5 Steps to Save for Your Next Holiday

Posted In: Plan Your Travel

We travel as much as we can.  Luckily in Australia, it is standard that everyone with full time employment receives a minimum of 4 weeks annual leave or holidays every year.  On top of that we get on average 10 public holidays a year (this include Christmas and Easter).  Many employers now also give employees the option to “buy” annual leave.  This means, for example you can take an extra weeks leave (making it 5 weeks a year) and reduce your annual income by one weeks pay spread out over the year.

But how do you save to be able to travel some or all of that time?   These are 5 steps on how we have saved and continue to save for our holidays.  They work for us.  But you need to work out if they can be helpful to you.  (Note – if you are unsure about your finances, you can always talk to an accountant or financial adviser)

I hope these 5 steps will help you think about how you can save for not only your next holiday, but for many more into the future.

Step 1: How Much Can You Save From Each Pay?

Your first step is to realistically work out how much you can save from each and every pay to put away for your holidays.  And I do mean “realistically”.  If you say you can put away $200 per pay but that is a struggle and realistically it was more like $100 per pay, you will probably need to dip into your holiday savings for things other than your holiday.  You don’t want to be doing that.

Also, work out the amount per pay.  For example, if you are paid weekly, how much can you put aside each week, not each month.  If you are paid monthly, how much can you put aside each month.

So how do you work out how much you can save?  It means working out a budget.  Noooo!!! I hear you scream!  It’s easy for me, I’m an accountant.  But a budget isn’t hard to work out if you don’t have one.  Work out what your income is (if you have two incomes, include both) and work out your expenses (including those nasty yearly expenses such as insurance and car registration).  Once you have worked out your budget (and hopefully you have extra funds available), work out how much of those funds you want to include in the new line on your budget – Holiday.

Worked out an amount?  Great.

Step 2: Open a separate bank account for holiday savings

Open a separate bank account for your holiday savings.  Why?  So you are less inclined to dip into those funds for reasons other than your holiday.  If the bank account is only for holiday savings, the only time you should be making withdrawals is to pay for holiday related expenses such as airfares, accommodation or withdrawing spending money for the trip.

step 3: open the bank account at another bank

Consider opening your holiday savings account at a bank where you don’t hold other bank accounts.  Why?  It makes it harder for you to withdraw funds from.  If you have the account at the bank where you usually bank, whenever you log into internet banking you may be tempted to dip into your holiday funds for another reason.  Don’t get me wrong, sometimes you need to access those funds in an emergency and that’s ok, but you want to make sure you’re not tempted to simply spend the money when you don’t need to.  If your holiday account is with another bank, you have to log into that bank’s internet banking facility to transfer funds.

step 4: select the bank account that's best for you

The last thing you want is to open a bank account to save for your future holidays and watch bank fees chew into your balance.  When working out the best bank account to use consider the following:
 
  • You don’t want to pay bank fees if possible.  The first preference is of course, to find a bank account that doesn’t charge fees.  If there are bank fees make sure they won’t be more than the interest you will receive otherwise you will be going backwards.
  • Try to find a good interest rate.  This is pretty hard with the current economic conditions, but shop around.
  • Some banks offer bonus interest, for example if you make at least one deposit and no withdrawals in a month.
  • Don’t be tempted to get an ATM card on the account – you don’t want the temptation of making withdrawals that aren’t holiday related.  If the bank does give you one, put it away for safe keeping (and not in your wallet or purse).

step 5: set up an automatic transfer after each pay day

Make it as easy as possible to save for your holiday.  Arrange for your holiday budget amount to be automatically transferred to your holiday bank account a day or two after you receive your pay.  If you are paid weekly, that means it’s a weekly transfer.  Don’t leave it until the end of the month – you may have already spent your holiday money on other things.  Just check with your bank that they don’t charge fees for automatic transfers.

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5 Steps to Save for Your Next Holiday
5 Steps to Save for Your Next Holiday

Do you struggle to save for a holiday? If you do, follow this guide on how to save for your next holiday and all your future holidays.

#travel #saving #holidays #holidaysavings
  • Avatar
    Theresa Goodrich
    May 4, 2019

    These tips are great because they’re so practical. Having an account at a separate bank is a great idea! Coming from the U.S., four weeks of vacation sounds luxurious. If I weren’t self-employed I would consider moving to Australia!

    • Lisa
      Lisa
      Theresa Goodrich
      May 4, 2019

      Thanks Theresa. It is our tried and tested method of saving for travel that we’ve used for a long time. And four weeks leave a year is definitely amazing!

  • Avatar
    April
    May 4, 2019

    I never thought about opening a separate bank account. I’m pretty good at knowing what money I have in savings and what it’s alloted for. I always put money aside each month, but I also do what I can to not spend money needlessly – so no going out for lunch during the work week, no going out to dinner because I’m feeling lazy, etc. But your tips are certainly a strong start.

    • Lisa
      Lisa
      April
      May 4, 2019

      Thanks April. We use a separate bank account as it’s a way of putting it away and not thinking about it until you need it to pay for your travel. And having it at a different bank means that when logging into internet banking you’re not tempted to transfer money from it for other reasons.

  • Avatar
    Pia
    May 4, 2019

    Yep, I save travel money the exact same way and it works very well. Thanks for the tips.

    • Lisa
      Lisa
      Pia
      May 5, 2019

      Thanks Pia. It’s tried and tested for us too and allows us to travel whenever we want.

  • Avatar
    Alex
    May 5, 2019

    These are great tips! I’ve always been a big saver but I know it can be really difficult if you’re not in a saving ‘routine’

    • Lisa
      Lisa
      Alex
      May 5, 2019

      Thanks Alex. It’s so true, it really is all about a savings routine.

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