There are plenty of ways to save money while you are on holiday – taking your own lunches, touring the city on foot – however, the biggest savings can actually be made before you even leave on vacation. This is because if you create a realistic budget for your vacation and learn how to stick to it, the savings you have worked so hard to accumulate will stretch as far as you need them to, and you won’t miss out on any adventures.
Part of budgeting for a vacation is knowing you can save up the amount you need for your trip. Therefore, this vacation budgeting guide will cover:
- How to save for your vacation.
- How to budget for your vacation.
- How to stick to your vacation budget.
Vacation Savings Tips
It is often easier to save when you have a goal in mind, because you have a clear end-point amount, and the motivation of reaching your goal. That doesn’t mean you don’t need to plan your vacation savings strategy, and you can follow just a few simple tips to reach your goal more easily:
- Set a goal amount. This is where your vacation budget comes in, so you know exactly how much you need to save, and can watch your goal getting closer.
- Keep your goal clear. Do whatever works for you to remind yourself of what you are saving for. Use a picture of your holiday destination as your screensaver, pin photos to the fridge, or stick pictures to a money box to motivate you each time you save. You could even paste a holiday snap to your credit card to remind you to only use it for emergencies.
- Make an automatic contribution. To keep your savings growing and on track, set up an automatic debit from your transaction account on the day you are paid. Having funds transferred to your savings account automatically means you don’t have to remember to make the transfer, you won’t be distracted, and the funds won’t be spent on something else because they are transferred before you can miss them.
- Save any spare funds. When you buy something on special, put the difference in your savings account. If you have a small lottery windfall, deposit the winnings, and if you get a healthy tax refund, save that too because all of those extras will help you reach your goal sooner.
- Ask for cash in lieu of gifts. Your friends and family should be understanding if you ask for money towards your vacation fund instead of a birthday or Christmas present. Not to mention cash is easier to shop for.
- Use an online account. When you transfer your savings contributions to an online account, you remove access and make it less tempting to spend the funds that are earmarked for your vacation.
- Earn high interest. Online savings accounts will pay a higher rate of interest than a standard savings account or transaction account, so shop around for the highest rate and earn savings contributions from your bank as well.
Don’t Forget to Budget For…
If you’re stumped by the fact that no matter how carefully you calculate your vacation expenses, you always seem to go over your budget, then you may be forgetting to allow for certain aspects of your vacation, or you may be being too generous with your savings. Your vacation budget should include:
- Transport. This should include transport to and from your holiday destination, as well as transport once you are there. Also remember to allow for flights, as well as a taxi to and from the airport, for example.
- Insurance. Travel insurance is something you will always need, and always hope never to use. However, it is best to be covered and make sure you have a comprehensive coverage for anything from an injury to a lost handbag to delayed flights, as this can curb further budget blowouts.
- Accommodation. Look for the most inclusive accommodation and make sure you are staying somewhere central. You can save by staying just outside the city, but you will need to remember to budget for higher transport costs.
- Food and restaurants. You can easily blow your vacation budget on food if you’re not prepared. Therefore, budget for all meals, snacks, drinks and cravings; for example, if you decide to stay in the hotel and watch a movie one night, are drinks and chips in the budget?
- Tourism. As a tourist you want to take part in the local activities and come home with a few souvenirs, but make sure you set a realistic budget amount for mementos before you leave because you’ll not only pay for them when you buy them, but you’ll also have to pay for extra luggage weight on the plane home. Also budget for planned tourist activities or guides because while you can save by touring yourself, you can’t discover all the best spots on your own.
Also make sure to calculate your vacation budget based on the number of people travelling, and don’t assume that if two people are a certain price, four people will just be twice the price, because you could be paying even more, or you could negotiate a better deal for a bigger group.
There are also vacation costs you have left at home such as your mortgage or rent, power, water, rates and phone bills which still need to be paid even if you’re not home and will need to come out of your vacation savings, especially if you’re taking unpaid leave from work. Don’t forget to account for other vacation costs such as mail redirection and house-sitting, or boarding for your pets.
Keeping to a Realistic Budget
Making a budget is just the first step in sticking to that budget, and your task does not end there. To make sure your vacation budget sees you through until you’re back in your own bed, you need to be sure to include all costs to do with your holiday.
Guessing at the costs won’t make for a realistic and easy to follow budget either, so research the local costs of your holiday destination and take into account the exchange rate, both on the way there and on the way back.
You also won’t be able to keep to your budget if you leave it at home, so take your calculations with you so you know how much you have spent so far, and what else you still need to pay for. You can also update your budget along the way if you save some money. This can be as simple as a small pad of paper or using a smart phone tool to keep track of your spending. If your gadget has online access, budgeting sites such as Spending Profile allow you to enter expenses on the go, as you make them.
Alban is a personal finance writer at Home Loan Finder, where he offers home loan comparison advice as well as tips on how to choose the best home loan.