How much should I spend on my holiday? A psychological guide

23 February, 2022|Making the most of travel|
How much should I spend on my holiday? A psychological guide The Travel Psychologist

The Madives

By Dr Charlotte Russell, Clinical Psychologist

This week’s article includes an interview with a guest who is dually qualified in both psychology and finance. Kim Stephenson is a Chartered Occupational Psychologist and prior to this he worked in the financial industry, which gives him a unique perspective on the psychological factors that can influence our spending. You can find out more about his fascinating work on his website Taming the pound.


The topic of how we prioritise our spending is a complex one, and I’m sure that very few of us carefully examine where we are spending our money in detail. Most of us also don’t grow up with clear guidance in this area. That leaves us with the big question of how much is reasonable to spend on a holiday? Should we forgo other things in life to afford to travel?

In order to structure this article I’m going to start with my clinical perspective and the recent research which can provide us with some initial information about factors that may influence our spending. Then I’m going to hand over to Kim to give us his unique insights from his combined expertise in finance and psychology. The article will conclude with a summary of our advice.

What factors influence our spending?

Like many aspects of our behaviour, the habits we develop in relation to spending will often stem from a combination of our earlier experiences and our personalities. We will also be influenced to a greater or lesser extent by our social group and the wider culture.

Many of us will be familiar with the idea that if individuals grow up in financial hardship, they tend to be frugal in later life. This may be the case even if they are no longer experiencing financial hardship and have the means to spend more readily if they wanted to. From my clinical perspective, I would understand this to be related to spending money on non-essentials being associated with anxiety or threat, and being seen as something unnecessary or even indulgent.

Of course there may also be examples of financial hardship in early life having the opposite effect; with individuals at the extreme becoming ‘showy’ with their wealth and extravagant. We could understand this potentially being related to self-esteem. If individuals grow up believing that they are ‘not as good’ as other people due to being poorer, then in later life they may be likely to overcompensate. This may be particularly likely if they grow up in a culture where money is equated with status and success. On the other hand if individuals grow up in circumstances that lead them to believe they are ‘good enough’ despite financial hardship, they are perhaps less likely to develop these kinds of behaviours.

The research in this area points to the idea that spending is closely related to emotions and what the authors call the ‘pain of paying’ (Rick, 2018). This research suggests that around 25% of the population fall into the category of ‘tightwads’, which means these individuals experience high levels of emotional discomfort when it comes to non-essential spending. Individuals who fall into this group experience this despite knowing that the purchase they make is something they want or will have a positive impact for them. In contrast, around 15% of the population fall into the category of ‘spendthrifts’, whereby they experience very little discomfort in spending. This of course runs the risk of over-spending.

According to Dr Rick’s work the rest of us will fall into the category of being ‘unconflicted’ with regard to our spending. This will mean that generally we will experience an appropriate amount of emotional discomfort when we make non-essential purchases. However this doesn’t necessarily mean that we budget well or spend wisely! Whilst this research is not as well supported as other psychological concepts such as personality, it does give us an idea of the different sorts of challenges that people may struggle with in relation to managing their spending.

Travel spending

The options for travel are seemingly endless and it is easy to become overwhelmed with choice in relation to type of trip, destination, duration and type of accommodation to stay in. As regular readers will know, an important theme running through our articles is about identifying what you may need at this particular time in your life, so that you can travel with purpose. Of course there will always be financial considerations to make. However what you may want and need is always a better starting point than price.

At this point I’m going to hand over to Kim to give his perspective:

In your experience how well do members of the public prioritise their spending?

“Badly! That’s not as derogatory as it sounds, because finance “experts” are probably worse, certainly not better, than the average person in the street.

We see from the research on topics such as wellbeing, happiness, flourishing and the other areas of positive psychology that using resources (time, money, energy) on developing meaning, relationships, engagement, curiosity and expertise lead to happiness. The opposite use: activities you don’t value, being isolated, unengaged, without seeking some novelty or developing any sense of mastery or improvement, tend to lead to a lack of satisfaction with life, boredom, unhappiness and a sense of being stuck. But we often buy to “keep up with the Jones’s” focussing on what matters to others, not what really matters intrinsically to us.

The money “experts” that the majority learn from emphasise material goods, showing off, jealousy, greed – all things which lead to unhappiness. People don’t learn to think about their own personality, what has meaning for them, their connection to others and the things that lead to happiness and fulfilment. So people tend to prioritise really badly (unless they long to be permanently anxious, depressed and unfulfilled, in which case they’re doing great!)”

Prior to working with you, how do people tend to decide how much to spend on travel?

“Prioritising the price over the value. People feel they’ve got to go to the things they see on TV, whether they like it or not, because it’s what the “best” people do. What’s better for you is to find out what is going to give you the best value for you, not for somebody else.

