How to Afford the Big Summer Holiday You Want this Year

Christmas may only just be over, but for many of us the next big thing to start thinking about is our much-anticipated summer holiday.  There's a reason your Christmas TV guide comes with a summer holiday supplement, and the TV ads start showing you exotic locations and Mediterranean beaches.  But before you cheer up the long slog of January by booking this summer's holiday, read this guide to being able to afford that holiday without getting into debt.

Family holidays are a lot of fun and the perfect way to re-connect after 6 months of work and school, not to mention the perfect way to make some amazing memories for your kids.  But for parents they can also put quite a strain on your budget. This year, instead of putting your annual family holiday on the credit card, plan for it ahead of time and start saving up.

There are some big benefits to planning and saving for your family holiday, the main one being that you don’t have to get into debt to make it happen. No credit card bills to worry about and no interest to pay for weeks and months to come. Instead you and your family can enjoy the holiday you can afford. As an added bonus you’ll have a lot more breathing room financially come next Christmas (or any other time a little extra cash comes in handy.)

Doesn’t that sound a lot better than coming home dreading the next credit card statement?  Along with the fear you have, hoping and praying no other unexpected expense creeps up until you’ve had time to pay off your holiday?

Holidays are a time to relax and make memories with your family. They shouldn’t add to your worries and your financial burden. Read on for a simple step-by-step process that will allow you to put away a little money here and there, creating a new summer holiday fund. And that fund will be there to cover your expenses come summer, winter, spring or whatever time of the year you decide to take that long-awaited family trip.

Budget In Your Holiday

Your first step is to add a family holiday fund to your budget. This works even if you don’t already have a personal budget. Take a little time this week to sit down and figure out what you’re bringing in each month and then add up your usual expenses. That should give you a pretty good idea on how much financial wiggle room you have each month for things like entertainment, gifts and your new holiday fund.

Start by getting out a notebook and pen, or opening a spreadsheet on your computer.

1. Record Your Income

Start with all the money you have coming in throughout the month. This will include things like

  • Your monthly or weekly pay
  • Overtime and bonuses
  • Any other income, e.g. from a second job, or from interest and investments
  • Benefits, e.g. Tax Credits, Universal Credit or Child Benefit

If you need to beef up the income column a little, there are plenty of ways you can earn money working from home.

Related post: 10 Ways to Make £400 Fast

2. Record Your Fixed Expenses

Next you need to look at your fixed expenses, those things that you have to pay every month such as mortgage or rent, utility bills and insurances. Record them in a different column in your notebook or spreadsheet. These are all your regular bills that mostly stay the same month after month. They are also usually things you can’t easily change or reduce.

Your fixed expenses include things like:

  • Rent or Mortgage
  • Insurance - home and contents, car, life etc
  • Car payments
  • Utilities - gas, electricity, water
  • Cable, phone and internet
  • Other credit card and loan payments
Subtracting your fixed expenses from your income will give you your disposable income.  For most of us this figure is actually higher than we expect.  Now to figure out what you spend it all on every month.

3. Record Your Variable Expenses

The last thing to track is the various things you pay for throughout the month. These are things that either change from one month to the next, e.g. groceries, or are things you pay for only once in a while, e.g. a bill from the dentist or a new pair of boots.

Here are a few more examples of typical variable expenses:

  • Groceries
  • Petrol
  • Clothes
  • School supplies
  • School trips and activities
  • Prescriptions
  • Dental bills
  • Hairdressing

Of course your family’s list will vary. The best way to get a feel for these expenses and how much you spend on them each month is to record them in a spending diary for a few months.

Yes, it takes some time and effort to write them down each day or week, but it is an exercise well worth it. This category of expenses often gives you the biggest opportunities to cut back and save more for your holiday and any other savings goals you may have.

Some expenses in here are non-negotiable. Prescriptions and dental bills will have to be paid, but your daily coffee or lunch habit can definitely be cut back on or eliminated altogether.  Even if you think you aren't a spendthrift, there will probably still be huge opportunities for savings.

Let’s start with something simple. Let’s say you go get your hair cut and coloured every 6 weeks. What if you went with a slightly different style that allowed you to go 8 weeks between cuts and you start to colour your hair at home. That’s a potential saving of £30 to £80 every other month.

By far your biggest savings will come from your grocery budget. You won't believe how much you’re spending on food and how much of that is wasted in food we end up throwing away. Finding just a few little things you can do differently will save you quite a bit each week.

