How to save for a big holiday

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We all dream of going on big adventures and travelling the world — exploring amazing places, meeting new people and creating unforgettable memories. But finding the money for big holidays can be an adventure in itself and can stop us in our tracks before we’ve got started. Loqbox shows you how to save for a holiday and turn dreams into a reality.

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Holidays are all about taking a break. They’re supposed to be a time for relaxation. So you don’t want money worries to ruin your fun. Read on to find out how to save money for a holiday, whether it's a short trip abroad or an extended travel adventure around the world. Get ready to embark on your dream vacation without breaking the bank!

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How much money should I save for travelling?

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Before you start saving, you need to work out your holiday budget. This totally depends on what sort of holiday you’re planning on. Will it be a few weeks in a faraway country with your family or as a couple? Are you trying to work out how much to save to travel for 6 months, or how much to save for a year of travel?

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Once you’ve figured out which country you’d like to visit, make a list of your must-sees and transportation to get there. If you’ve always wanted to go on a safari, take a dip in Iceland’s Blue Lagoon, or fly over the Grand Canyon by helicopter, you can get an idea of prices for these in advance. It’s handy, because saving money always works best when you have a goal in mind.

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Expensive travelling to-do list?

If the prices are too out of reach for your budget, you can push back the travel dates to build your savings — or cut out the non-essential experiences and replace them with equally brilliant but cheaper experiences. Something like walking over the Brooklyn Bridge is a huge bucket list hit for many people, but the best part is  that it’s free to do. 

Or you may be able to go full Wes Anderson and tick travelling by sleeper train off your bucket list, saving you some money on hotel accommodation as you travel.

We know it’s hard to cut back once you’ve started daydreaming though, which is why doing your research, plus having a budget and savings plan are so important. (One Loqbox employee couldn’t cut back on her bucket list and actually moved to Japan to earn there instead!)

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The answer isn’t always simple but it’s possible to set a budget regardless of how far, or for how long, you want to go exploring. The average family holiday costs around £2,000. You can adjust that figure depending on how many people are travelling, your destination and the duration. You might also want to consider travelling at a different time of year, because travel and accommodation prices vary depending on the season.

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To work out how much to save to travel for a year, or for any number of months, it’s suggested that you set aside a budget of at least £1,000 per month. Travelling through cities can be more expensive than rural areas, and some countries will drain more of your budget than others, but using this amount should mean you can cover your costs (including a 10% buffer).  

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How to save for a travel fund

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Once you have a budget in mind, set a savings goal by working out how much you need to save and by what date. Having a specific goal will help you to stay motivated and track your progress along the way. Write the number down, and your deadline. That’s your travel savings goal. Now here are seven tips to save money quickly for a holiday!

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7 tips on how to save for travelling

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1. Create a dedicated travel fund

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Open a separate savings account specifically for your holiday fund. This will help you keep your savings separate from your day-to-day expenses and reduce the temptation to dip into your travel savings. You should also shop around for the best savings accounts to get a good return on your interest payments. Some accounts you could look at are:

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• Fixed rate bonds offer, as the name suggests, a competitive fixed interest rate so you know exactly how much you’ll earn on your savings. You’ll normally have to lock your money away for anywhere between six months and five years, though.
  
  
• Notice accounts will also offer competitive rates, but they are variable as the accounts allow you to access your money when you give between 30 and 90 days notice. These accounts are good for people who are not able to lock their money away for as long as fixed bonds require.
  
  
• Instant Access ISAs  let you add to your savings and access your money whenever you like. In return you should be able to get a fair, variable interest rate (look for the highest AER %). These accounts are useful if you want more flexibility. ISAs are great for tax-saving reasons too, as you can save up to £20,000 a year tax-free using one of these.
  
  
• Loqbox Save is an option to boost your credit score as you grow your savings. If you’re planning to go away for a while and worried that may set your credit rating back for the future, this could be a good option for you. Your savings would also be locked away for up to 12 months, so there’d be no dipping into it!  

Improvements to your credit score are not guaranteed.

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2. Trim unnecessary expenses

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If you really want to make your dream holiday come true, it’s probably going to take some discipline and sacrifice. Look at where you can cut back on your expenses. Consider reducing dining out, entertainment, or subscription services. Small adjustments in your daily spending habits can have a significant impact on your savings.

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Budgeting rules can help you work out where to cut back. The 50 20 30 rule is a simple way of breaking down your post-tax monthly income into 50% for what you need (rent and bills) and 30% for what you want (luxury and entertainment). That leaves you with 20% to put towards your savings goals.

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Be honest with yourself. Are you regularly using your gym membership? How often do you really watch that streaming service? While it’s nice to have these things, weigh up whether you’d rather have an amazing holiday and a whole bunch of memories you’ll cherish for the rest of your life.

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3. Automate your savings

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Take away the temptation to spend your holiday cash by setting up automatic transfers from your main account to your travel fund on a regular basis. We all make mistakes, so take the pressure off yourself by organising your standing orders to come out of your account on pay day. That way, your travel fund is fed before you even see the cash! 

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4. Increase your income

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If you want to accelerate your savings, and you have the ability to do it, consider finding additional sources of income. Explore part-time jobs, freelance opportunities, sell things you no longer need on Vinted, eBay and Facebook Marketplace, or monetise your skills and hobbies. The extra income can go directly into your travel fund.

5. Cut your travel costs

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While saving for your holiday, look for ways to cut down on travel expenses. Consider travelling during off-peak seasons, and use comparison sites to find the best prices for flights and accommodations. If you don’t have a specific destination in mind, maybe explore budget-friendly cities or countries where you can make your money go further.

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Package holidays can also give you a hand when it comes to getting your travel costs down. With a package holiday all of your expenses, like accommodation and food, are lumped into one sum making it easier to budget. They can also work out cheaper than bespoke holidays so it’s definitely worth taking a look at options.

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6. Track your progress

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Keep track of your savings progress regularly. Monitor your travel fund's growth and celebrate milestones along the way. This will motivate you to stay on track and make adjustments if necessary.

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7. Stick with it!

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Saving for a big holiday is going to take some grit and determination but the rewards will be amazing! Stay focused on your goal, remind yourself of the incredible experiences that await you, and resist the temptation to use your savings for other things. Of course, life throws curveballs, so don’t punish yourself if you miss your monthly target.

‍Just stick at it. Even saving a little often can get you to your goal. Just remember to work out your budget, set your savings goal, automate the payments, cut unnecessary expenses, and stay committed to your travel fund!