According to a survey by The Post Office, “Holiday overspend is on the rise with 67% of holidaymakers confessing to exceeding the holiday budget.” While 57% blame the rise in food prices on overspending.

Moreover, foreign transaction fees, exchange rate fluctuations and travel-related purchases make one spend more. It is even if one plans the budget safely. However, one must consider the unexpected before developing the final budget. The blog outlines the steps to create a holiday budget, helping you avoid any surprises along the way.

How to create a workable holiday budget?

You may not want to see lengthy bills after the holiday retreat. Thus, to make the most of the gateway without breaking the bank, check the following steps to create a workable holiday budget.

1)      Step 1-Determine the ideal spend

It is very important to understand how much you should ideally spend on a holiday. It may meet your expectations or may surprise you. However, in any case, it is helpful as it prevents you from setting expensive limits for a comfortable holiday.

According to Finder.com, “The average planned spend per adult in the UK on holidays abroad was £1,690 in 2024. It was 20% less than in 2023. Moreover, it may cost around £3,600 for a family of four to travel abroad for a week.“

Yes, travelling is costly, and it may affect other expenses, especially for individuals with low incomes. Thus, here, putting away cash for travel insurance may help you.  However, unemployed individuals may fail to renew their travel insurance cover. Check loans for people on benefits from a direct lender for help. It may help you with necessary legal needs like insurance and visa updates. Moreover, you can use it to book tickets for travel.

2)      Step 2- Determine the aspects to spend on

To have clarity, break down the aspects that you must spend on holidays. It could be:

·         Flights

·         Accommodation

·         Food

·         Activities and Attractions

·         Local transport

·         Insurance

·         Visa and travel fees

·         Emergency/contingency fund

According to DM Airport transfers, “Daily food, transport, accommodation, and activities costs can range from approx. £100–£300+ per day, depending on travel style.”

Thus, listing the aspects will help you add or subtract the unnecessary or discretionary aspects.  It eventually helps you dedicate money towards something essential for the trip.

3)      Step 3-  Prioritise and categorise expenses

It is critical to categorise core and discretionary expenses while developing a travel budget. It helps you save more for the important aspects over the discretionary ones.

Differentiating the two may help you analyse the best ways to save money. It helps you save extra for the important expenses and cut on unnecessary ones.

4)      Step 4- Set daily limits on each category

Split your financial budget for travel into aspects like;

·         Accommodations

·         Ticket

·         Wanderings and activities

·         Transport

·         Food

·         Shopping

Identify the average spend on each category from a budget point of view. Dedicate direct debits towards each category to save money. Additionally, don’t forget to set aside some cash for the unforeseen or unplanned expenses. It will prevent you from overspending in any category. Thus, you can save a substantial amount by planning your finances and practising disciplined savings.

5)      Step 5-  Research and compare rates before booking

It is always better to compare prices and rates before booking flights or accommodations. For example, flights are usually cheaper on Tuesdays, Wednesdays, and Thursdays in the UK.

One must avoid booking one during the peak holiday season, like Christmas, school holidays, weekends or New Year. Moreover, book 1-3 months in advance for a short trip and 2-6 months before for a long weekend getaway. You can also set price drop alerts on sites like Sky Scanner for booking tickets.

6)      Step 6- Budget for currency exchange and corrections

Most individuals forget about setting money aside for exchange. It may prove the costliest aspect of travelling abroad. Check the current exchange rates and the charges. Identify the countries where your pound is stronger. In that case, exchange may prove cheap, and you can save money overall on the trip. For example, you can travel to India as the value of £1 = ₹121.26. 

Here are a few things to know before exchanging the currency:

·         Use a reputable currency converter to know the real rate

·         Never trust 0% commission claims. The companies may hide the real exchange rate. Also, check for the delivery fees if ordering currency online.

·         Compare online specialists with high street bureaus and banks. It may help you fetch the currency at the cheapest rate.

·         Try to complete the exchange in mid-week (Tuesday-Thursday) when markets remain open. Try to avoid weekends and exchanging money at airports. It is the costliest way to do so.

7)      Step 7- Track and monitor your holiday budget

You must monitor your daily spend against the holiday budget.  It helps you understand whether you can save a particular amount before going on a holiday. Most UK travellers monitor the expense only after travelling or returning from the trip.  It makes mid-trip adjustments nearly impossible.  Here is how to do so:

·         Conduct scheduled check-ins monthly or weekly.  Check what you are overspending on and restrict it. Use the MoneyHelper free planner.

·         Be flexible to cut back on expenses if you spend more one day

·         Reallocate more funds to the essential area

·         If costs are consistently higher, adjust your budget upwards or check cheaper alternatives.

·         Always remember to factor in normal savings to avoid double-counting.

8)      Step 8- Conduct post-holiday review

Lastly, always review your budget after returning from a relaxed holiday. It helps you analyse the aspects that you spend the most on. Accordingly, it lets you plan a fail-proof budget for your next trip.  Don’t keep miscellaneous items just in the diary. Instead, consider it for a budget-friendly holiday.

Bottom line

These are some steps which may help you plan a holiday budget for a swift and memorable trip.  It helps you save money and spend only on essential things. Thus, one must always plan for aspects like tickets, accommodation, travel insurance, visa and food. After this, one can consider the less important aspects like restaurants and shopping preferences.

Also, keep some flexibility for unplanned expenses. It may daunt you at the most unexpected moment. Thus, you must be ready to counter it. Lastly, review your budget during and after the trip. It helps you analyse the aspects that you can save on for the next trip.