You know that free-spirited friend, the one with way more disposable income than you?

It is possible at some stage they will - if they have not already - concoct an extravagant holiday plan and invite you to come along. You will be torn between the fear of mounting debt and the fear of missing out. What should you do?

The advice from financial experts is not all glum and no fun, but refreshingly balanced.

"One of the biggest reasons people get themselves into trouble with credit card debt is holidays," financial coach Shula Newland, from Full Balance Financial Coaching, says.

"But it is also the most motivating reason to save."

Keeping up with jet-setting friends comes up occasionally with clients, Tim Ellis, a Wellington-based financial advisor with Foxplan, says.

Recently, a client who is retired made a snap decision to go on a trip with a long-term friend and told him after the fact.

It meant she needed to draw down additional money from her retirement fund to cover the trip. It wasn't a catastrophe.

"We don't want people straying away from their plan, but we're also not the fun police here saying 'Don't use money to have fun.' That's the whole point of money is to do the things that are important to you."

Communicate your concerns

If you cannot afford the holiday but you want to go, tell your friend or the group of friends who are dreaming up the trip, Ellis says.

"You might find that somebody else was actually feeling the exact same. They just felt too embarrassed to mention it.

"It just puts everybody on the same page."

In some cases, it will not be financially possible for you to go, but it might result in the trip being altered to accommodate everyone's budgets.

Let them pay for you

This idea will get many people squirming uncomfortably, but see it from your friend's point of view.

"I'm in a really good financial position, but I have friends that are not and look, I want to go spend time with them but they're like 'No I can't afford that,'" Newland says.

"You actually don't mind shouting because you want to enjoy your friend's company but people won't let you shout."

A friend could show their appreciation in non-monetary ways by, say, babysitting their kids for them while on the trip, Newland suggests.

Plan a way out of debt

So, you have decided to stretch financially and go on the trip.

"If you're going to plan to go into debt, you also need to plan how you're going to get out of debt, but that's the part that people neglect - the plan out," Ellis says.

You can start by drawing up a realistic budget by combing through previous bank statements to get the true amount of what you are spending on groceries, eating out, petrol, etc.

Cut expenses to increase your savings ahead of the trip, or repayments on holiday debt after you return.

"They should be looking at the other side of things and write down all the ways you think you might be able to increase your income," Ellis says.

This could include doing some overtime, picking up a side hustle and selling items on Trade Me or Facebook Marketplace.

Regular savings for holidays

If spontaneous rich friend holidays are a regular occurrence, you might consider planning for that in your savings. Allocate a set amount regularly to a separate account once you figure out your true expenses, Ellis says,

"It doesn't solve the problem now but it will stop it from being a problem in the future."

-RNZ