Budgeting for a holiday

piggy bank in troubleWant a holiday? Could do with a break? Require a rest? NEED a holiday, right now or there will be blood spilt and it’s not going to be yours!!?!??  Whether you want to go away for a few days or jet away to another country for a week, it’s going to cost you. You need to plan your finances.  Travelling anywhere, even locally, is expensive.  There are the obvious costs like transport to and from your dream location, accommodation and food (kids have to be fed, remember) and sightseeing costs. But what about those other costs you might not have factored for.

Drive yourself; take the road less travelled, show the kids the “real” New Zealand. Sounds like a dream right? Nah! Let’s start with fuel costs. To calculate fuel costs its best to know your car’s fuel consumption, ie, how many kilometres to the tank, estimate the driving distance and bump it up by 5% for unexpected detours and traffic jams.  Then divide the driving distance by the fuel consumption to arrive at an estimate of how many times you can expect to fill the tank, and then calculate the final amount using an average amount you pay each time you fill the tank.  A more accurate approach is to multiply the driving distance by the cost of per litre of petrol charged at the pump.  Use a high cost to ensure you capture any variation, and at the end of the holiday you may be lucky to have some left over.

What?! In plain speak, if your car does 100 km per litre, then to travel 1,000 miles you will need 10 litres of fuel. Multiply that by the cost of per litre so $2.10 per litre (the average cost as of the time of this article) x the distance (say 1000km) divided by 100 (how many km $2.10 worth of fuel will carry you) total cost $20.10.

Quick Tip: If you’re driving, fill up the gas tank before hopping on the highway, where it’s much costlier.

So flying is looking good about now – just pay a ticket. Um… not quite. Remember airport tax, booking charges, transferring you and the rugrats between your place and your accommodation, cost of hiring a car verses using public transport while you’re there, parking your car at the airport or parking the hire car. There’s insurance and if travelling overseas the cost of an international licence (some countries).

Quick Tip: Look online for bulk ticket buying locally, not just on the tourist sites eg a travel card for locals is cheaper than catching a tourist bus.

Talking about going O.S. (that’s just me trying to sound cool and travel savvy), there is the cost of the passports, visas and travellers cheques. Don’t just trust that plastic card to do it for you at a good price. Some cards total your bills up at the end of your holidays then convert, some convert as you spend, either way it could cost you a bundle. Thankfully there are online currency converters  that will source the buy rates from four major banks and recommend the best rate.  One of the most expensive places to exchange money is at a foreign bank’s cash machine. Why? Because your card issuer charges a handling fee for using your credit or debit card abroad, and some even charge an extra percentage of the amount withdrawn as commission. On top of this, you can then get stung by a poor exchange rate offered by the local bank.

Quick Tip: Buy foreign currency, so once you figure out the costs in the foreign currency; use the “Buy” exchange rate.  When you come home, you would use the “Sell” exchange rate. 

Of course you’re taking your phone right? To make phone calls, in case of emergencies, to facebook jealous friends back home – that sort of thing. But did you know if you take your mobile overseas you will be hit with additional charges for making phone calls through your local provider?  Media reports are peppered with unwary New Zealanders being charged extra for “Global Roaming”.  It might be worthwhile looking for a provider in your destination and getting a pre-paid card.

Quick Tip: Grab an old or cheaper phone – you don’t want to replace a super expensive phone with all your contacts, precious photos, favourite aps and games etc to be lost, stolen or damaged.

Where are you staying?  Is food included in the accommodation package?  If not you have to allow for three square meals and several snacks a day; you may have to set limits on your spending.  Tips and hints for reducing costs will be discussed in another article but in the meantime factor in the food with your decision.  Cruises tend to throw food in as part of the package, Bed and Breakfasts throw in breakfast and maybe tea/coffee facilities and camping holidays and self-contained apartments gives you the opportunity to make and store your own meals. But don’t assume staying in a hotel includes breakfast.  If you have the cash, you may want splash on room service, but it’s very expensive, and that’s not including tips.  Also think about where you’re going for the day. For instance, going to an amusement park means more expensive meals.  If you have special dietary needs that’s an added expense too.

