A holiday can be ridiculously expensive. Whether you’re a sun-loving beach enthusiast or you prefer something a little cooler – say a Swiss Alps ski trip – you’ve got to think about airfares, accommodation costs, car hire, baby sitters, shopping expenses and more.
Don’t fret though. The first step to any undertaking is picking an end goal – so you’re already on your way to enjoying mojitos in Honolulu or learning how to snowboard in Zurich. Following the next nine steps will ensure that all you have to worry about during your trip is if you’ve got room in your luggage for a shopping spree.
1. Set a goal
A holiday is a great savings goal – you can easily look into how much the base cost of a holiday would be, i.e. the price of plane tickets and accommodation, and then estimate how much you’ll be spending over your stay.
Once you’ve got a definite savings goal, you’ll be able to track your progress towards it quite easily, and using that as a measurement, determine if your efforts will get you to your destination or if you’ve got to pick up your game a bit.
2. Set a deadline
You know how much you’ll need, but you’ll also have to know when you’ll need it by. You’ll have to plan your holiday around a time that will suit your work schedule. You should also consider discounts for off peak travel and early-bird ticket sales too.
Putting up a poster and colouring in your progress is a great motivator and will help you stay focused on your goal.
3. Draw up a budget
You’re going to have to take a good hard look at your current spending habits. Take your monthly earnings and categorise where that money goes – you might find that there are certain things you’re spending way too much money on and that’s where you should cut back.
4. Give yourself a wage
A percentage of every paycheck should automatically go into your savings account. You can set it up so that your bank will do it for you without you needing to manually handle each transfer.
You’ll need to look at your budget to see how much you can afford to pay yourself, but this should be a set amount that you’re saving each pay cycle, regardless of your other spending activities.
5. Keep a budget diary
A handy way to do this is with your phone – you take it with you everywhere anyway and can note down purchases quickly and easily. You should be logging all purchases you make with cash especially, as they’re often the ones that are forgotten when it comes time to analyse your bank statements.
Make sure you note down even the small expenses. If you buy a cup of coffee every day at work, that could be around $20 a week!
6. Put away the credit card
Credit cards can be very useful, but you really shouldn’t be relying on one while you’re trying to save. If you pay off your balance each month, that’s ok – maybe you’re just using it to get reward points – but if you can’t afford to buy something now, maybe you shouldn’t buy it at all.
Most credit cards will charge you a higher interest rate than what you’re earning on your savings – meaning that an unpaid credit card balance will accrue a debt greater than the interest earned on your savings, leaving you, overall, in the red for that payment period.
7. Don’t withdraw!
You’re saving for something, so any money you take out of that means you’ll wait longer before getting what you want. Plan your budget so that you don’t have to touch your savings account at all and implement some sort of penalty for doing so – like giving up your daily coffee for each $10 you take out.
8. Spend less than you earn
This goes hand in hand with points 6 and 7 – don’t draw on resources that you don’t have. If you can’t afford to pay for petrol every month, swap to bus/train rides to work instead. If you’re paying too much for your phone/internet, swap to a smaller plan and limit your usage.
9. Swap bought for homemade
Coffee is the best example here – keep that $20 a week in your pocket and invest in a good thermos. Bring your own coffee to work with you and you’ll find you’re saving a fair amount.
10. Cut back
It’s a classic for a reason – if you want to save money, you’re going to have to cut it from somewhere. The easiest way to do this is to cut back on the small things. Make regular Fridays ‘Coffee-Free Fridays’. Saving one dollar here and five there can really make a difference in the long run.
Don’t let your frugal habits die after you get back all relaxed and tanned from your week in the Maldives – you could start saving for a month in Europe next!