Would you like to be able to enjoy a 1 or 2 week holiday every year with maybe a couple of weekends away thrown in for good measure but never seem to have the money? Maybe it is time to overhaul your finances, cut spending and find ways to save so that travel becomes a reality and not a dream.
Before beginning to find ways to save money, it is extremely beneficial to spend time completing a Budget Plan.
It can be surprising to discover what you spend your money on, and the number of things you actually buy with that money.
Completing a budget plan will highlight the areas where you can get better value for money and pinpoint the places where savings can be made.
Fact – Most of us have to make sacrifices when choosing what we spend our money on.
If you really want that dream holiday then you have to make it a priority and be prepared to put money aside towards achieving your goal. If you want it badly enough then you will be prepared to go without something else.
We have travelled to some amazing countries and have incredible memories because this is what we choose to spend our money on. We don’t have a brand new car, top of the range appliances, designer clothes, expensive jewellery or material possessions. These things are not high up on our list of priorities – pole position goes to travel, every time.
In order to save for holidays you need to cut your expenses and create more money to save.
Ways To make Savings
Pain-Free Savings – This doesn’t involve any lifestyle changes, but focus’s on living the same way for less money.
Painful Savings – This involves making lifestyle changes, spending less and doing less. This takes more commitment.
You need to be honest with yourself and ask yourself what you currently spend money on that is important to you. I think life is too short to make yourself miserable by not even allowing yourself some treats, even when you are saving. Life is a balance and it is important to enjoy yourself and be happy 365 days of the year and not just the 2 weeks you are enjoying your holiday.
Compromise is the key!
Identify Places To Make Cut Backs
Using your Budget Planner, take a highlighter pen and highlight any costs that you may be able to get better deals for. This process can be time consuming, but worthwhile when you discover the savings you can make, without any lifestyle changes having to be made.
The principle is simple. Can you get your existing cover from a different supplier for less money? Cutting household bills, the cost of your debts and your personal bills is the first place to start and can include the following :
- Gas and Electric
- Council Tax
- Water Rates
- Home Phone & Broadband
- Boiler Cover
- Food Shopping
- Mobile Phone
- Digital TV – Sky
- Unused memberships e.g Magazine & Gym
- Car Insurance
- Household Insurance
- Breakdown Cover
- Mortgage Insurance
By using comparison websites and ringing your existing supplier, it is possible to find better and cheaper deals on everyday utility and household bills, without changing your existing cover.
Simply transferring the debt of an existing credit card onto a new card at a cheaper rate will cut the cost. In the same way, could you arrange a better rate on your Mortgage by approaching your existing lender or swapping to a new lender?
It is also important to keep abreast of the interest rates offered by your Bank or Building Society for current accounts and savings accounts as again, savings can be made.
Okay, hopefully you will have made real savings in this exercise and have more free money to allocate to saving for travel. Go back to your budget planner and put in the new figures to calculate the new level of savings available each month. Now is the time to set aside a set figure to put straight into a separate account at the beginning of each month by standing order, earmarked specifically for travel.
This way, you will be saving towards that trip that you always wanted to go on but told yourself you couldn’t afford.
Now that we have covered the Pain-free way to make savings, you can go a step further and make some more Painful Choices to save even more money.
Extra Ways To Make Savings
These saving methods are going to take a level of self-discipline as they involve changing elements of your current lifestyle and cutting back on luxury items.
Going back to your budget planner, look at what you currently spend your money on, aside from the necessary bills which have to be paid each month.
Make a list of these items which will probably include such things as Nights Out, Takeaways, Cinema, Newspapers, Lunches, Coffee, Clothes, Hairdresser etc.
Work Out Your Priorities
List the expenses in order of priorities to spend your money on.
Then ask yourself the following questions about each item :
- Can I afford it?
- Do I need it?
- Why do I want it?
- Could it be replaced with a cheaper alternative?
- Would I get more pleasure spending the same amount on something else?
Change can be difficult and feel like a hardship when you are unaccustomed to cutting back on things you enjoy. This is why you have to be honest with yourself and what things are important to you and make you happy. If you are budgeting as a couple or family, it is imperative to do this exercise together and try and cater for everyone’s preferences in order to maintain harmony. This will only work if you are all onboard with the decisions.
I could quite easily do without magazines,newspapers and takeaways. But it makes me feel happy going to a cafe for coffee and cake, so I do this once or twice a week instead. Again, it is all about priorities and compromise. Only you can decide what is important to stay on the expenses list and what can be deleted.
Don’t Forget The One Off Expenses
If you have completed a budget planner then you will have included costs for one off expenses such as christmas, birthdays, replacing a car and new furniture/appliances.
This is an area for big savings, as we often don’t even budget for them, so when they come around we just pay what we think we need to pay at the time.
Take Christmas as an example. People often don’t budget for Christmas and when it arrives they buy whatever they think will contribute to having a great time, including a huge tree, expensive gifts and amounts of food to feed a small army. Instead, they should decide on an amount of money they can afford to spend and plan Christmas around that figure. Deciding on a set amount means that you can divide it by 12 and save a set amount each month starting in January or February and spread the cost over the whole year.
The same concept can be applied to birthday presents and a set amount to spend, agreed with other family and friends.
The Key To Successful Savings
To really be successful at saving money you need to automate your spending in order to truly know how much money you have to spend each month.
To translate the money you plan to save from your budget planner to real savings, you have to transfer this money from your current account and into specific accounts to avoid spending it. If the money isn’t in your current account then the temptation to dip into it has been removed. What is left is what you have to spend.
Look back at your budget planner and choose 1-4 main categories that you spend money on.
For example, say that you want to save £100 a month towards Travel and £50 a month towards Christmas.
Set up a separate bank account for each of these categories so that you know how much you will be spending each month.
Effectively, you are separating your money into “pots”, each with its own purpose, aside from your main bank account.
Your Accounts could look like this :
- Main Account
- Bill Account
- Travel Account to cover holidays
- Christmas/Birthday Account
- Savings/Emergency Fund
- Tax Account (If Self-Employed)
Now set up standing orders from your main bank account, into each of these separate accounts for the set amount you are saving each month. Set this up within the first week of being paid.
This is two-fold as first, when you check your bank balance it gives a clearer figure of how much you have to spend, as money for Bills, Holidays etc has been taken out.
Second, you are saving towards these categories, and what is in each account is set aside for that purpose only.
Out of Sight is Out of Mind!
You are on your way to saving for and affording your dream trip!
How about you? Do you save towards your holidays each year, and if so, do you have a budget planner?
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