Holiday planning

After more than two years of social distancing, virtual schooling, and lockdowns, who’s not itching to hit the open road? A holiday is a time to explore new landscapes and create memories that will last a lifetime. Whatever your dream destination is, one thing is for sure – it will involve spending money. In this article we focus on financial planning for your holidays.  

Plan in advance  

Holidays can be a significant expense, and as with all large expenses, planning is key to success. Planning well in advance will give you time to research holiday packages and find deals and discounts. It can be easier to save for something when you create a separate account for that event. That way you can easily see progress towards your goal, helping you stay on track.   

If you are planning a trip within the next three years, then it’s best to save into a cash account. Although it may be difficult to find attractive interest rates in the current environment, the funds will not be subject to the short-term volatility associated with investment markets. You will also have quick and easy access should you need to pay deposits or make staged payments.  

If the big holidays you are planning for will not be for five or more years, then you may be able to consider investing for these goals. This gives the added benefit of putting your savings to work, generating returns potentially above bank rates and inflation.  

Don’t go overboard  

It’s really easy to end up spending more on a holiday than you initially planned. There can be costs you hadn’t thought of, particularly once you’re on holiday.  

A good habit to get into is setting an overall budget. Not just for the cost of flights, accommodation and travel which are the obvious elements. Don’t forget to add insurance, holiday clothes and toiletries. The opportunity for additional spending at the airport often can’t be resisted let alone the day-to-day cost of excursions, entertainment, food, drink and treats whilst you’re away. Of course, you may choose to spend more than you initially intended but having a budget will make it so much easier to stay within your limits.  

Do your research  

Check the whole itinerary before finalising your booking and ensure you have not included services that you don’t need. On the other hand, ensure that essential services are included and be aware of having to pay for expensive add-ons such as WiFi on that cruise ship. If you’re planning to take a trip abroad, then you will need to understand any VISA regulation and charges. Depending on Coronavirus requirements you may have to factor in the cost of pre-flight tests as well. Don’t forget to check the exchange rate to see how far your money will go.  It might just make a difference to where you decide to go for your holiday. 

We’ve all got very used to paying for things online and there can be added advantages for using your credit card for holidays. Did you know credit card bookings are protected under the Consumer Credit Act? Hopefully it won’t happen but if your holiday gets cancelled or the holiday company goes bust you might be able to make a claim.  

Before you travel do check whether there are any restrictions or additional charges if you use your credit card abroad. There’s nothing more annoying than being caught out by the small print that means you’re paying more than you’d intended.  

Holiday proof your portfolio  

Your holidays should be a time to unwind and relax. Trying to keep up with market movements from under an umbrella on your deck chair probably isn’t realistic. Give yourself a proper break. Far better to spend dedicated time ‘in the market’, rather than dipping in and out provoking knee jerk reactions. Staying invested and focussed on the long term ensures your portfolio is in the position to capture what the market has to offer. That you can focus on recharging your batteries and enjoying that beautiful sunset.  

How we can help 

Working with our Financial Planners will help you to understand what is achievable for you and your family both now and in the years ahead. While we can create and monitor a financial plan for all of life’s challenges and surprises, holidays are a big annual expense for many. We can use cashflow modelling software to help you determine an affordable budget. We can even show you how many more holidays you could be taking safe in the knowledge that you won’t run out of money over your lifetime.  

Many people approaching retirement want a holiday of a lifetime. There can be a number of options when it comes to deciding where the money to pay for this should come from. This can include pensions, ISAs, general investment accounts and cash accounts or a combination. We can work with you to assess your individual needs and circumstances to ensure you draw the funds needed in a tax efficient and sustainable manner. 

Final thoughts  

Financial planning for the holiday season doesn’t need to be complicated. Planning well in advance, creating a budget, doing your research, and thinking outside the box can help you steer clear of overspending. You can and should enjoy a well-deserved break without compromising your financial well-being or the quality time spent with family and friends.  

This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action