When trying to draw up your budget for the year, it can be complicated trying to understand how much of your income should go towards holidays. After all, it’s not really a monthly expense and is likely a once or twice-a-year event.
How much you should spend on holidays is very personal and depends on your total budget. We would recommend spending no more than 5-10% of your post-tax income on a holiday every year.
How Much Of Your Household Income Should You Spend On A Holiday?
How much you spend on holidays will really depend on your own personal budget. If we follow the 50/30/20 budgeting plan you have 30% of your income towards wants. Before even thinking about holidays you should ensure that your housing, bills, food, and necessities are covered. You should also be saving around 20% of your income.
The other 30% is left over to do whatever you want with it. If you’re someone who wants big extravagant holidays then 2/3 of the “Wants” money might have to go towards your holiday budget. You won’t have very much left over for entertainment the rest of the year though.
A reasonable amount to put towards holidays is around 5-10% of your total income. This allows you to still have 20-25% of your income to enjoy yourself the rest of the year.
Earning £25k a year leaves you with £21,022 after tax. This means you could reasonably spend £1051 on a holiday each year at 5% of your income. This of course is only if your essential needs are covered by your salary and you have some savings set aside.
What Is The Average Per Person Spent On Holidays In The UK
The average UK person is expected to spend £943.40 on holidays in 2023 according to a report from vouchercodes.co.uk.
What Is The Average Amount Spent By Families In The UK
The average household is expected to pay £1,850.80 on travel in 2023 according to the same report.
Ensure To Include All Expenses In Your Budget
When budgeting for your holiday you want to ensure you include everything. We often think about the upfront costs of flights and accommodation. However, when you arrive, depending on what you’re doing, you may end up spending as much while you are there.
When planning for your trip, you want to make sure to include all costs of:
- Travel while there (Taxis, Trains, Bus etc)
- Day Trips and excursions
- Food and drinks
- Sun creams, holiday clothes and more
- Anything else you plan to do
Once you have an idea of the total trip cost, you can start to plan how you will get there.
Should You Include Holiday Costs In Your Monthly Budget
Personally, I would recommend including it in your monthly budget. This allows you to plan ahead and save money over the course of the year, rather than having a big blowout in one single month.
This way when it comes to booking, you are prepared, have the money ready to go, and don’t have to worry about taking on debt to go away.
Do Not Go In Debt For Holidays
I see so many people go into debt to go on holidays and it’s a huge financial mistake. Getting yourself into debt for something you couldn’t afford in the first place is a terrible idea. If you want to go on holiday simply save a portion of your paycheck each month and purchase your holiday with those funds.
If you couldn’t save the money upfront this year, prior to the holiday, how do you expect to pay the same amount back next year with interest on top? This is how people end up in a death spiral of debt. Avoid it at all costs.
If you want to save money for a holiday and get great interest on your savings I highly recommend Chip. Your money is also in a separate account, outside of your main account where you would be more likely to spend it.
Chip is an award-winning savings and investment app. They became popular with their high-interest savings account but also offer investment services and automatic saving.
How To Save On Holidays
1. Start Planning Early
The sooner you start looking for deals, the more likely you are to find the best prices on flights, accommodations, and activities.
2. Travel in the Off-Peak Season
Consider traveling during the shoulder or off-peak season. Not only will places be less crowded, but prices can be considerably cheaper.
3. Use Price Comparison Websites
Websites like Kayak, Skyscanner, and Trivago can help you compare prices across different service providers to ensure you get the best deal.
4. Book Flights on Weekdays
Research suggests that booking flights on Tuesdays or Wednesdays can often yield lower prices.
5. Consider Alternative Accommodations
Skip the hotel and try vacation rental platforms like Airbnb, Vrbo, or even Couchsurfing for a more budget-friendly stay.
6. Use Public Transportation
Using local buses, trains, and trams can be much cheaper than taxis or car rentals. Plus, it gives you a more authentic experience!
7. Cook Your Meals
Instead of dining out for every meal, consider cooking at your accommodation or trying local street food which can be both delicious and affordable.
8. Take Advantage of Free Attractions
Many cities offer free museums, parks, and cultural events. Do your research and fill your itinerary with these cost-effective options.
9. Use Loyalty Programs and Credit Card Points
If you travel often, make sure you’re part of airline and hotel loyalty programs. Also, certain credit cards offer travel rewards and points that can save you money.
10. Set a Daily Budget
By allocating a certain amount of money to spend each day, you’ll be more conscious of your expenses and less likely to splurge.
11. Avoid Tourist Traps
Areas frequented by tourists tend to have inflated prices. Venture off the beaten path for a more genuine (and affordable) experience.
12. Pack Smart
Avoid excess baggage fees by packing only what you need. This will also save you the hassle of lugging around a heavy suitcase.
13. Purchase Travel Insurance
While it may seem like an additional expense, travel insurance can save you money in case of unexpected events like cancellations or medical emergencies.
14. Stay Connected Affordably
Instead of racking up roaming charges, buy a local SIM card or use free Wi-Fi spots to stay connected.
15. Travel in Groups
Traveling with friends or family can reduce costs as many expenses such as accommodation or transportation can be split.
You should now have a rough idea of how much to spend on your holiday. If you’re someone who loves holidays and traveling then you may allocate more of your budget towards it than others but you should always ensure your necessities are paid and you are putting money in savings each month.
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