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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. This table shows how much on average we spend per person on holidays each year:
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.
Learn how to save:
7 holiday savings tips: What’s 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:
1. Make it automatic
As we mentioned above, one of the most effective ways to save for a holiday is to factor a set amount in your monthly savings amount as an expense. You might want to set up a standing order that leaves your current account on the day you get paid each month. That way, you’ll be saving without really realising it. This is also known as ‘paying yourself first’.
2. Create a bespoke budget plan
A detailed budget plan designed around your income and outgoings is the perfect first step to take for any savings goal. To do this, you should review your monthly income against all of your expenses and pull them all together into one document so that you can see what you’re left with each month. Having a list of your monthly expenses is also a great way to see what you can and can’t live without, giving you further ideas as to where you can make savings.
3. Keep a spare change jar
We all have loose change lying around somewhere, and it adds up. By having a spare change jar that your entire household can contribute to, you’ll be able to cash in money you never even realised you had. While you’re unlikely to get thousands from a spare change jar, you might be able to use it for treats, activities or essentials while you’re away.
4. Look out for offers
By signing up to emails from your favourite package holiday providers, airlines and hotels, you’re likely to receive exclusive discounts and offers as well as notifications of any last-minute cancellations offered at a discounted price. However, be sure to clear both your cookies and your search history frequently, as website algorithms may drive prices up if they know you’ve got your eye on a certain date or destination.
5. Participate in savings challenges
If you have a competitive nature, a savings challenge could be a great saving tactic for you. With both short-term and long-term savings challenges available to follow, you could save for a holiday a year in advance by doing the 365 challenge, which starts with saving just 1p and building it up each day, eventually reaching £3.65 on your final day. This will save you £670, which is a great option if you’re on a tight budget.
6. 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.
7. 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.
Easy access savings accounts
Easy access savings accounts are a flexible savings option, as they give you the freedom to top-up and withdraw money whenever you need to. They offer competitive variable interest rates, and you can keep your account open for as long as you want, so you can save for all your future holidays in one place.
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