Everything you need to know about saving for a holiday
Table of Contents
How much do I need to save for a holiday?
An average family holiday costs around £2,400*, and many of us know that whatever budget we set ourselves, there’s a good chance we’ll overspend. If you’re saving for a holiday, the best starting point is to work out the cost per person. Your budget will, of course, depend on your destination, how long you want to go away for and how much you will spend when you are on holiday.
Once you’ve figured out your budget and savings goal, it’s time to think about how to save for your holiday.
Holiday savings tips: What is the best way to save?
There is no perfect way to save for a trip to your dream destination, but some holiday saving tips that might be useful when growing your holiday savings pot include the following:
Finding extra money
You may think it’s not possible to simply “find extra money”, but it might surprise you quite how much you can do to make your money work harder. You could try reviewing your household bills to see if you have any unnecessary expenditure, or if there’s anything you could forego while you save. Think about your subscriptions, TV plans, or switching to a different and cheaper energy supplier.
You could also try reviewing what you spend each day. For example, you could cut down on the number of coffee runs or how often you eat out, perhaps getting together with friends or family at home rather than at a restaurant or cafe. As well as saving you some money, you might find this a nice change of pace.
Opening a holiday savings account
Committing to saving a regular sum each month can help you achieve your holiday savings goal. You could try the following:
- Save a small amount at first. Saving £4 a day, for example, means you’ll have £1,460 in a year.
- If you find you can save a small amount, try increasing it. You’ll soon find your savings add up.
- Consider saving with a friend or family member, as knowing someone else is saving with you can help you to stay motivated to save enough for your dream holiday.
What are the best savings accounts to consider when saving for a holiday?
You might want to consider depositing your money into a holiday savings account. Savings accounts can help you resist the temptation to spend your money, and you’ll also earn interest that will grow your holiday savings. Make sure you shop around and compare the right type of savings accounts for you.
Savings accounts to consider include:
Fixed rate bonds
A fixed rate bond offers competitive fixed interest rates and could be right for you if you can save a lump sum towards a once-in-a-lifetime future holiday. As the interest rate you’ll earn won’t change, you’ll know exactly how much you’ll get at the end of your fixed term, which can be six months, as well as one, two, three and five years.
If you don’t know when you’ll be going on holiday, or you simply want the flexibility to withdraw your money at a date of your choosing, opening a notice account might be a better choice. A notice account offers competitive variable interest rates and gives you the freedom to withdraw your money after a set notice period, typically between 30 and 90 days.
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