Kari Karanikos is 25 years old with six figures of debt. A social media director who lives in Pittsburgh, Karanikos is one of the many Gen Zers who love to travel, despite carrying hefty debt.
A recent Bankrate survey on chasing credit card rewards while in debt found that nearly 1 in 4 (24 percent) Gen Zers and 1 in 3 (32 percent) millennials carry a credit card balance. At the same time, nearly 3 in 5 Gen Zers (60 percent) and millennials (61 percent) plan to take a summer vacation this year.
Experts — and young people like Karanikos — know how tricky it can be to balance debt payoff with your budget’s needs and wants. But it doesn’t have to be all or nothing. Learn how Karanikos is juggling expenses and experiences, and discover ways you can do the same.
Key insights on younger generations’ travel and debt habits
Key insights
- Younger generations are more likely to travel this summer than older generations. Sixty percent of Gen Z and 61 percent of millennials are planning a summer vacation, compared to 50 percent of Gen X and 44 percent of boomers.
- Younger generations are spending more on travel this year than older generations. Forty-four percent of Gen Z and 37 percent of millennials plan to spend more on travel in 2024, compared to 20 percent of Gen X and 24 percent of boomers.
- Younger generations are carrying debt, but are less likely to do so than older generations. Twenty-four percent of Gen Z and 32 percent of millennials typically carry a credit card balance from month to month, compared to 39 percent of Gen X and 38 percent of boomers.
Gen Z and millennials are splurging on travel in 2024
If you end up on a flight, cruise or other mode of travel this year, look around — you might see more younger faces than older. That’s because roughly 3 in 5 Gen Zers (60 percent) and millennials (61 percent) plan to take a summer vacation in 2024. Only half of Gen X (50 percent) and fewer than half of boomers (44 percent) say they’ll do so.
Younger generations are also more likely to be spending more on travel this year — and going into debt to pay for it. Gen Z (44 percent) and millennials (37 percent) are more likely to spend more on travel in 2024 compared to 2023 than Gen X (20 percent) and boomers (24 percent), according to Bankrate research on discretionary spending. In fact, travel was the most popular purchase for which young people are willing to take on debt, compared to live entertainment and dining out.
Further, Bankrate’s 2024 summer travel survey found that Gen Z (42 percent) and millennials (47 percent) are more likely to use debt to pay for summer travel in 2024 than Gen X (31 percent) and boomers (22 percent).
Rita-Soledad Fernández Paulino (she/they), a money and self-care coach, says her clients often want to be able to pay off debt and still travel. Fernández Paulino is all for it.
“It’s important that people have a variety of self-care activities they can engage in… that allow them to still take care of themselves at different budget points,” she says.
How one Gen Zer is managing her six-figure debt
When it comes to balancing fun with financial savviness, Karanikos is no stranger to the challenge. She’s doing her best to manage both while keeping an eye on the big picture.
Karanikos has only been out of college for a few years, and she’s staring down years — or even decades — of debt repayment. Of her six-figure debt, the majority is from student loans. She also carries about $5,000 in credit card debt and about $3,000 in a car lease.
Karanikos began accruing credit card debt in the months that passed after college graduation, but before she landed her full-time job. Now, she’s prioritizing growing her emergency fund without adding to her debt. That’s because Karanikos is moving to New York City in a few months, and wants to have plenty of cash in her back pocket.
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“I definitely think of [my debt] every day,” she says. But by keeping an eye on her debt with a payoff plan in place, she feels empowered to make smart money decisions. She also pursues side hustles to help pay off her debt.
And even though Karanikos recently got a salary raise, she’s trying to keep her costs steady. In her words, she doesn’t want to fall victim to lifestyle inflation.
Why Gen Zers like Karanikos are prioritizing travel
It may be hard to understand how people can spend money on travel expenses when they’re already in the red with debt. But Karanikos’s motivation to travel is about more than just getting that Instagram-worthy photo.
Karanikos’s grandparents and parents are immigrants from both Greece and Australia. She explains that, while growing up, her family was trying to make their way in a new environment. They often prioritized sacrifice over fun. But now, as a young adult, Karanikos doesn’t want to miss out on anything. And she wants to reach a financial standpoint where she can give experiences back to her family.
“I think my immigrant backstory is a main motivator,” she says. In fact, she names travel and experiences with friends and family as the two most important things in her life.
My biggest goal financially is to get my debt down so that I can continue to experience life with my friends, my family. And that’s also why I try to prioritize travel.
— Kari Karanikos
It’s also worth considering the years that young people largely missed during the pandemic. Karanikos says she and some of her peers (around ages 24 to 26) feel like they lost out on their opportunity to be young, travel and not worry about money. Now, they’re making up for lost time.
“Logistically, my debt will not be gone in the next year or two years,” Karanikos says. “I don’t want to put [experiences] aside and finally be able to live my life when I hit 30 or 35 and have that regret.”
