BLOG: It pays to plan ahead with holiday savings
With summer finally here, many people up and down the country will be looking forward to a well-deserved break. However, the cost of living rise has undeniably had a big impact on budgets, and some people are facing the reality that a holiday abroad is now an unaffordable luxury.
To establish the impact of the current cost of living rise, First Direct commissioned a survey to explore how people’s holidays are being affected by everything that’s going on at the moment.
The survey revealed that six in ten people have seen the cost of living rise have a direct impact on their holiday plans – so much so in fact, that one in five cancelled their holiday altogether.
But, getting a break in the sun is still a top priority for half of Brits – and big sacrifices are being made in order to ensure this happens, even if it means making financial cutbacks elsewhere.
Holiday remains top priority for half of Brits
Despite the challenges and stretched budgets, 47% of Brits confirmed they were determined to go on holiday abroad this year.
Unsurprisingly, this figure rose to nearly two thirds among younger age groups, with 63% of 18-25 year-olds and 65% of 26-31 year-olds prioritising going on holiday this summer – perhaps making up for lost time after the pandemic.
Younger millennials (26-31 year-olds) were the most likely age group to make financial sacrifices so they can get away – and they made substantially more than the national average. Among that group, 85% said they’d reduced their spending in order to be able to afford a holiday, ranging from giving up small luxuries to regular expenses.
However, Gen-Z (aged 18-25) wasn’t far behind with 81% making cuts. This is against a national average of 64% – which shows younger age groups are doing a lot to make their holidays happen.
Some of the most common sacrifices for 26-31 year-olds included reducing the volume of takeaways and eating out (35%), cancelling regular memberships such as the gym or subscriptions such as Netflix (29%), buying fewer new clothes (24%) and going on fewer nights out (22%).
Top financial tips ahead of holiday season
The research also revealed that Brits are cutting back so their holidays are more affordable, on top of making sacrifices in the run-up. The most common measure was reducing their holiday spending budget, with more than a quarter of Brits (27%) committing to less spending money.
More than one in five (22%) went as far as changing their holiday destination, while 19% chose cheaper accommodation. One in 10 (12%) travelled with hand-luggage only to save costs. A further 12% chose an all-inclusive holiday this year, where they wouldn’t usually.
Below, First Direct shares some tips to help you save money on your holidays this year to help budgets stretch a bit further…
The first tip would be to check if your bank charges fees to use your card abroad. You can do this by checking T&Cs to see if there are transaction and ATM withdrawal charges overseas. At First Direct, we have just scrapped charges on our debit card, which means customers can use their day-to-day current account card to spend abroad.
It is, however, worth noting that even if you are using a fee-free card, there may still be charges or fees outside of your bank’s control. For example, some cash machine operators may apply a direct charge – although this should be advised on the screen at the time of withdrawal.
The second important thing is to consider cash requirements before you travel. Depending on the travel destination, it’s often useful to arrange to carry some cash in the local currency, even if you do plan on using your card.
If you can, you might want to plan ahead so you can get money in the local currency at a competitive rate, and don’t end up having to use a cashpoint abroad. This way, you’ll avoid separate, non-bank charges for withdrawals. Doing your homework and getting a competitive travel money deal will also make all the difference.
My third tip is that it pays to go local. If you’re using your card outside of the UK and you are given the choice of paying in pounds or in the local currency, go down the local currency route. By selecting this option, you’ll avoid any additional conversion fees the retailer or their bank may charge – so it tends to work out cheaper.
It also goes without saying that during those tough times, it’s key to plan a budget really carefully. It’s a good idea to set a budget per day rather than weekly, simply because it’s easier to track. It’s also really important to consider any unexpected charges when planning your holiday budget, whether it’s luggage fees, hotel tourist taxes or even high roaming charges for using mobile data abroad.
No matter your budget, taking a few steps to plan ahead and make savvy financial choices will help it stretch that little bit further – which is so important in the context of rising costs, where every little bit of saving helps.
But no matter what your budget is or your holiday destination, it’s important to also remember that you’ve given up a lot to make your trip happen and that it’s taken a lot of planning – so enjoy every minute!
Chris Pitt is CEO of First Direct