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How To Budget

How to Budget for a Holiday

For many, the holidays we take are our most expensive item of luxury expenditure every year. If you have a family, your holiday costs can really spiral though.

However, we all need those one or two weeks away from the stresses of modern life and work to recharge our batteries. For people or families on a budget, what are the best ways to go about getting the most holiday for the least money?

First, we’ll look at mix-and-match holidays – that’s where you choose and book the flights and the accommodation yourself. Then we’ll consider all-inclusive and package holidays. Finally, we look at how to raise the money you need for your time abroad.


Mix and match holidays – before you go

The opportunities to make savings start a long time before you book. The first thing you need to do is to set a budget for the flights, where you’ll be staying, how much you’ll need to spend on insurance, and what your cash spending limit will be. Don’t forget to factor in other items like car hire, sun cream, new clothes, swimwear, medicines, and toiletries.

When you budget, how much are you planning on spending on trips out, treats, entertainment, and your food and drink?

Once you’ve worked all this out, you’ll now know your maximum holiday budget. So how you can go about reducing that budget to either save money or allow yourself to do more when you’re away?

  • Save on flights – the days and times you set off and fly back can save you literally hundreds. Skyscanner, Kayak, Expedia, Bookingbuddy, and Travelsupermarket can help you. Using Kayak on a trip from Newcastle Airport to Ibiza Airport, we were quoted £139 return by Jet2 using direct flights. Other flights came back at £330 return with one deal flying us back to Newcastle from Ibiza via Madrid and Heathrow. Overnight travel offers even further savings.
  • School holidays – the last week in August and the following first week in September offer scope for real savings. October half-term holidays can also offer big discounts over the summer period.
  • Be careful with your luggage – if you take too much on holiday or your case is too big, you’ll pay a lot for it.
  • Car hire and parking – it’s nearly always cheaper to hire a car and book your parking space before you go on holiday than it is when you get there.
  • Want to be near water? If you’re staying in a villa, a private pool will add hundreds of pounds a week to your stay. Try booking somewhere near the beach instead.
  • Financial and health – stay clear from airport bureau de changes – you’ll pay far more to them than if you use your debit card in a cash machine, even abroad. Book your travel insurance while in Britain, negotiate the best roaming deal with your mobile phone provider (or buy a pay-as-you-go SIM in the country you’re travelling to) and remember to get your free European Health Insurance card and get your inoculations done at your local GP’s.

When you’re booking or you’re at the airport, turn down every opportunity to spend money. Buying food or drink at an airport is eye-wateringly expensive and airports are not renowned for the quality of their culinary offering – better just to make your own and take it with you.

If you’re planning on days out and excursions when you’re abroad, see what’s available to book online when you’re in the UK.

And don’t forget that if you’re travelling outside the EU, there’s tax- and duty-free shopping you can take advantage of.


Mix and match holidays – when you’re there

To really experience the sights, sounds, and smells of your holiday destination, you can buy a travel pass to give you unlimited use of buses, trains, metros, and trams while you’re there. Many cities also offer a sightseeing pass – with these, you get inclusive access to museums, theatres, the sights, and more together with free public transport and discounts when you visit participating retailers, bars, and restaurants.

If you’ve hired a car, it makes sense to get it insured – IcarHireInsurance offers 65 days’ continuous cover for up to £6,000 for £39.99 at time of writing (many other providers are available). You probably won’t be involved in any accidents or prangs but if you are, being insured will work out much cheaper for you than paying for damage to a car. As with the UK, fuel is normally cheaper at supermarkets abroad. In Europe, the use of toll roads is much more prevalent so make sure you download a map of the region of the country you’re visiting to your sat nav or mobile phone and, when entering a destination, select the “toll-free road only” option.

Food and drink cost can mount up when abroad. You may remember recently reading about the party of Japanese tourists who were charged £970 for four steaks, a plate of fried fish, water, and service. When you’re overseas, restaurants are cheaper either at lunchtime or if you order from the fixed-price menu. You should insist on tap water instead of mineral water – just like here in the UK and remember that it’s tradition for many bars and restaurants to charge you more for food and particularly drink if you’re sitting down at a table to eat it.


All-inclusive holidays

Millions of Britons love taking an all-inclusive holiday every year. You get three meals a day, alcoholic drinks, soft drinks, and other services included in the price. Many all-inclusive holiday makers make a point of taking no money with them on holiday, taking full advantage of the facilities on offer from their chosen resort.

Are they really cheaper though? Recent evidence suggests that they still are although the gap is beginning to narrow between all-inclusive holidays, standard hotel-based holidays, and self-catering holidays.

In research carried out by Post Office Money and reported in the Express newspaper, an all-inclusive package to Marmaris in Turkey was 27% cheaper than a bed-and-breakfast hotel – £462 in savings. Savings in Majorca were 24% as Brits spent an average of £321 more on holidays they took which did not include the benefits of an all-inclusive deal.

Families with kids benefited most as 43% of respondents to the survey told researchers that all-inclusive holidays cuts “the cost of kids’ meals and drinks”.

The same newspaper, in a different report, compared the prices of all-inclusive and self-catering holidays. Reporters discovered that self-catering holidays were much cheaper than all-inclusive holidays or holidays in hotels which were either half-board or full-board. However, when the cost of food, drink, and other services and amenities were added, all-inclusive came out cheaper again in most cases especially if “you’re planning on having more than one beer a day or a mid-afternoon snack every now and again”.


You now have your budget – how to save up

Paying by cash is almost always cheaper than paying by credit card unless you can settle your entire balance when you next pay your bill. If you don’t pay it off straight away, then you could end up paying hundreds of pounds’ worth of interest that you don’t need to. On the other hand, if you pay by cash, you don’t have the same protection under the Consumer Credit Act that paying by credit card automatically offers you. Why not pay £100 towards the holiday on card as a deposit and the rest in cash if possible?

As soon as you know much you have to save up, try to put aside spare cash every week. Keep the money in a safe place and don’t dip into it for day-to-day spending. If you can, you can take the money to a bank or building society and open a savings account or an ISA. You won’t earn a great deal of interest on it, but it will be safer than if it’s stored somewhere in your home.

When you’re on holiday, if you want to spend money in bars, shops, or restaurants when you’re abroad, try to pay only in cash you’ve taken out early – leave the card back at your hotel. Having a credit or debit card on you only increases temptation to overspend and we’re all prone to buying ourselves something special on the spur of the moment when we’re abroad and the sun is pleasantly beating down upon our back.

That perfect holiday is within your reach and it will feel all the better to know that when your plane lands back in Britain, you’ve come back having spent only the cash you’d budgeted for and saved.