Holidays in the sun
The sun is shining and it’s time for a well-earned holiday. Taking a vacation builds what is known as “consumption capital” – a stock of happy memories, different foods to taste and new photos to share with friends and family. And they are popular. Figures from the European statistics office Eurostat show nearly half of all Europeans made at least one holiday trip during the summer months of July, August and September in 2011. But the financial costs of going away for a few days – or a few weeks – can quickly mount. So planning ahead can pay off.
Bob’s golf trip
One approach to save for a trip away is to decide where you want to go and how long for. Calculate expected costs (including travel, dining out, accommodation, sightseeing) and set up a dedicated holiday fund for regular deposits. Naming the account in honour of your travel – think Bob’s golf trip – may help boost motivation to save.
Work out how many months until departure and divide the holiday total by the number of months to get the monthly savings target.
When travelling to a place that uses a different currency, it can be a good idea to factor in a buffer in case the exchange rate shifts.
Planning can be difficult
Although the maths involved in budgeting for a holiday can be simple, actually setting the money aside each month can be difficult. Further, Bri Williams blogs that people often not only fail to budget for exceptional items, such as holidays, but that they also regularly underestimate their total cost. The tip is to be think carefully about the total cost of the holiday and other exceptional items and budget accordingly.
I can’t wait until…
In addition to making the financial aspect of a holiday more secure, planning ahead my also pay off in terms of emotion. Psyblog says that studies suggest people get a lot of pleasure from looking forward to good things they have planned in the future.