Fernández Paulino thinks that Gen Zers like Karanikos have the right idea. “Money is just a tool to support your wellness,” she says. “Becoming debt-free is part of your financial self-care. Traveling is a form of interpersonal self-care, emotional self-care, some might even say spiritual self-care.”
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What sets younger generations apart from older generations?
When it comes to the spending discrepancy between younger and older Americans, here are some possible factors to keep in mind:
- Young people aren’t as likely to be already burdened by debt. According to Bankrate’s chasing rewards while in debt survey, Gen Z (24 percent) and millennials (32 percent) are less likely to typically carry a credit card balance from month to month than Gen X (39 percent) or boomers (38 percent).
- Young people haven’t carried debt for as long. In a November 2023 Bankrate survey on credit card usage, 22 percent of both Gen X and boomer credit card debtors had carried credit card debt for five years or more, compared to 8 percent of Gen Z and 13 percent of millennials.
- Young people maximize rewards. Gen Z (77 percent) and millennial (74 percent) cardholders are more likely to make every or some effort to maximize credit card rewards than Gen X (69 percent) or boomers (69 percent).
- Young people are less worried about their finances this year. In a November 2023 Bankrate study, Gen Z (59 percent) and millennials (49 percent) were significantly more optimistic about their personal financial situation in 2024 than Gen X (33 percent) or boomers (20 percent). Karanikos says that “I feel quite optimistic [about my personal finances], maybe due to the fact that I have a plan.”
- Young people want to present a certain lifestyle. Karanikos explains that her peers tend to compare themselves to others on social media, even though they might be earning different incomes. “I think the majority of Gen Z is putting [travel expenses] onto credit cards,” she says.
How to travel this year without breaking the bank
Are you itching to travel this year but have a tight budget? Here’s how Gen Zers like Karanikos are spending smarter while traveling.
Build a sinking fund
When Karanikos traveled in college, she’d work extra shifts beforehand, but still found herself using debt and paying it off after the trip. Now, she’s adopted the practice of building a sinking fund. Three months before a trip, she starts setting money aside so she can travel without growing her debt. While she still swipes her credit card on travel expenses to earn points, “I try to make sure the savings are there before I spend,” she says.
To follow her example, you could open a free high-yield savings account that lets you earn a competitive APY while still accessing your money when you need it. By setting aside a certain amount of money each month, you’ll have cash to spend when your trip rolls around.
Cutting back on your expenses can also help you to build your sinking fund. For instance, you might spend less on takeout or new outfits in order to enjoy the local cuisine and shopping in your travel destination later on.
Earn extra income
Fernández Paulino says that paying for travel starts with understanding your cash flow. “You need to know your numbers,” she says. And rather than only cutting expenses to increase your cash flow, Fernández Paulino advocates finding ways to earn more money.
“I work on having [my clients] increase their income,” she says. “There’s no limit to how much we can increase our income.”
She recommends listing out your skills and joining the nearly two in five Americans with a side hustle (39 percent). You could tap into LinkedIn or your network for higher-paying job opportunities. Or you could monetize something you own, like renting out a room in your house.
Tap into credit card rewards
A rewards credit card can help you earn points or miles to cover your next flight or hotel room. Plus, many travel rewards cards let you earn extra rewards when you book travel through the card issuer’s portal.
Karanikos uses the Chase Sapphire Preferred® Card and Capital One Venture Rewards Credit Card to earn points and miles that she puts toward flights. By earning while making everyday purchases, you could knock several hundred dollars off the price tag on your next trip.
Get practical with your destinations
Karanikos tries to visit locations where her friends live so she can have a place to stay. She’s also going to Atlanta for a work conference this year and will extend her trip to explore for a few days. And she and her friends plan to visit another friend’s lake house this summer.
Choosing affordable places is key when traveling on a budget. Some cities are more affordable than others, and you could tap into your network for lodging and other shared resources. A travel budget app might also help you save money as you create new memories.
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Bankrate commissioned YouGov Plc to conduct the surveys. All figures, unless otherwise stated, are from YouGov Plc.
Bankrate research on discretionary spending: Total sample size was 2,276 US adults. Fieldwork was undertaken between 4th – 6th March 2024.
Bankrate survey on credit card usage: Total sample size was 2,350 US adults. Fieldwork was undertaken between 28th – 30th November 2023.
Side-hustle survey: Total sample size was 2,505 U.S. adults, of whom 981 have a side hustle. Fieldwork was undertaken between 26th – 28th April 2023.
Tax Credit Card Debt: Total sample size was 2,239 adults. Fieldwork was undertaken between 24th – 26th January 2024.
December FSP: Total sample size was 2,391 adults. Fieldwork was undertaken between 13th – 15th November 2023
Summer Vacation: Total sample size was 2,360 adults. Fieldwork was undertaken between 18th – 20th March 2024
The surveys were carried out online and meet rigorous quality standards. They employed non-probability-based samples using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
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