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Is the cost of your holiday taking its toll?

Is the cost of your holiday taking its toll?

Category: Savings

Updated: 18/07/2014
First Published: 18/07/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

It's the time of year when we all dream of jetting off on a well-earned holiday, but sometimes there's one thing that gets in the way – money. The costs can soon add up, particularly with the likes of food and entertainment added into the mix, and a lot of people are finding they need to raid their savings to cover the cost.

Research from Halifax has revealed just how quickly things can escalate. The average overseas holiday now costs a whopping £1,404 per person – up 7% on last year – with £359.45 of that total going on food, drinks and entertainment.

It's a significant sum of money but it can't be denied that it's worth it, and happily people still seem to shop around with 44% claiming to do so before they booked their break. However, less happily is the fact that 19% raided their savings in order to pay for it.

Additional figures show that savers are withdrawing, on average, over double the amount they're paying into their savings account, with savers raiding an average of £1,666 in the three months to July – and putting back just £803.

It's a significant sum of money for a single holiday, but of course, a break from routine and work is worth it. Hopefully you'd have been dedicating your savings pot to this very purpose anyway so it won't be such a shock to your balance, and ideally you'll have a separate account as an emergency fund.

General advice is to have around three months' worth of income tucked away in a savings account for a rainy day, and as long as you've got that kind of buffer there's nothing to stop you from saving up for that holiday. It seems that people are becoming more inclined to save money anyway – 73% said they'd put aside money in the last three months (up from 68% a year ago), with 33% saving for a rainy day and 26% for a holiday.

Richard Fearon, head of Halifax Savings, comments on the findings: "Summer is typically a time when we see people dipping into their savings, as the cost of holidays put additional pressures on every day finances. While many have specifically saved for their holiday over the year, it seems that they may also be underestimating the cost. As a result, the nation's savings pots have been unexpectedly raided to make up the shortfall.

"However, the fact that a greater number of people are saving, and regularly putting money aside, is encouraging, and means that they are likely to be better able to cope financially when those unexpected costs arise."

As long as you're adequately prepared, there's no reason to deny yourself that summer break. Putting aside little and often can soon add up, and if you're saving for this purpose it may be advisable to opt for a fixed rate account so you're not tempted to dip in without really needing to. Of course, you'll still need an easy access version for those unexpected emergencies, and with the right combination you can be sure that your all-important holiday won't be too much of a stretch.

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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