You are unique, you don’t have the same tastes, interests, likes and dislikes as somebody else. You might really want to do scuba diving, somebody else would find that horrific, someone else might want to party all night and sleep all day, you’d find it tedious (you can do that at home, why go out to do it at great expense and miss all the local culture?) If you’re fascinated with a country or culture, and it’s unfashionable, why would you go somewhere you aren’t really interested in, just because that’s a trendy destination. Surely, you’d go to the place that has the culture you want to learn about and sites you want to see, because you get several bangs for your buck. Maybe some meaning (why does the culture appeal), learning, novelty, the chance to develop expertise (like learning some of the language). If you want to see the standard tourist stuff, because that’s what you really want, and you figure that the expert guides, arranged tours, friends recommendations are what will give you happiness, great. But if you’re doing it so you can show pictures in the wine bar or bore visitors at home with a rather superficial and condescending travelogue, think about it. How much happiness do you really get out of doing something that you’re only doing to make other people jealous? Compare that to how much fun and reward you’d get over doing something that was really special to you, even if nobody else really “gets” why you would like it?”

Is there anything to avoid or be wary of when it comes to travel spending?

“Thinking “we have to have the best”, without working out why you have to, what “the best” actually means, or thinking about what you really want or what you’ll get out of it. If you do that, you’re likely to spend a lot of money, for very little reward. What I suggest is think about “why here, what do I/we want to do, am I likely to come back, and what is unique about this place”. If it’s unique (say, the Grand Canyon, or Venice), you’re talking about an experience you can’t get anywhere else. So, if you want to splash out a bit, and it’s important to you to stay in the canyon itself, or right on St Mark’s Square, and you’ll probably only go there once, great, live a little.”

What advice would you give to our readers to help them consider how much to spend on a trip?

“Do what really matters to you.

I’ll give you a personal example. We like good food. We’ve found that everywhere we go in the last few years, we go on a food tour (so far, Boston, Chicago, Washington, Florence (twice), Bergen, Madeira, and London!). We learn something about the local culture and history, meet some interesting people, have great food and wine and learn about their standard ingredients and cooking methods. It presses pretty much all the buttons of any happiness inventory for us – for somebody else it might not be so good and it wouldn’t be worth doing.

By the same token, in Madeira the hotel had a two Michelin starred restaurant. We’d never eaten at even a one star, so we tried it. As an experience, it was great, the food was (obviously) superb as was the service. But what set it apart was the sheer theatre of it – for example, pouring the olive oil for dipping into a white plate with a depression in the middle so the oil flowed into a map of Madeira. Great. But we found at least two restaurants (one from the tour, one by ourselves) that also had superb food and service. And they were between a third and a quarter of the price of the hotel restaurant. As a result we’ll never do that again, we’ve done the Michelin bit, it’s very nice but it isn’t worth, to us, all that money for the theatrical element. We’d rather have nice meal and go to an actual theatre. Somebody else might love it, and hate regular theatre, so their values would be totally different.

The basic thing is, do what appeals. Plan it for you (and your partner/family). Do the things you value and that will give you fulfilment, excitement, interesting experiences. Don’t care what other people do, they’re not you. Don’t worry about it being unfashionable, don’t worry if it’s seen as “cheap” and don’t worry if people think “that’s wasteful and extravagant”, if you’re doing it for you, as a lifetime memory, that you’ll look back on fondly forever, that’s great. It’s only if you’re doing it to show somebody else and crow over them or make them jealous, or from some idea of having to fit in and not to fulfil your own values and goals that you run into problems.”


Based on the research, my clinical perspective and the Kim’s expertise and insights, you may want to consider the following when thinking about how much to spend on your trips:

  • Take some time to reflect on your previous trips and what aspects of these have provided the most enjoyment and value for you. This provides you with a map of what is important to you and where you might want to spend more or less.
  • Be cautious when it comes to taking inspiration from other people. If you are inspired by someone else’s trip think about what it actually is about that destination that appeals and connects to you personally.
  • The last thing anyone wants on a holiday is to under or overspend or accommodation and then feel resentful when you get there so it Is really important to be clear about what you want in advance. An example would be whether you prefer staying in a town/city or at the beach. Both are equally valid, but if you know that you much prefer one over the other, stick with that and don’t be swayed by price as that choice is going to have a huge impact on the enjoyment of your holiday.
  • Also think about your own spending style, and whether there are times when not spending might be holding you back, or identify times when you have tended to overspend and this has been unhelpful or unfulfilling for you.
  • If you identify as being more of a ‘tightwad’ and are uncomfortable spending money: Remind yourself of what travelling is going to give you – the benefits for you and your partner/family and view it as an investment. If you can see logically that you can afford the trip, remind yourself of this when the emotional discomfort of spending shows up.
  • Another tip for those who might lean towards ‘tightwad’ tendencies; be wary of searching endlessly for the best deal. Looking for a good deal can be a helpful strategy but if we take it to the extreme and start to put price ahead of what we value, this becomes less helpful for us and can take the enjoyment out of a trip. It can also feed the anxiety you may experience in relation to spending.
  • If you identify as being a ‘spendthrift’, ask yourself whether you can afford the trip, and what you might need to give up to be able to afford it? Also ask yourself whether there are aspects of the trip where you can spend less, that won’t affect your enjoyment.


Rick, S. (2018). Tightwads and spendthrifts: An interdisciplinary review. Financial Planning Review. Wiley Online Library

Speaking of Psychology: Tightwads and spendthrifts: How emotions drive our shopping behavior, with Scott Rick, PhD (

If you liked this article check out Should I share my travel photos on social media?