At MW Wealth Management we are dreaming of our next holiday. Here is a good savings plan from www.moneyadviceservice.org.uk to ensure your holiday won’t disrupt your financial goals.
Putting your holiday on a credit card can add hundreds of pounds to the cost. Save up for it and you’ll come home relaxed, not restless with money worries.
- Cash or credit card?
- Step 1 – Set a budget
- Step 2 – Start saving
- Step 3 – Stash your savings
- Step 4 – Watch your savings grow
Step 1 – Set a budget
This will stop the cost of your holiday spiralling out of control by avoiding ‘extras’ you haven’t planned for.
List all the things you’ll need to buy, including:
holiday clothes and swimwear
sun cream and toiletries
Then estimate the amount you’ll spend each day on:
food and drink
Add these costs together and you have your savings goal.
Step 2 – Start saving
Did You Know?
Research shows that people who treat saving as a regular expense are more likely to reach their goals than people who try to save whatever is left at the end of the month.
Source: ‘Transforming Financial Behaviour: Developing interventions that build financial capability’, CFEB (2010)
You don’t miss what you don’t have. Treat saving the same as paying a bill, and commit tosaving a regular sum each month or week.
But be realistic – it’s better to commit to a small, manageable sum than to try too hard and give up.
Name your goal
Whether it’s a family trip to Tenerife or a romantic break in Rome, naming your goal will keep you motivated.
Try labelling a separate savings account with the name of your goal, or sticking a chart onto the fridge – whatever will help you keep track of your progress.
Step 3 – Stash your savings
Set up a regular payment to transfer a set amount into your savings account each month.
It’s time to start thinking about where to stash your savings.
You might start with a coin jar, 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.
Your bank account may let you set up a separate pot for your holiday goal online, so check if this is possible
Step 4 – Watch your savings grow
Check your savings regularly to see how you’re 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 until all your trips are credit-free. And remember to take your money-saving habits on holiday with you.
You should review your savings account often to check you’re getting the best interest rate.
Make sure you use as much of your yearly cash ISA allowance as possible so you don’t pay tax on the interest you earn. Many ISAs tempt you with a bonus introductory rate but then fall back to dismal rates.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.