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Do you struggle with how to save for a holiday? If you’re unsure where to start, you’re not alone! Saving money can feel overwhelming, but it doesn’t have to be. I’ve been saving for holidays for 25 years and want to share my tried-and-tested method with you. With these five steps, you’ll be on your way to saving for your dream vacation.
We travel as much as possible, and living in Australia gives us a good amount of annual leave. In Australia, full-time workers are entitled to at least four weeks of annual leave every year. That’s a solid month of vacation time to explore! In addition, we get about ten public holidays each year, including Christmas, Easter, and other special days.
Some employers even allow employees to “buy” extra leave. For instance, if you wanted five weeks of annual leave instead of four, you could take another week off and spread the pay reduction over the year. This flexibility means more time to travel, but how can you afford to make the most of that time off?
Saving for a holiday is easier said than done. You’ll hear advice like skipping your morning coffee to save $5 a day, but does that really help? The reality is that even if you skip your daily coffee, you might end up spending that $5 on snacks later in the day or other small purchases. To make a real difference, you need a system that helps you save money without spending it on something else. So, let’s get into it – here are five practical steps for how to save for a holiday. But these steps aren’t just for saving for one holiday, this process allows you to save for all of your future holidays.
For tips on visiting Iceland, see our Iceland Travel Guide.
The first step on how to save for a holiday is working out how much you can set aside from every pay. Be realistic about how much you can save. If you aim too high, like saving $200 per pay, but then struggle, you might dip into your holiday savings for other things, which defeats the purpose. It’s better to set a manageable goal, like $100 per pay, and stick to it consistently.
You should also consider the frequency of your pay. Are you paid weekly, fortnightly, or monthly? Knowing this will help you decide how much to save each time you’re paid. For instance, if you get paid weekly, work out a weekly savings goal. If you’re paid monthly, decide how much you can afford to save each month.
But how do you work out how much to save? It all comes down to one word: budget. I know that budgeting can sound intimidating, but it’s crucial for determining how much money you can realistically put towards your holiday. Start by calculating your income – include both salaries if you have a dual-income household. Then, list your expenses, including bills, groceries, and yearly costs like car registration, insurance and home maintenance. Once you’ve outlined your expenses, see what’s left over. That extra money can go towards your holiday savings.
If you don’t already have a budget, now’s a great time to make one. A budget gives you a clear picture of where your money is going and where you can cut back. After you’ve calculated your income and expenses, allocate a portion of your leftover funds to your new budget line: Holiday Savings. You’re ready for the next step once you’ve figured out how much you can save from each pay.
We have visited New Zealand a number of times (it is close to Australia). For tips on visiting New Zealand, see our New Zeland Travel Guide.
Now that you know how much you can save, it’s time to find the right place to put your money. Opening a new savings account specifically for your holiday fund is essential. However, not all savings accounts are created equal, so you’ll need to do some research.
The first thing to look for is an account that doesn’t charge fees. Bank fees can eat into your savings, so try to find a no-fee account if possible. If you can’t avoid fees, make sure that any interest you earn will cover them so that your balance doesn’t end up shrinking instead of growing.
Next, check the interest rates offered by different banks. While interest rates aren’t great in today’s economy, every little bit helps. Some accounts offer bonus interest if you meet specific conditions, such as making a deposit each month without any withdrawals. These features can help your savings grow faster, but read the fine print and understand what’s required to earn the bonus.
Putting your holiday savings in a dedicated account makes you less likely to spend that money on everyday expenses. Plus, if you choose an account that offers competitive interest rates, you’ll earn a little extra while your money sits there waiting for your trip.
For tips on visiting Thailand, see our Thailand Travel Guide.
Here’s an incredibly useful trick: open your holiday savings account at a bank where you don’t have any other accounts. It’s harder to access the money on a whim.
When all your accounts are at the same bank, it’s easy to see your balances and transfer money between them, especially with Internet banking. This can be tempting when you see a sale on something non-essential or an unexpected bill comes up. Keeping your holiday savings in a different bank will make you less likely to touch that money unless it’s for a true emergency.
Of course, emergencies happen, and sometimes you’ll need to dip into your holiday fund. That’s okay! The point is to make it harder to access the money casually. When your holiday account is at another bank, you’ll need to go through the extra step of logging into a separate online banking system to transfer funds. This small inconvenience can be enough to keep you from spending the money on things that aren’t related to your trip.
For tips on visiting Sri Lanka, see our Sri Lanka Travel Guide.
Once you’ve chosen the right bank and account, it’s time to open your holiday savings account. Make sure this account is only for your holiday fund. That way, every time you deposit money or withdraw it, you know exactly what it’s for: your vacation.
When opening the account, resist the temptation to get an ATM card for it. Having easy access to the account via an ATM card increases the temptation to withdraw cash for non-holiday reasons. If the bank automatically issues you a card, don’t keep it in your wallet or purse. Put it away in a drawer at home so it’s not within easy reach. This will help you stick to your savings plan and avoid using the money for anything but your holiday.
The idea is to make withdrawing money from this account as difficult as possible unless you’re spending it on your trip. Whether you’re paying for flights and accommodation or pulling out spending money for your holiday, those should be the only reasons to touch this account.
For tips on visiting Japan, see our Japan Travel Guide.
The final step is to make saving for your holiday as easy as possible by setting up an automatic transfer. It’s an essential part of how to save for a holiday. This ensures that a set amount of money is transferred from your main account to your holiday savings account after every payday. By doing this, you don’t even have to think about it – the money will be saved automatically.
If you’re paid weekly, set up a weekly transfer. If you’re paid monthly, set up a monthly transfer. The key is to transfer the money as soon as possible after payday so that you don’t accidentally spend it on something else. This is why it’s essential to have a realistic goal from Step 1. You don’t want to struggle because you’ve over-committed to your holiday savings.
Also, check with your bank to ensure that they don’t charge fees for automatic transfers. Most banks offer this service for free, but it’s always good to double-check.
You’ll stay on track by automating your savings without even thinking about it. You’ll be surprised at how quickly your holiday fund grows when you’re consistent with these transfers. Before you know it, you’ll have enough money saved up for a fantastic trip!
Saving for a holiday doesn’t have to be stressful or complicated. By following these five simple steps on how to save for a holiday, you can save for your dream trips year after year.
These steps have worked for me for over 25 years and can work for you, too. The key is to be disciplined and consistent. Start small if you need to, and as you get into the habit of saving, you can gradually increase your contributions. With a little planning and effort, you’ll be jetting off on your next holiday before you know it. Happy travels!
Has your suitcase ever gone missing when travelling? Try packing using my Half and Half Rule.
Hi, I’m Lisa, a 50+ retired chartered accountant. My husband, Darren, and I explore the world every opportunity we get. Staying fit is key to our adventures, from hiking the Inca Trail to scuba diving. We call Australia home but travel overseas often, always eager to discover new cultures, bustling cities, cuisines, nature and wildlife.
We would love you to join us on our journeys and hope that our adventures give you encouragement to explore this amazing world.
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