Here are a few simple tips:

1. Start planning your meals to avoid throwing out spoiled food.
2. Change to store's own brand options.
3. Look for sales and use coupons for items you actually need and use.
4. Cut back on the amount of meat you use in your dishes.
5. Change from breakfast cereal to eating porridge in the morning.
6. Eat meat-free dishes once or twice a week.
7. Pack leftovers for lunch.
8. Find a few frugal meals like beans and rice and make them at least once a week.

If you don’t keep track of anything else, start paying attention to how much you spend at the supermarket. Planning your meals and only heading to the shop once a week will not only make tracking what you spend easier, it will also help start your savings.

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4. Start Setting Aside Money Regularly

Take a portion of your disposable income that you are comfortable with and set it aside each week or month. You can stick the cash under the bed or, better still, open a special savings account for it.  You may not get much interest, but it will still add to your total.  Set up a direct debit to this savings account so thee money goes out as soon as your paycheck hits your current account.

By putting the holiday funds away first, before you start to spend, you won't even miss it. If you wait until the end of the month when all the bills are paid and all the purchases are made, chances are that there isn’t much of anything left. Instead trying paying yourself (or in this case your holiday fund) first.

By the way, this strategy works well anytime you want to save up money, no matter what it’s for.  So set aside the money now for your holiday, then the next 6 months of the year you could be saving for Christmas, or even start a new account to save for a new car or a house deposit.

How much you decide to add to your holiday fund is up to you. Start small, even if it’s just £10 a week and add more as finances allow. As you get better at tracking expenses and living within your means you’ll be able to set more and more aside.

5. Extra Ways To Add To The Vacation Fund

Of course you don’t have to stop there. Putting £20 a month into a vacation fund may not add up to enough to pay for anything more than a 3-Day-Weekend at a cheap hotel. However, if you know your ideal holiday will be well above what you’re setting aside via your monthly direct debits, consider some extra ways to add to the holiday fund.

Start by putting extra cash throughout the year into the fund. This could be that bonus cheque you got, the extra pay for working overtime, the cash birthday gift from Grandma, a tax refund or even a small lottery win.  Every little helps!

Next see if you can beef up those monthly payments. Look through your list of expandable expenses. Could you cancel that magazine subscription, downgrade to a lower TV package, or even get rid of it altogether? Can you consolidate your mobile phones into one family plan and save a few more pounds each month?

And let’s not forget about the money you spend here and there throughout the week. If you’re heading to Starbucks several times a week, to grab your favorite drink, consider cutting back to once a week, or making your coffee at home and funneling those savings into your vacation fund.

Start with something that seems fairly easy and that jumps out at you as you look through your weekly and monthly expenses. Let’s say it’s giving up that Starbucks habit, or packing your lunch instead of going out to eat every day. Give it a couple of weeks and once you are used to this new routine, find something else you can save on.

It's all about rearranging your priorities and if the annual family holiday is important enough, you will find a way to make it work.  After a while it almost becomes a game to see how quickly you can get the holiday fund to grow.  When it feels tough, just picture the end result: your happy family on holiday somewhere special.

Share your idea with the rest of the family and ask them how they can contribute.  What else can you cut back on?  Can you all find things to sell online, or to do a car boot sale when the weather gets better?

Maybe you could start looking into ways to make a bit of extra money on the side.  This may be just the motivation you need to get that blog going you’ve been talking about, or explore selling handmade jewellery on Etsy.

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Book What You Can Afford

After a couple of months of saving up, you’ll get a pretty good idea how much money you’ll have to spend by the time summer rolls around. That’s your budget and your next job is to make sure you find a vacation that fits within those means.

Don’t forget to leave some financial wiggle room for extras like ice cream, days out and anything else that sounds like fun as you go about your vacation days.

Don’t book anything that’s pricier than you can afford. The whole point of saving up was to avoid maxing out the credit card this year. You’ll be glad you stuck to that budget when you get home and find that a few weeks after you get back your washing machine dies or you need new glasses.

Related article: 12 Money Saving Travel Tips


There are lots of good reasons why you should include holiday expenses to your budget. It helps you enjoy a fun trip with the whole family without having to stress about paying off the debt when you come back home. Instead, you can plot and plan in the months leading up to it and set enough money aside to have a fantastic holiday, whatever your budget. The fun you have working towards that goal, anticipating the trip and making it all work is just an added bonus.

To make that happen start working on your budget. Record your income, record your expenses and review. Set aside a little money each month. It doesn’t have to be much, every little bit will help come holiday time. And don’t forget about the extra ways to add money to your fund we talked about.

Keep going and see how much you can set aside for your annual holiday. Take that sum and book the best trip you can afford. Comparison shop, make it work and head out on vacation, knowing everything is paid for. It’s a great feeling and it will make your holiday that much more relaxing and rewarding.

Some ideas for your next holiday:

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