The summer holiday is a relatively new tradition in Australia but it is one which is alive and well on both sides of the country. I’m sure most of us have spent a couple of weeks away from home over the Christmas period.
Looking at some of the coastal towns in WA you can be sure that it certainly is peak season with most of them bursting at the seams. The only problem with “peak” holiday season is everything comes at a “peak” cost.
Whilst a summer holiday is a great experience the last thing you want to do is come back from with a debt hangover. If you are not prepared for the memories of your holiday will last for a very long time, especially when you are looking at your credit card statement. So how do you afford to get away each summer without breaking the bank?
Most of the time it is simple planning or lack of planning which can get you into trouble with your holiday finances. Whilst there is nothing better than spontaneous trip down south or overseas, if you can’t afford it you will regret it very quickly. Plan your holiday. Don’t just plan where you are going and what you are going to do, plan how much it is going to cost you and how you are going to pay for it. You don’t have to make it very complex. Just add up all the costs of the holiday and how much you are going to need as spending money, perhaps add 10% on top for a margin of error, and that is your new holiday budget. Now the fun part, find the money.
Last time i looked, and much to my kid’s disgust, there is no money tree at the back of my house where i can magically grab my holiday funds from. Unfortunately like everyone else i have to save for them.
There are a couple of fairly simple ways to do this which hopefully you can put into practise to make the holiday less painful from a financial point of view. Now that you have worked out how much you need to save, start saving today. Make small equal payments each week or fortnight into a separate bank account and you will start to see your holiday fund come to life. Even better , put the funds into a mortgage offset account. This will help you save interest on your home loan as well as keep your savings safe.
One of the best things about having some savings fairly early is that you can take advantage of cheap deals on accommodation and airfares. Most providers will have special some time during the year so if you have the money sitting ready to go you can take advantage of these offers early. Nothing worse than trying to book flights and accommodation a couple of weeks out from a peak season. It is a bit like west Australians trying to buy plane tickets to Melbourne a week before the grand final. Ouch. Look for deals , you would be surprised by how much you can save by booking and paying early. Plus you get the satisfaction of knowing the trip is payed for before you go.
Ok , lets also be realistic and acknowledge that you will end up using your credit card whilst you are away on holidays. This is where you have a couple of good options. Option one is to pay off the card before your get charged interest on it. The next one if you are not able to do this is to use a low rate credit card. No point paying interest at 19% when you can pay just over 10 via a cheaper rate card.
These are a couple of ideas which hopefully will make your next break a bit easier on the finances. A summer break away from home certainly beats watching the cricket in a blow up pool in the back yard. Have a safe and merry Christmas from the team at Peard finance.