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How to pay for your holiday

What can I afford to spend?

Your annual holiday should cost about a week’s salary, but the price depends on your fixed expenses (housing, transportation) and lifestyle choices. The most common mistake is underestimating expenses. As you create a budget, include meals, taxis, souvenirs, tips and the unexpected. Financial expert Grant Cardone suggests setting aside an extra 25%.

Should I use my credit card?

No! Charging travel expenses that you can’t immediately pay back isn’t the way to go. “You end up paying much more than the cost of the trip,” warns Mackey McNeill, accountant and author of The Intersection of Joy and Money. “You can end up spending 50 to 100 per cent more.”

Set up a savings account?

Yes. Determine how much you can afford to save. Then have money automatically deducted from your salary and put into an account that you forget about until you use it. “It won’t earn much interest, but it’s more effective than stuffing notes in a cookie jar,” says McNeill.

But I never have the cash for a holiday?

Don’t despair. You may be able to secure lodgings for next to nothing by swapping digs with someone who lives in your dream destination. For a small monthly fee, you can list on homeexchange.com or lovehomeswap.com. The more detailed the description of your home, the more successful you’ll be.

Source: Budget Travel

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