What’s the ultimate secret to saving for your holidays? Before you put away anything for that crazy Bali vacay, you need to have a good understanding of your income and your expenses.
The easiest way to do this is to sit down and write out your expenses and your after-tax earnings. This makes it possible to plan and budget. Yes, it’s boring, but it’s also important – a little time now means lots of time spent under a tropical sun with a Piña Colada in hand.
Step 1: Create a holiday budget planner spreadsheet
Create a holiday budget planner spreadsheet with ALL your expenses recorded. Mortgage payments, utility bills, car repayments, mobile phone bills, credit card payments, car insurance, daily transport, grocery shopping, social spending, entertainment and then all those little things that people generally pass over (like morning coffees or afternoon pick-me-up chocolate snacks).
It’s easy to lose track of $5 here and there, but, if you’re serious about budgeting for your holiday, then every cent needs to be accounted for in your plan.
Step 2: Download a daily spend tracker app
It can be difficult to get a grasp of how much you’re spending and saving each day, but it’s important to factor this in to your holiday budget planner to get a realistic view of your spending patterns.
There are so many free spending tracker tools out there, but we think TrackMySPEND is a good option. The $5 you spend on coffee each day equates to $140 a month or $1,680 a year – definitely worth tracking.
Every time you purchase something, jump straight into the app and record your spend. At the end of the day, when you’re at home with your feet up, just pop your spend into your holiday budget planner spreadsheet.
One great tip is to be realistic. The likelihood is that an unexpected spend will crop up at times, like a friend’s birthday party or a failed car engine, so it’s a good idea to factor these in to your saving.
Step 3: Look for ways to reduce your spending
Once you see how much your expenditure adds up to, you might feel like giving up on the holiday and hibernating for the next six months…
Don’t give up!
After a week or so, you’ll start to see a trend of your most-purchased items and that’s when you can evaluate what you can cut down on or live without to kickstart the saving.
We’ve included a few ideas to get you started below.
Shop with a list!
Before you head to the shops, write a shopping list. It doesn’t matter what it’s for – groceries, birthday presents, clothes shopping. Get it down on paper so that you have a plan of what you’re buying and don’t stray.
Ditch the gym membership…
…and sign up to group classes. How often are you actually going to the gym? You might be better off paying for a class priced between $8 and $15 a session (rather than shelling out $80 a month), and saving the difference.
Cut your mobile bill in half
Have you already paid off your mobile phone contract? Opt for a pre-paid SIM card with your current phone and you could literally cut your mobile bill in half. You could get a much better deal on data and extras when comparing a pre-paid SIM to a contract.
Step 4: Make a budget plan
By now you should have the beginnings of your holiday budget planner: your income versus your expenditure. The next step is making a real budget.
Take a look at you and your partner’s income and deduct all of your outgoings from it. This will give you an idea of how much you have left over after paying off all your bills.
Then it’s up to you to do the math and work out how much needs to go into your savings each month in order to afford your holiday. Make sure you have a date in mind for booking the holiday and work back from there.
The end result? You’ll both have agreed on how much each of you will save into your holiday fund – Hurrah!