How to save for a holiday

It looks like we’re finally tip toeing into Spring – we can start putting away our dark winter coats (at last!) and don our pastels and sandals. If you’re also planning a getaway, UK or abroad, usually the first thing to think about is, money: how much can we afford to spend to on a break?  

Whether you’re at the consideration stage, or your bags have been mentally packed since you received your booking confirmation, having savings put aside can make a big difference to your experience. Check out our breakdown of ways to effectively build your holiday funds, from realistic savings goals to choosing the right savings account to grow your money. 

Brits are willing to save for a holiday 

Recent research from Hodge on the cost of living found less of us are able to save as we focus on day-to-day expenses. However, it does seem  despite economic challenges, travel continues to be a priority for many Brits.  According to Travelodge's 2024 Travel Trends Report, a third of people in the UK plan to vacation domestically this year and one in four will travel abroad, with value for money being a big deciding factor. So, despite the continued cost of living crisis, Brits are willing to make sacrifices in order to put money into their holiday savings.  

How much should I save for a holiday? 

The first step in working out how much to save is to be realistic about how much you’re able to save. You may need to consider cutting back on spending in other areas for a little while to be able to put more money into your holiday savings account. When planning for holiday spending consider costs such as travel and accommodation, as well as spending money for food and drink, as well as activities. It’s always good to have a buffer for unforeseen expenses while you’re away. Follow our list below to help you create a budget. Once you’ve put one in place, it’s a lot easier to set clear and achievable savings goals.  

Creating a holiday budget:  

1. Make a list of all potential holiday costs: include everything from flights and hotels to attractions and dining out. Remember to think about added costs that sometimes slip to the back of our minds, like airport parking, car hire and travel insurance.  

2. Research costs: While you’re listing out potential costs, do your own research to see what the realistic cost will be. You can often find better deals by looking around, tweaking travel dates and times too. 

3. Set priorities: Think about what’s most important to you when you go away and chose somewhere that offers you the holiday you want within the budget you can afford. 

4. Track your spending: Once you know how much you need to save, the next step is to keep a close eye on your spending so you can keep your holiday savings account topped up. Take a look at our handy budget guide for easy ways to find a budget to fit with your lifestyle.   

How does a holiday savings account work? 

It’s a good idea to have your holiday funds in a separate place to your current account, it will make it easier for you to see if you’re on track with your savings goals and a little harder for you to accidentally dip into it for other spending. Depending on when you’re planning to travel, you can choose easy access or fixed term savings accounts. Plus, by adding to a savings account, you’re likely to get a better interest rates, giving your savings a little boost. With options like Hodge's Fixed Rate Bonds or Cash ISA savings accounts, you can benefit from features that keep your savings safe and growing at the same time. 

Opening a holiday savings account 

We know every pound makes a difference, and brings you closer to your goal, which is why we’ve got range of personal savings accounts to suit. With Hodge, it’s easy to open an individual savings account with us. For our Fixed Rate Bonds or Cash ISA savings accounts, you can open one if you’re 18 years or over and can deposit a minimum of £1,000.  

Find out more about savings and budgeting in our handy blogs: An introduction to saving money, Tax-efficient ways to save with an ISA and What type of savings account do I need? 

This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.