Young Travellers Say They’ll Live Now, Make Money Later

Cameon Wade felt like the pandemic had robbed her of her early 20s.

So, after getting into a film program at Prague Film Institute, she travelled by herself across Europe this summer. Originally, she was planning to only travel for the program, but ended up going to seven cities in five countries in the course of three weeks to make up for the lack of travelling during the pandemic.

“The whole pandemic, I felt like the years were taken away from what was supposed to be the best years of my life and college,” she said.

Young people have always taken trips during college years, gap years or after college. This year, however, the winding down of Covid-19 travel restrictions in many countries gave many the freedom they didn’t have in the past few years.

Many of these students or recent graduates are now taking more elaborate and in some cases more expensive vacations than they expected to take at this age, say some young graduates. Overall, 72% of Gen Zers between the ages 18 and 25 surveyed in April were likely to take a summer vacation, more than any other age group, a recent Bankrate survey found.

Even so, those taking larger vacations recognize it isn’t an easy decision. In the U.S., young people between the ages of 18 to 34 had the lowest median weekly checking-account balances when compared with older age groups for the past two years, according to a recent study by JPMorgan Chase Institute.

To make up for the extra costs, these young vacationers say they are making rigorous budgets and doing financial planning behind the scenes to keep costs from skyrocketing.

Many say they believe the vacations themselves will deliver justifiable returns down the road. On TikTok, thousands of young people have posted videos of their travels with the phrase “I will make my money back.” Most videos show beautiful landscapes or dinners, but also an awareness in the captions of the financial sacrifice that comes with travelling.

“You want to frame it in such a way that, yes, this is a financial sacrifice,” said Scott Rick, an associate professor of marketing at the University of Michigan, who studies emotional causes and consequences of consumer financial decision-making. “But this is a calculated decision on my part.”

Ms. Wade posted her TikTok video in June with the caption “I’ll make my money back, but I’ll never be 20 scootering around Paris at night again.” More than three million viewers saw the clip.

After getting accepted to the film program, Ms. Wade started doing research about how much she needed to make the trip happen. “Once I realized it was possible, it was a no-brainer,” she said.

She said she paid for all of her expenses herself, using her income from her four poetry books and a part-time job to fund the trip. She also took advantage of student discounts at museums, stayed in cheaper hostels, opted for the cheapest meal options and relied on public transportation to stay on budget.

The idea behind these vacations is that an experience will have a longer lasting social benefit. Cassie Holmes, a professor at UCLA’s Anderson School of Management, said several studies back up the thinking that experiences lead to greater initial happiness and provide greater lasting happiness than material possessions.

As people get older, they start to realize that engaging in experiences will bring them greater happiness, she says. In many ways, the pandemic simply got younger people to realize this benefit earlier.

“Vacations are the experiences that not only sort of generate initial happiness, but they continue to make you feel happier as you revisit them,” Ms. Holmes said.

Isabelle Lieblein, 22, was supposed to study abroad in Germany in 2020, but the pandemic disrupted her plans.

“Before Covid, I said no to trips to save up to go to Germany, and then it didn’t happen. It really changed my outlook,” she said.

Ms. Lieblein kept working throughout the lockdown to build up her savings and spent a semester studying abroad in Germany after the travel restrictions were lifted. She travelled to 19 countries during her study abroad period and paid for the entire trip with her savings.

Throughout her backpacking adventures in Europe, Ms. Lieblein was interviewing for jobs with plans to start after her graduation from Kettering University in Flint, Mich., and her trip. Ms. Lieblein started a full-time job as a quality engineer in February. On TikTok, she shared a video encouraging other young people to invest in experiences such as travel after she ended up making the money she spent back.

Having this experience, she said, is worth the coming financial challenges.

“I wanted to take advantage of it even if that means that I’m eating ramen until I get my first paycheck when I get back, that’s worth it to me,” she said.

The U.S. and Chinese governments should take action to lower future borrowing, as a surge in their debts threatens to have “profound” effects on the global economy and the interest rates paid by other countries, the International Monetary Fund said Wednesday.

In its twice-yearly report on government borrowing, the Fund said many rich countries have adopted measures that will lead to a reduction in their debts relative to the size of their economies, although not to the levels seen before the Covid-19 pandemic.

However, that is not true of the U.S. and China, which will continue to see a surge in borrowing if current policies remain in place. The Fund projected that U.S. government debt relative to economic output will rise by 70% by 2053, while Chinese debt will more than double by the same year.

The Fund said both countries will lead a rise in global government debt to 98.8% of economic output in 2029 from 93.2% in 2023. The U.K. and Italy are among the other big contributors to that increase.

“The increase will be led by some large economies, for example, China, Italy, the United Kingdom, and the United States, which critically need to take policy action to address fundamental imbalances between spending and revenues,” the IMF said.

The IMF expects U.S. government debt to be 133.9% of annual gross domestic product in 2029, up from 122.1% in 2023. And it expects China’s debt to rise to 110.1% of GDP by the same year from 83.6%.

The Fund said there had been “large fiscal slippages” in the U.S. during 2023, with government spending exceeding revenues by 8.8% of GDP, up from 4.1% in the previous year. It expects the budget deficit to exceed 6% over the medium term.

That level of borrowing is slowing progress toward reducing inflation, the Fund said, and may also increase the interest rates paid by other governments.

“Loose US fiscal policy could make the last mile of disinflation harder to achieve while exacerbating the debt burden,” the Fund said. “Further, global interest rate spillovers could contribute to tighter financial conditions, increasing risks elsewhere.”

A series of weak auctions for U.S. Treasurys are stoking investors’ concerns that markets will struggle to absorb an incoming rush of government debt. The government is poised to sell another $386 billion or so of bonds in May—an onslaught that Wall Street expects to continue no matter who wins November’s presidential election.

While analysts don’t expect those sales to fail, a sharp rise in U.S. bond yields would likely have consequences for borrowers around the world. The IMF estimated that a rise of one percentage point in U.S. yields leads to a matching rise for developing economies and an increase of 90 basis points in other rich countries.

“Long-term government bond yields in the United States remain elevated and sensitive to inflation developments and monetary policy decisions,” the Fund said. “This could lead to volatile financing conditions in other economies.”

China’s budget deficit fell to 7.1% of GDP in 2023 from 7.5% the previous year, but the IMF projects a steady pickup from this year to 7.9% in 2029. It warned that a slowdown in the world’s second largest economy “exacerbated by unintended fiscal tightening” would likely weaken growth elsewhere, and reduce aid flows that have become a significant source of funding for governments in Africa and Latin America.

An unusually large number of elections is likely to push government borrowing higher this year, the Fund said. It estimates that 88 economies or economic areas are set for significant votes, and that budget deficits tend to be 0.3% of GDP higher in election years than in other years.

“What makes this year different is not only the confluence of elections, but the fact that they will happen amid higher demand for public spending,” the Fund said. “The bias toward higher spending is shared across the political spectrum, indicating substantial challenges in gathering support for consolidation in the years ahead, and particularly in a key election year like 2024.”

Young Travellers Say They’ll Live Now, Make Money Later

Gen Z vacationers say they are making rigorous budgets behind the scenes to keep track of costs.

Says U.S. and China, which will continue to see a surge in borrowing if current policies remain in place.