How to save for a holiday: a guide

Planning a holiday, whether it’s a staycation in the UK or a dream trip abroad, is an exciting treat we all look forward to. However, the cost can sometimes make it feel like an unaffordable luxury. With the right preparation and a few clever saving strategies, you don’t have to miss out.

In this guide, we’ll look at the importance of creating a budget, making your money work harder, and offer practical tips on how to save money for a holiday. This way, you can enjoy your trip without the stress of worrying about your financial situation when you return.

In 2023, Brits spent an average of £1,011 on their summer holidays. If we take into account those who travel abroad, the average spending is slightly higher, at £1,140 per person. While these figures provide a general idea, your own holiday budget will depend on several factors.

The amount you need to save will vary based on your destination, the duration of your trip, whether you’re travelling alone or with family, and what kind of experience you want. Are you planning a holiday on a shoestring, or do you prefer luxury and comfort? Saving money for travelling while staying in hostels will of course look different to a once-in-a-lifetime holiday in a high-end hotel.

You could start by thinking about where you want to travel, as your money will go further in some locations than others due to the varying cost of living. For example, average daily expenses for accommodation and food range from £18 in India to £211 in Barbados*. Considering these factors can help you set a realistic budget that will still give you the experience you want from your holiday.

Once you’ve picked your dream destination and set a target date, one of the most important tasks when working out how to save money for a trip away is to make a budget. Here, we list five steps you could take to budget and save for your holiday.

1. Start deciding how to save for your holiday well in advance to avoid any stress closer to your trip.

2. Make a list of all potential costs for your trip, including travel, accommodation, food, and activities. Having a think about how you spent your money during previous holidays can help you see where your money typically goes.

3. Consider your monthly income and set a clear spending limit based on your financial situation. One popular budgeting method is the 50/30/20 rule, where 50% of your income goes to essentials, 30% to your “wants” (including your holiday fund), and 20% to savings.

4. Use a spreadsheet or budgeting app to monitor your spending before and during the trip.

5. Adjust your budget if necessary to stay within your financial limits.

While expenses can vary from person to person, here’s a breakdown of what you might consider including in your holiday budget:

• Travel (flights, public transport, or petrol costs)

• Accommodation

• Travel insurance

• Local currency, if travelling abroad

• Food and drink

• Entertainment

• Holiday outfits

• Toiletries

• Day trips and excursions

It can be helpful to overestimate these costs, as chances are, you’ll be able to save money on some expenses if you book well in advance. Knowing how to save money on travel can free up a lot of your budget for other things.

You might also factor any unexpected expenses into your budget, as it’s often better to have some excess savings than having to miss out on experiences during your holiday. Some suggest putting 10-15% of your budget towards unexpected expenses.

Once you have a savings goal in mind, working out how to save money for travelling is the next step. It can help to look over your monthly spending habits to find areas where you can cut back, or creative ways to increase your savings. Here’s a list of saving strategies to help you get there:

• Automate your savings: Set up automatic transfers to a separate holiday savings account. This takes the effort out of saving up and transferring a set amount of money each month.

• Book early: Book accommodation and flights in advance. You can set up price alerts with your chosen flight booking platform, showing you the cheapest times to book. Buying travel money early on can also help you avoid airport fees.

• Choose wallet-friendly alternatives: Opt for budget-friendly accommodation options like hostels. Use public transport to save money on car hire and petrol costs.

• Be flexible: Travel during off-peak times and be flexible with dates to secure the best deals. Price comparison sites often allow you to choose nearby airports for cheaper options.

• Pack lightly: Maximise your hand luggage allowance by packing light, easily packable clothes.

• Check your mobile costs: Avoid unexpected data roaming charges by checking with your mobile provider for any fees. Look for special packages tailored to your destination to keep communication costs down.

• Get into the habit of saving: Look for small ways to save money every day, like packing your own lunch for work. Every little change makes a difference!

• Earn extra money: Boost your holiday budget by clearing out your wardrobe or garage, and selling anything you no longer need. 

• Use money-saving apps: Download apps that help you save money automatically. Some apps round up your purchases to the nearest pound and save the difference, making it easier to build a fund for your trip.

These suggestions can help you save up faster and enjoy a stress-free trip. For more tips on how to save money for a holiday or other savings goal, check out Raisin UK’s money-saving pages.

Wondering how to save for a holiday that’s coming up soon? If you’ve booked a last-minute holiday and need to save up to pay for it quickly, don’t worry - there are plenty of ways to catch up and build a pot of money fast. 

If you’re wondering how to save for a holiday in six months, you might consider opening a competitive rate notice account or a 6 month fixed rate bond to save for your holiday. Not only will these options help boost your savings in the short term, but they’ll also keep your money locked away until your departure date comes along.

If you’re on a tight deadline, it can be tempting to dip into your emergency fund. Regardless of how desperately you feel you need a break, it’s generally recommended to have a pot of savings kept aside for any unforeseen expenses. You don’t want to drain all your savings on your dream trip away, only to come home and find your car has stopped working, and you have no money left to cover the repairs.

Deciding how to save for a holiday isn’t just about stashing the cash away - you ideally want to earn interest on your savings. If your travel date is further out, you might consider setting up a dedicated savings account.

If you prefer a structured approach and are new to saving, a regular savings account might be right for you. With this account, you commit to saving a set amount each month, gradually building your holiday fund.

Alternatively, you could transfer any money you’ve initially saved to a higher-interest savings account such as a fixed rate bond. This way, your money can earn interest, helping you to reach your savings goal more quickly. 

Fixed rate bonds come with a set term, typically between six months and five years. With this account, you’re less likely to withdraw your money on the spur of the moment, and your savings remain locked away until you’re ready to use them.

There are ways to keep costs down during your holiday to avoid going over-budget. We’ve listed some ways to help you save money:

• Bring along snacks and picnic food for day trips to avoid pricey restaurant bills.

• Opt for self-catered accommodation and shop at local supermarkets to save on dining out expenses.

• Wander away from the tourist hotspots to find places where the locals hang out. Not only will you save money, but you’re also likely to get a more authentic experience.

• Consider if you have friends or family that can put you up, or find hosts through platforms like CouchSurfing for a cost-effective accommodation option.

• Look into tourist passes to save on travel costs within the region. Buses, trams, trains, or even hiring a bike can be a budget-friendly way to explore. Plus, cycling around big cities lets you soak in the sights at your own pace.

• Research free walking tours. These tours often operate on a donation basis, making them a cheaper way to experience the local culture.

Saving for a holiday is easier when you get your money to work for you. Whether you prefer the flexibility of an easy access savings account or the competitive rates of a fixed rate bond, there’s an account to suit you at Raisin UK. All you have to do is register for a free Raisin UK Account, choose from a range of bank and building society accounts, apply to open, transfer your funds, and watch your money grow!

Note: The contents on this page serve as general information and do not constitute financial advice. 

*https://www.rolcruise.co.uk/blog/how-much-does-it-cost-to-travel-the-world