Employers in the United States are not as liberal with vacation days—paid time off (PTO)—as are employers in Europe and other parts of the world. PTO in the United States typically accrues on the basis of the number of years the employee is with the organization and the level of the employee's position; PTO is available for full-time employees only. The Fair Labor Standards ACT (http://www.dol.gov/whd/flsa/) "does not require employers to pay for vacations, sick leave or federal or other holidays." Although the 2014–15 MacroMonitor reports that 64% of household heads are employed, not all qualify for PTO. During difficult economic times, or when households' needs are many, few households can afford vacation expenses in addition to lost wages. The 2014–15 MacroMonitor reports that only one-quarter of households with an employed head save for a vacation; only 3% are willing to borrow.

Demographics

Households with an employed head are more likely to save or borrow to take a vacation than are all US households (96% versus roughly 76%). Family—the presence of children—is a strong vacation motivator, particularly for households willing to borrow. Households that have an employed head and that are willing to save or borrow for a vacation:

• Are headed—about 70%—by either a Millennial or a member of Gen X
• Have a head whose mean age is 44, in comparison with age 51 for all US household heads
• Are more likely than average (59%) to be dual-headed households
• Are more likely than all households to have dependent children and much less likely than all households to have dependent adults
• Have a higher mean annual pretax income than all US households ($93K for households willing to save; $88K for households willing to borrow; $72K for all households).
• Are average (62%) for single-family-home ownership
• Are more likely than average (10%) to have a head who is an owner or part owner of a professional practice or business.

Financials

Vacation savers' financial-product ownership differs from that of vacation borrowers. Because borrowers represent a very small target, we focus on savers. For example:

• Savers' ownership of savings accounts, US Savings Bonds, stock or bond mutual funds, publically traded stocks, other real estate, tangible assets, and vehicles is above average.
• Both savers' and borrowers' ownership of money market mutual funds, education savings accounts, 529 plans, nontraded stock, and 401(k), 403(b), or 457 plans is above average.
• The majority of savers and borrowers have savings accounts (70% and 59% respectively); savers have a higher mean amount in savings, whereas borrowers have a lower mean amount.

The overwhelming majority of households willing to save for a vacation have a great deal of pressure on their financial resources.

• These households are above more likely than average to have mortgages, vehicle loans, consumer loans, and outstanding credit-card balances. However, the amounts they owe are about the same as for all US households.
• At the same time, many of these households are funding retirement accounts, education savings plans, and 529 plans.

Financial Attitudes and Interesting Tidbits

Vacation savers' many financial goals demand constant trade-offs when allocating finite resources between long-term and short-term priorities. These households are more likely than all households to say their most important goals for savings and investments (in rank order) are to buy a home, to pay for education, to take a vacation, to make major home improvements, and to buy a vehicle.

• One-half of vacation savers report they are financially stable at present; one-quarter report financial security. Their average mean disposable income per month is $1,103.
• Vacation savers are more likely than all households to have a general or partial (but incomplete) financial strategy and to be financially very confident.
• One result of being relatively young (a mean age of 44) is that vacation savers are more likely than all households to use an ATM, the internet, or an app to connect to their financial institution.
• Vacation savers are more likely than all households to mostly agree they feel comfortable doing financial business on the internet and think that automatic deduction from income is the best way to save or invest.
• They are less likely than all households to (mostly) agree they will rely on Social Security for retirement income, to rely on Medicare for most of their health-care needs, and to prefer doing most of their financial business in person.
• Financially well informed, vacation savers are more likely than all households in the past year to use friends, relatives, and associates; the internet and other online services; financial-institution personnel; magazines; newspapers; and books as sources of financial information and guidance.

Implications

Economists point out that money is money regardless of where anyone holds it. Although a look at the numbers says that this point may be true, a look at how human beings actually behave suggests that it is not true. The entire field of behavioral economics is based on demonstrable evidence that people do not always behave rationally when dealing with money. For example, people think about financial needs as separate "buckets"—a bucket for home expenses, a bucket for education, a bucket for a vacation, and the like. The money in a particular savings account may be for use only in emergencies, for medical expenses, for household repairs, and so forth. Without a "vacation-savings" bucket, the majority of people (who are not economists) hesitate to use savings that they have set aside for emergencies or other necessities for a nonessential expense such as a vacation. However, recent research suggests that taking a vacation may be essential for an individual's health, an individual's familial relationships, and a healthy, motivated, creative, and productive workforce. Financial institutions interested in increasing the assets in their savings accounts might consider the benefits of an updated type of vacation-savings product—one with direct access, easy transfers, and an incentive at achievement of the savings' goal. The ability to watch savings grow, the challenge to achieve a goal, and the benefits to the household, the financial institution, and society at large could be a win-win-win.

MacroMonitor subscribers and nonsubscribers may contact us to learn more about households willing to save for a vacation. Subscribers may request an on-site presentation of these findings along with a Q&A session for a small additional fee.