6 Steps for Budgeting for Holiday Expenses

Saving up for a holiday and paying for it with cash is usually the best option for your finances. When you don’t have to borrow money, you will come home relaxed, not restless with money worries. Here you can find our step by step guide on how you could save up for your next holiday, as we look at budgeting for holiday expenses.

Step 1 – Finding money to save even when you don’t feel you have any

Saving isn’t always easy, but it is always something you should try to aim for. A lack of spare money is a common obstacle to saving. There are some things you can do though that will help you find some extra money that you can put towards your savings:

  • Review your household bills and switch energy suppliers to save around £300 a year
  • Check you are getting all the benefits you are entitled to
  • Get control of your budget by reviewing your income and spending with our Budget planner
  • Reduce spending in your biggest areas

Step 2 – Set a Budget

It is really important to figure out how much you want to save and how much you can afford to put aside each month. Here is how to do it. First, make a list of all the items you will need to take care of before you go. You can use our Budget planner to help you work out these costs:

  • Travel Money
  • Travel Insurance
  • Accommodation
  • Sun cream and toiletries
  • Travel
  • Holiday clothes and swimwear
  • Car hire

Second, think about the day to day expenses on holiday like:

  • Excursions
  • Holiday treats
  • Entertainment
  • Food and drink

 

Add all these costs together and you have your savings goal. You might be able to get holiday costs down a bit too, meaning you will have to save a little less money. When you have done all this you can work out the best way to reach your goal with our savings calculator.

Step 3 – Start saving

Treat saving the same as paying a bill, and commit to saving a regular sum each month or week. This way it will be much easier for you to budget savings and spending. But be realistic – it is better to commit to a small, manageable sum than to try too hard and give up. If your income varies from month to month or even week to week, put aside an amount you know you can stick to, however small it might feel. You can always add to it later. The trick is to not touch the money you have set aside.

Tips to help you start saving

 

  • Start small by putting spare change into a jar each week. Saving £3 a day means you will save £1,095 in a year
  • If this works, set aside a bit more on a regular basis
  • If this is difficult, save what you can as regularly as you can. Every bit makes a big difference
  • Try saving socially, for example with a friend, and check in with them to see how it is going
  • Make it visual and track your progress with a chart – you can put something up on the fridge or on a wall in your bedroom
  • Use a Direct Debit or standing to order to automatically take a regularly amount of your pay and put it into a savings account so you will never forgot to save
  • Name your goal – whether it is a family trip to the UK coast or a romantic break in Rome, naming your goal will keep you motivated

Step 4 – Stash your Savings

It is time to start thinking about where to keep your savings. Bank accounts make it easier and more secure to save your money. You might start with a coin jar – putting £10 away a week gets you £520 in a year. But, make sure you transfer your money to a savings account when it builds up to a tidy sum. This way, you can earn a bit of interest on top. If you don’t have one, here is how to open a bank account.

Your bank will let you set up a separate pot for your holiday goal online. Set this up if you can as it will help you keep a target in view and track your progress. If you want to keep saving without a bank account, you can save cash at home, entrust money to a friend or family member, buy saving “stamps” find a local credit union, or use a rotating saving and loan scheme.

Step 5 – Watch your Savings Grow

Check your savings regularly to see how you are doing. Set yourself small targets along the way and treat yourself as you hit each milestone. When you reach your goal for this year’s holiday, set a new, higher target for next year – maybe you could go on more holidays or visit more remote destinations.

Step 6 – Expect the Unexpected

Almost three out of every 4 people experience at least one unforeseen expense a year. It is for things like car breakdowns, the oven packing up or even a parking fine. The average unexpected cost for repairing a car, for example, is a whopping £1341, so it could put a real dent in your savings goal.

The best way to not get caught out is to always put away a little something to cover these costs, even if your main saving goal is for a holiday. Here is how to make sure you have covered if something expensive unexpectedly happens:

  • List out possible expenses. What expenses do you think could come up? Is the car showing signs of wear, is the boiler or washing machine very old?
  • Can you reduce the chance of the cost, by getting a service or insurance? Can you replace something cheaper in a sale now before it breaks completely or is someone you know offering something you will need or a skill you can get a discount on?
  • Work out how much a typical emergency fund is for you, so you can have something to aim for. Our emergency saving page can help.
  • Making saving a habit – even when you have finished saving for a holiday, don’t stop – the money can be used for emergency funds, can go towards a new holiday, or help you live comfortably in the future.