Holiday money blues? Not with these tips
We work hard all year to be able to enjoy our holidays, so making every penny count helps you get the most from your trip.
Now, however, is the time to start planning your summer holiday money if you want to keep your costs down. Warren Shute shares his top 10 tips on making your money go further when you’re heading overseas:
1. Prepare a rough budget and think about ways to generate more income now
It very hard to stick to a budget on holiday, but with a few months to go, it is often useful to draw out a rough budget to make sure you have enough money – and if not, you have time to do something about it. Obvious I know, but I can’t tell you how many people wake up to the fact that they are going on holiday next week and don’t have enough spending money – which leads to more borrowing.
I think it’s really important to figure out how much will need on holiday. First, make a list of all the items you’ll need to take care of before you go: i.e. Travel money, Travel insurance, Accommodation, Sun cream and toiletries, Travel (flights or fuel costs), Holiday clothes and swimwear, Car hire (and car excess insurance). Remember to hunt around for the best bargains online.
Second, think about the day-to-day expenses on holiday like: Excursions, Holiday treats, Entertainment, Food and drink, Duty Free and Airport transfers. This will give you a rough guide of how much money you will need.
There are some things you can do though that’ll help you find some extra money that you can put towards your savings: Some ideas are to sell things on eBay, look at Airbnb, check your getting all the benefits you are entitled to; reduce spending, have a month of alcohol before you go away, downshift your supermarket shopping in the run up to the holiday. Check out www.moneyadviceservice.org for other ideas.
2. Time your booking to maximise your saving
If you’re booking flights only, then the earlier the better when it comes to the cost. www.Skyscanner.net lets you compare prices simply on any device as does www.kayak.co.uk and www.moneysupermarket.com. It’s all about using the right tool and service to get the cheapest flights.
For a package holiday, if you can be flexible on where and exactly when you’re going, then the closer to your ideal departure date you wait, the cheaper the rates. There are plenty of bargains to be had in the scramble to fill up empty spaces in the month or two beforehand. If it’s just cheap hotel rooms that you are after I often use www.trivago.co.uk to compare rooms and www.booking.com is great if you want to delay payment to give you time to build up reserves.
3. Not all cards are equal
Having the right card in your pocket is by far the cheapest way to spend abroad. When you’re using your plastic, it’s easy to be caught out by hidden fees and poor exchange rates, so plan ahead and your cash will go on enjoying your trip – not on admin fees.
I’m a big fan of the Monzo card, which offers a debit card that you can charge up before you travel. Based on the Mastercard exchange rate, you’ll pay no fees to use it abroad in just about any currency, so it keeps your spending simple. You can also withdraw up to £200 cash for free in any 30-day period. www.monzo.com.
Via your smartphone, Monzo will also keep track of how much you’ve spent in sterling, and lets you know the exchange rate after you land. The Revolt card is another good example www.revoult.com.
Alternatively, although I am not a big fan if you’re not good with money, credit cards including Halifax Clarity, the Post Office and Saga offer fee-free transactions overseas, but you should only use a credit card if you’re financially organised and have a direct debit set up to clear your balance each month to avoid interest charges.
Other cards can add 3% in fees when used abroad, which might not sound like much but can quickly add up to a nasty surprise when you get home.
4. Don’t exchange cash at the airport…and always pay in currency of the Country you are in
If you prefer cash to cards, then get your currency before you reach the airport. Exchange rates are horrendous at the departure lounge, because you’ve no other choice by that stage.
Use an online comparison tool to search for the best exchange rates before you travel, keeping a close eye on the fees charged and not just the headline rate. It’s well worth spending a little time calculating the amount you’ll end up receiving from each provider once the fees are factored in. My favourite is: www.travelmoneymax.com.
Don’t forget – If they ask, “Pay in pounds or Euros?” The answer’s Euros. This question is becoming more common when paying or using ATMs in Europe. If you say “pounds” it means the foreign bank or shop is doing the conversion for you, and it’s usually at a worse rate than if you let your own bank do it by saying “Euros”. This is especially true if you’ve got one of the specialist overseas cards.
5. …and exchange whenever it suits you
Sterling exchange rates are fluctuating daily with the uncertainty surrounding Brexit, and nobody knows which way they’re going to go in the next week or month.
Don’t waste time fretting about picking the perfect time to exchange, do it whenever you’re ready – minimising the fees you pay will have a bigger impact on how much you get for your pounds than a slight shift in the currency rates.
6. A long delay can bring compensation
EU law dictates that a flight delay of two hours or more means you’re entitled to compensation on certain routes into or out of the UK, EU, Iceland, Norway and Switzerland. Amounts vary according to where you’re departing from or going to, and how long you’ve been held back.
To claim, you’ll need to contact the airline. It’s free and simple to do online on most carriers, so you don’t need a third party to claim for you. If the airline is unresponsive, you can elevate your claim to the Civil Aviation Authority or the official ADR providers www.aviationadr.com and www.cedr.com.
Avoid the numerous companies who charge for reclaiming, it really is a simple and easy process that you can do yourself. I would start with www.resolver.co.uk who are a free service. If your delayed flight was into or out of Europe, you could be entitled to up to €600 in compensation. … EU law EC 261 says you can file a claim for cash compensation if you arrive at your destination more than three hours later than planned.
7. Arrange your car hire at home…
It’s simple and fast to shop around online to get the best car hire deals. If you wait until you get to your destination, you run the risk of your costs going through the roof: double the price of an internet quote is not uncommon.
8. …and your insurance too
You’ll be offered accident excess insurance by pretty much very car hire firm, and because the excess for any claim you make (even for a paint scratch) is usually, well, excessive (£500+), it’s something you should take out.
But the rates you’ll be quoted are often around £10 per day or more. Instead, arrange an excess policy before you leave via a site like www.moneymaxim.co.uk, and you’ll save a pretty penny.
9. Travel insurance matters
Make sure you have insurance in place before you book your trip, or you won’t be covered in the event of cancellation. Travel insurance needn’t cost a lot, but it sure will if you don’t have it.
If you plan on travelling overseas more than once in the next 12 months, an annual travel policy is often cheaper than single-trip plans. Either way, use an online comparison tool to get the best rates. I would start with www.moneysavingexpert.com or www.comparethemarket.com.
10. Think about your next trip
Pre-funding your holiday means you won’t be paying it off for months after you get back. Set your holiday as a goal in your long-term vision, and without noticing you’ll have paid it off by the time you hit the beach.
Open a separate holiday account and make a regular, automatic monthly payment, like a direct debit. If your holiday’s going to cost you £800 in November, transfer £100 each month for 8 months before you go away.
Remember to focus on the date you need to make payment, which isn’t usually the day you go away! If payment is due a few weeks before that, budget accordingly.
How great would it be to get back from your holiday without paying for it for months afterwards? Make it a reality by automating your money.
Oh, and don’t forget the bigger picture when you’re on the beach….
With a little more head space when we go away, it can be a great time to see the bigger picture. Think about any changes you can make when you get back home to get more financially organised. Pick up a copy of The Money Plan for your beach reading and make your next trip even more special!