Quick Tip: look where the locals are eating. It’s usually cheaper, with better food and you get to meet the local inhabitants.

So where are you going while you’re there? There are entry fees to amusement parks, museums, galleries and public buildings. Pre-booking might ensure a lower cost and in some galleries and museums pre-bookings is mandatory.  And then there is the purchasing of souvenirs, post cards and gifts for family/dog minder at home.  Don’t forget – if you have to “go”, in some countries you have to pay to use the toilet.

Quick Tip: always pack some tissues too for everyone in your group (sometimes there is a charge per sheet used!)

Ensure that you are not missing out on any discounts.  Tourist destinations sometimes offer families discounts for early entry or there may be package deals associated with your accommodation. The local tourist bureaus usually offer vouchers for discounted entry to local tourist spots and same with the guided tours but remember some of those get kickbacks from specific shops so it might be cheaper not to buy on their suggestions.

Quick Tip: Ask for discounts everywhere. Is it cheaper for a senior? Would it be cheaper with an extra child? (ask to “borrow” one from someone else in the queue.) Does any of your AA Membership offer member discounts or specials?

Add up all the money you’ve calculated so far and add an additional 10% for emergencies per person. I’m not trying to freak you out, but one sick child or car breakdown can cost you a fortune.  Travel insurance (even for local travel) might help mitigate the cost of unforseen problems but they won’t cover every event that might go wrong.  Below are some of the other costs you need to factor in:

  •  Flying passengers might pay extra for checked bags, in-flight movies, snacks, bottled water, exit-row seating, window/aisle seats, and – in some cases – even assigned seats.
  • Car rental agencies will charge for fuel at a much higher rate than the cost of petrol down the block.
  • At many hotels, your room rate will get you only a room. Anything else – like parking, internet, breakfast and use of the gym and pool – will cost extra.
  • On some cruises, there are port charges averaging $500pp and are often not included in the advertised rate. More often than not some excursions are not included in the package.
  • Bottled water is rarely budgeted for. And when you’re in a hot climate or around tourist attractions, it adds up and buying at local concessions stalls is expensive. Just BYO reusable bottles.
  • Familiarise yourself with your destination’s tipping policies for all service providers including housekeeping, taxi and tour bus drivers, guides – just about anyone you talk to really!
  • Some countries levy a departure tax. Make sure you have cash available; they often don’t accept plastic.
  • Private beaches often charge for entry, and non-guests can also incur hefty fees just to use another hotel’s pool.

So you did your research six months before you leave, worked where to stay, what to see, good eating places etc and as you go to book – the prices change.  So why bother booking so early?

Easy – beat the rush.  Get the good rooms before somebody else does.  Remember you are mobilising your whole family.  School holidays coincide with peak tourism times, (naturally).  It’s not unusual for desired destinations and accommodation to be booked out months in advance.  Popular entertainment and tourist sites may be hard to get into. You could say,“Fine, I’ll go to a travel agent!”  This may ensure things get organised, but it doesn’t stop the hit on the wallet. In fact using a travel agent may draw on your budget.

Yes, to save for a holiday requires early planning, gathering all foreseeable costs, and then saving.  Saving, saving, saving.  To get the amount you need to set aside specific amounts each week/fortnight/month simply take the total and divide by the period of time.  So let’s say you need $10,000 for a holiday in six months and you get paid fortnightly, (assuming all months are four weeks long, which they aren’t,) then that’s 12 pay periods.  You will need to save $833 from each pay period.  That’s a fair whack of a basic wage.  And remember those sneaky costs and emergency cash.

If you can’t afford to save for a holiday like that and don’t wish to go into debt, then you will have to consider planning for a holiday in the longer term, or a cheaper holiday sooner.  The good thing about holidays is that they can be as cheap as they need to be without sacrificing the fun.  In future articles we look at cheap alternatives for family holidays, and money saving tips for overseas travel but until then “happy travels” to you.


0 comments… add one

Leave a Comment