In the end, this article will give you the tools to make an informed decision on whether to tell the group chat it will have to be ‘Croatia2026’, or if it is time to make deliberate decisions over the next few months to ensure you’re blocking your eyes from the sunlight and sipping a cold drink at the beach.
How am I doing financially?
Regardless of what is being budgeted for, being mindful of your current financial situation is an effective starting point. Here are some key areas to consider:
- How much do I have in savings?
- What is my income? What is my projected income? Are these figures stable?
- What are my regular expenses?
- Do I have any major expenses coming up before the holiday date? Don’t forget birthdays, a car insurance renewal, or rent!
- Am I saving for a big-ticket item that needs prioritising, such as a car or a house?
- What do I typically have left over each month after deducting my expenses from my income?
These questions will help you understand your current savings, and the monthly earnings that boost that base. Why not go one step further and regularly track your budget through technology, such as Microsoft Excel or Google Sheets, to give you more insight into your finances.
Assessing the cost of the holiday
Next, research the potential cost of the holiday. Here are some key areas to consider:
- Flights
- Accommodation
- Transportation costs
- Food and drink (Consider the number of days of travel, projected meals per day, and the average costs of those meals. For example, £10 for breakfast, £15 for lunch, and £25 for dinner for a 4-day trip = £200)
- Entertainment (activities and leisure)
- Shopping and souvenirs
- Travel insurance
Budget trade-offs
Shopping around for different prices is an effective approach to keep the holiday within budget. However, it is important not to skimp on quality in the areas that you or the group value the most. Take the time to determine where to cut costs and where to spend more money.
- Comfortable sleeping in the same room as strangers? Research different hostels.
- Fancy a fuss-free breakfast a few steps away from your hotel room? Look for breakfast-inclusive accommodation.
- Prefer to relax on holiday? Search for accommodation with its own spa; look up the cost of car rentals or check how close your hotel is to the beach.
- Thinking about booking an earlier, cheaper flight? Consider if the airport is further from your home and if you’re okay with the longer commute and extra travel costs.
Tips to keep in budget
- Compare the costs to your home country and consider the exchange rate.
- If necessary, take advantage of flexible payment options to manage cash flow.
- Use a bank card that avoids international fees when abroad, such as Monzo or Revolut.
- Use trusted websites where possible and check for reviews if available to make sure you receive value for money. This could mean you book your flight directly through the airline’s site rather than through a third-party site with a slightly lower rate. If you’d prefer the lower rate, make sure to search up the third-party site and confirm others have had successful bookings.
Budget buffer
Planning is essential; however, life happens. A stolen phone, a missed transfer, or an expensive but must-have souvenir. Including a buffer on top of the estimated holiday costs provides you with some protection, in case of any emergencies. You could add a percentage of your total spend or an exact amount (like £100) to the total cost of your holiday for peace of mind, depending on your risk tolerance.
Travel insurance is another great way to ensure you have extra protection in case things don’t go as planned. Sites like comparethemarket.com can help you compare the affordability of different providers, what the policy covers and the excess you could pay (the agreed amount you would pay towards a claim, should you have to make one.)
To holiday or not to holiday
Once the estimated holiday cost is added up, return to your finances to decide whether the cost is sensible and within your budget. Don’t forget context is key– is the cost of the holiday reasonable for that type of holiday? There may be an ideal budget for a staycation in your mind compared to an international trip. It is okay and useful to have these preferences.
Decision time
Now that you’ve determined the holiday costs are within your budget and do not take up an uncomfortable percentage of your savings, it’s time to decide. While financially you can say yes to the holiday, a holiday within budget does not always equate to having to go on the holiday. You might not be comfortable parting with a certain amount of money, or you might not be keen on the location or the people you are going with. The emotional decision is up to you.
All in all, as the saying goes: Fail to plan, plan to fail. Hold off on responding to that group chat and take some time to reflect on your budget, the cost of the holiday, and your willingness to part with your cash. If you’ve made it this far into the article, you’re already taking proactive steps to budget for your holiday. Hopefully, the tips in this article will help you enjoy an exciting holiday or improve your financial wellbeing. We wish you both!
Are you a student? If you’re looking for more budgeting tips to set you up for success, check out our budgeting for uni article.