Whether it’s snorkelling on the Great Barrier Reef or going on safari in the Serengeti, your next holiday will cost money. It’s much better to save as much as you can before you leave, so you don’t rely entirely on your credit card. You don’t want to spend the next year paying off your trip debts.
Work out your holiday costs
The cost of your holiday depends on where you go and how you like to travel. Some costs to consider include:
- Airfares or transport costs
- Visa and passport charges
- Travel insurance
- Transport at your destination e.g. hire car
- Accommodation
- Food
- Entry fees to sights and activities
- Souvenirs
- Entertainment costs
- Extra money in case of emergencies
- Charges for using your phone for calls while you’re overseas
Smart tip
If you are exchanging money here or overseas shop around with a few different operators. Different fees and charges can have a big impact on how much cash you receive.
Accessing money
Think about how you are going to access money while overseas. If you carry lots of cash around, you risk losing it. You could get a travel prepaid card or you could talk to your bank about how you can access your money overseas without paying high fees.
For more information on travelling and safety precautions, see the Australian Government’s Smart traveller website.
Australians and travel insurance
Our Australians and travel insurance infographic explains why Australians travel, where they go, what is covered and isn’t covered by travel insurance and how to get the best policy for you.
Save as much as you can
Budgeting
Cut back on spending before you go and you’ll have more money to spend on your trip.
See where your money goes and find ways to spend less on non-essential items.
For example, Paul is going to Mexico and decided to save money by not going out for dinner for 2 months. He saved $300, which he put towards dining out on his Mexican trip.
Look for savings in your:
- Entertainment costs
- Restaurant meals
- Clothes
- Takeaway lunches and coffees
Growing your savings
Once you’ve cut back on your spending, you should make the most of your savings.
Think about putting your money where it will earn interest, such as a term deposit or a savings account. These accounts will give you a higher rate of interest than transaction accounts. Learn more about the compound interest you could earn in a savings account.
Work out how much you will earn in interest if your savings are put in a savings account or term deposit.
It might also help to visualise your holiday so you keep in mind what you are saving for. Our app will help visualise your progress towards achieving your goals.
Track your savings goals on the go with our free app.
Case study: Laura and Kaz save up for Europe
Laura and Kaz dream of backpacking around Europe. They have only 18 months to save as much money as they can for their trip.
Laura opens an online savings account with an interest rate of 3% and deposits $500 every fortnight. She resists the temptation to dip into the money as she knows she will lose some of her interest if she does. Kaz saves $500 of her pay every fortnight in her everyday transaction account that has an interest rate of 1.5%. She tries not to use the money but regularly takes out $50 a fortnight to get her through to the next pay day.
Eighteen months later, Laura has saved more than $18,400, while Kaz has only $16,394. Hard-to-access, high interest accounts can make a big difference.
The more money you can save before a holiday, the better. Start saving now by opening a savings account.
Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at www.moneysmart.gov.au
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