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As another holiday season approaches – this one with hopefully some welcome sunshine – Nationwide's latest Spending Report has revealed that Brits can spend up to a quarter of their annual disposable income on trips away each year, and many seem to have no desire to curb this spending.
According to the data, Brits go on holiday an average of twice a year, at a cost of £855 per person each time, with 23% even spending £1,000 or more per holiday. This means that a family of four could end up spending £3,240 per trip, and up to £6,840 in total.
Based on the annual median disposable household income in the UK of £27,300, holiday spending can take up to three months' worth of income, or a quarter of spending. Worryingly, not everyone has this money available.
As a result, 22% said they had to borrow money to go on holiday, which included using a credit card (15%), taking out a personal loan (4%) or borrowing money from friends or family members (3%). In contrast, 43% did manage to pay for their holiday using savings, while 35% had the money in their current account and 11% were fortunate enough to have family members willing to pay for them to take a holiday.
Of those that said they had to borrow money, 88% said this was the only way they could afford to go away, with the average Brit then taking three months to pay off this holiday – and 11% even taking more than six months. Yet 51% of respondents aren't willing to forgo anything for their holiday.
This is despite the fact that saving money ahead of a holiday, by cutting down on some dinners out for instance, can save you a lot of money and stress compared to paying off debts afterwards. With proper planning and a high-interest paying current accountor competitive savings account you might even be able to afford a little extra.
You might well need this little extra, as 61% say they overspend on their holiday, going an average of £250 over budget on their last main holiday. Eleven percent even over-splurge by £500 or more.
Then there are the 20% who don't set a holiday budget at all, who might still regret spending more than their bank accounts can handle. Indeed, money is one of the biggest holiday regrets, with 25% feeling they had spent too much money, while 21% said they didn't have enough cash to enjoy themselves and 20% thought their holiday was too expensive.
To tackle all this overspending and regret, it might be a good idea to plan well ahead of your next holiday. While this may not help you with this year's main outing, there are still a few things you can do to make your escape from work less expensive.
For instance, those going abroad could look into getting a travel credit card or prepaid travel card to cut down on foreign transaction fees. And you could use a cashback card to pay for all pre-holiday expenses to get some money back, provided you can pay it off in full before interest gets added. Finally, whatever you do, don't forget about that all-important travel insurance.
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