Got your eye on that cruise around the Mediterranean? Or maybe it’s time to take on the challenge of trekking in Nepal? Whatever your travel dream is, it’s better to have the cash on-hand so you’re left with great memories after your holiday and not debt. Here are some ways you can save enough to fund your dream holiday.
1. Do your research
Whether you’re going on a package holiday like a cruise or tour or travelling independently, you’ll need to look at upfront costs (flights, visas, tour costs), daily expenses (meals, accommodation) and have some extra cash for things like emergencies and souvenirs. Your expenses can vary hugely depending on where you’re travelling. Resources like a guidebook, wikitravel, Trip Advisor and online travel forums can be extremely helpful in understanding the costs for your destination.
2. Set realistic goals
If you’re dreaming about that cruise to Antarctica or another once-in-a-lifetime adventure, consider how long it might take you to save the money and how realistic this is for you in the timeframe you had in mind. This might mean you need to postpone the holiday and take longer to save or perhaps choose a less pricey holiday this time.
3. Set a budget
Once you have your savings goal and a deadline, you’re ready to set your budget. Our Finance Writer Alexandra Cain has some great tips on setting up a budget here. As a starting point you want to understand your income and your expenses and identify the difference between the two. For example, if you’re saving for a holiday in 12 months that you expect to cost you $10 000, you’ll need to find savings of $833 per month. Once you outline what’s left after your expenses are taken out of your income, you can see how realistic this goal is.
4. Look at areas you can cut back
There are always expenses we simply can’t do without. Fixed costs like rent or mortgage repayments, energy, water and phone bills and of course any transport costs are a must, but you can always look at how to reduce these. Would a cheaper phone plan be possible for you? What about catching public transport or better yet walking or riding a bike to work to save on transport costs?
Once you’ve reduced a couple of your fixed costs, it’s time to move on to your discretionary spending. It’s easy to want to order-in after a long week of work but cooking your own meals from scratch can save significant money over only a few months. Similarly reducing your takeaway coffees or cutting out your media subscriptions are small things that will add up over time.
5. If you don’t see you don’t spend
Once you have your budget and have started cutting back, it’s a great idea to have a separate account to stash away your travel funds. There are upsides and downsides to different savings products so it’s important to do your research to find the best product for you.
An Online Saver account will offer you a lower rate of interest but a higher level of flexibility to access your money if you need to without penalty.
A Bonus Saver offers a higher rate of interest but receiving these rates usually has conditions around how often you can withdraw. This option is good if you require less flexibility to access your savings.
A Term Deposit is a great option for those who have a longer period to save and an initial deposit they would like to invest. This would suit someone who isn’t planning to take a holiday in the near future but is potentially planning a dream holiday in the next few years for a life milestone like a 40th birthday, honeymoon, or upon retirement.
6. Tell the people you love about your goal
If your savings goal means behavioural changes, it’s a good idea to let your friends and family know about it. This way they will understand when your turn down that invitation to Friday drinks or dinner at an expensive restaurant. Your friends and family can often be a great resource to support you as well – offering their savings advice and opting for less expensive ways to catch up.
7. Celebrate your success
If you are saving over the long-term it might be hard to keep the motivation going. It’s a good idea to set milestones to celebrate like heading out for a nice dinner when you hit a specific savings target. This will help you stay on track as well as being proud of your savings achievements.
If you’re interested in talking with us about how we can support your financial goals, please pop into a branch, look at our savings products here or give us a call on 132888.
Please note that this article is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs.