A vacation home works for some people and can provide a lot of benefits. It’s wonderful to have your own place to escape to when you’re ready to relax and unwind. And if you make good decisions about where and what you buy — and get a little lucky in the process — a second home can be an asset.
But the key point? It works for some people and certainly not all. In fact, for most people saving for travel instead of a vacation home makes much more financial sense. It also ends up better for you in the long run regarding happiness and enjoyment.
That being said, it’s well worth understanding how to make the most of your vacations. You’re better off saving your money for trips, experiences, and various destinations — not a second home.
Vacations Are Fun and Games — Vacation Homes? Not So Much
Buying a vacation home often makes you a second-home owner. With homeownership usually comes with a second mortgage, property taxes, insurance, the responsibility for repairs, managing a property that may be far away, potentially managing renters (or paying someone to manage that process for you), and so on. In other words, it may sound fun and exciting. But don’t get swept away thinking about all the benefits. Vacation homes come with downsides. Potentially even more than your primary home and are responsible for taking care of throughout the year. Add in handling those responsibilities over distances, and a vacation home is often a fast-track to frustration (and a lot of work, to boot!).Make the Most of Your Vacations by Maintaining Your Freedom to Choose
Those downsides don’t even account for the fact that owning a vacation home tends to mean you’re locked into the same vacation year after year. Again, that might be fine for some folks — but for most people, the freedom and flexibility to vacation in various places and explore new things is worth a lot. You may remain stuck with one type of vacation for as long as you own your home. And even if you’re not, that begs the question. Why bother with the vacation home in the first place? Keep the freedom and spend that money on taking dream vacations wherever you choose to go.The Benefits of Saving for Travel
Still not convinced? Consider these reasons you should save for travel instead of plunking your money down in another property that you’ll only use a few weeks (at most!) out of the year. You’ll get:- The opportunity to explore and visit more places.
- The option to take different kinds of vacations (cruise, beach house, camping, etc.).
- Increased flexibility (where you go, when you go, how long you go, how many people go, etc.).
- The ability to budget for “that one big trip” you’ve always dreamed of (maybe three weeks in Southeast Asia, or a month in Europe) by spending less on travel in the year or two leading up to the trip (such as a camping and hiking trip at a national park).
- Fewer unexpected expenses. You don’t have to worry about vacation home repairs, furniture, the air conditioning going out…
- The freedom to follow the deals and to pick vacations based on deals you find online, without being locked into any one place.
- Simplify your life with greater peace of mind.
Travel Can Keep Your Other Wealth-Building Goals on Track, Too
Traveling, as opposed to a vacation home, can keep your other financial goals on track. You can spend significantly less on travel (even luxury travel) than you would buying and maintaining a property. Travel gives you more flexibility in how you use your money, even to the point of choosing not to travel. As your life circumstances change — you suffer an injury or illness, get married, have kids, take care of an elderly parent — travel may not be the right fit for a few years. And that’s okay. You can save your money and explore places closer to home while you need to prioritize other things in life. While you can choose how and when you travel, you can’t choose to not pay your mortgage on your vacation home if another savings goal or family need becomes a priority that year. When purchasing a vacation home, you lock yourself into those expenses year after year — even when your goals, financial situation, and interests change.What to Think About If You’re Set on a Vacation Property
If you do choose to forge ahead with a vacation home, here are just a few points you’ll want to keep in mind:- Make sure you know the neighborhood and surrounding area. Is it a place you are going to want to visit for the next 30 years or more (assuming a 30-year mortgage)?
- Are you going to have renters? Keep in mind that you have to a rent a vacation property for large chunks of the time if you want to receive the tax benefits. This usually means making the most popular weeks available to renters — not your family.
- Renting a vacation home often requires hiring a management company, or managing it yourself. It also means more wear and tear on the furniture and property. Account for this when you look to see if your budget can handle a second home.
- A vacation home is more than the price of the home. It needs to be furnished, maintained, repaired, and insured (and often vacation homes are in costly areas, such as a beach house on the water). Again, account for these expenses when you consider the financial aspects.