Now the clocks have gone forward and we are well into spring, our thoughts may well be turning to getting away for some sun rather than having to endure another disappointing British summer!Despite recent security threats and reports about the long-term damage to the environment, the desire to get away from it all is stronger than ever with us taking an average of 1.6 holidays per year (according to The Times, 2006). It’s not just how frequently we go away which puts us under increasing financial pressure but also the growing trend to take so-called ‘dream holidays’ every year.According to a Halifax survey, 20% of respondents said that were likely to take a dream trip for no special reason with over half prepared to spend between £1,000 and £5,000 per person on these holidays.It’s clear then that these halcyon days of sun, sea and sand have a price beyond the widely-debated cost to the environment. The annual holiday is almost seen as a given with more and more of us spending large amounts of money on lavish trips abroad just to “keep up with the Jones'”. Two or even three holidays a year to Europe and the Caribbean are now considered the norm with £74bn being spent on holidays and spending money in 2006, according to Axa.The pressure to overspend on holidays is intense and nowadays people think nothing of charging a holiday in the US or Australia to a credit card. The problem starts when the holiday is over and the dreaded credit card bills start landing on the mat! Only then do some people realize that they have spent beyond their means and the ‘holiday hangover’ starts to set in.
Tips to prevent the holiday hangover:o Set a limit – Think about how much you can realistically afford before you decide where you are going and, more importantly, where the money will be coming from. Stick to this budget!
o Start saving – Put some money aside every month leading up to the holiday – don’t forget that most package holiday companies require the balance to be paid up to 12 weeks before departure. Try to put the same amount away and deposit the funds into a separate bank account to avoid the temptation to spend.
o Start shopping early – Buy holiday essentials little and often. Take advantage of special offers and avoid the ‘holiday rush’ period. Holiday essentials are often cheaper out of peak holiday season, so start your shopping then for the following year.
o Make use of offers – When booking holidays, take advantage of incentives for booking early or bag a bargain by booking a late package deal. Look out for free child places and remember to get quotes from several different sources to see if you can haggle the price down.
o Use credit wisely – If you do use your credit card on holiday, remember to start making payments on it as soon as you return. If possible, use your debit card for transactions (but remember these are also subject to additional charges) – avoid cash advances on credit cards at all costs as the interest rates are typically very high.
o Budget daily – Work out a daily budget of likely spend and try to stick to it while you are away. Don’t be tempted to blow the budget and put the daily meals on a credit card.
o Quality not quantity – Try to resist over-stretching yourself too much even if everyone else seems to be splashing out on foreign holidays. Remember, holidays are far better enjoyed when they are saved up for – there’s more to life than material wealth!Holiday InsuranceAccording to Axa, we spent £4.2bn on travel insurance in 2006 – Often overlooked, travel insurance is as important as sunscreen when going on a foreign holiday. However, all holiday insurance is not the same and prices differ widely, here are five top tips to help you get the best deal on travel insurance:o Shop around – Don’t be pressured to take travel insurance out with your travel agent, it isn’t mandatory. There are sometimes better deals to be had on the high street from banks, retailers and even the Post Office
o Consider annual insurance – If you do go abroad more than once a year, it may be worthwhile purchasing annual rather than single trip travel insurance to cover all the trips you take in that year. Remember to make sure you purchase the correct type of cover, as a winter sports holiday usually requires additional cover.
o Already covered? – You may already have travel insurance – many premium bank accounts have value-added benefits such as travel cover as part of the package. Credit card companies also have tie-ins with travel insurance companies that may be available to cardholders. You may already have basic travel insurance as part of your benefits but may just be unaware so make sure you do your homework!
o Don’t pay for what you don’t need – If you only go abroad within Europe, opt for a policy that only covers Europe rather than a worldwide policy, as this will often be cheaper. Also, don’t pay for winter sports cover unless you actually need it.
o European Health Insurance Card (EHIC) – A replacement for the old E111 form and a travel essential. Whilst not a substitute for adequate travel insurance, this card entitles the holder to free or discounted medical treatment in any EU country (including Switzerland). Cards are available online or by post.
Beverley Busdworth is an Insolvency Practitioner at award winning IVA and debt management company at web: thedebtadvisor.co.uk.