Just because you are living on a pension or a fixed income doesn’t mean that you cannot afford to go on an exciting holiday, even overseas! Here are some tips to save up the funds you need for your dream holiday on a pension, as well as making your pennies go further.
Plan your budget
With good planning, anything is possible! Do some research and work out how much the holiday will cost, taking into account flights or transport, accommodation, meals, insurance, and spending money. Then work out how much you can put aside each month after you have paid your regular expenses. This will tell you how long you need to save up for your holiday.
Be sure to be realistic in your figures – there is not point setting savings goals you will not be able to meet or underestimating the real cost of your holiday. However, be ambitious too – don’t set your sights too low!
Control and maximise your savings
It’s not enough to just set a budget, you need to make sure you stick to it! This means close control and tracking to make sure you are sticking to your goals. Be disciplined and make sure you save the required amount every month, even if it means putting this aside as soon as your pension comes in. If something comes up and you are not able to put this much aside, make sure to update your budget and your timeline.
Make sure you put your money in a savings account which gives you good interest, so that you maximise the amount of savings you have. Talk to your bank to see if they can set up a new, dedicated savings account with better interest than you are currently getting. Banks make new offers for high-interest savings accounts all the time. Generally these have requirements that you cannot withdraw money until you close the account, but this won’t be a problem if you use the account solely to build up savings for your holiday.
Be on the lookout for good deals
There are many ways to cut costs and make your holiday more affordable.
Booking ahead can mean significant savings on both flights and accommodation – so plan well in advance and take advantage of early bird specials. If this means waiting a bit longer, it will be worth it for your dream holiday!
Consider when and where you are taking your holiday. Look at traveling in the low season. Most destinations have a ‘peak’ and ‘low’season, and prices can vary significantly between these periods. Especially, make sure you don’t book your holiday during school holidays, when prices skyrocket everywhere! Also look for alternative destinations: especially when travelling overseas, visiting the most famous spots and towns can be much more expensive than staying in their less famous neighbours down the road which often offer a similar experience.
Be smart with your credit card
As a general rule, saving up in advance to pay for your holiday is a much better option financially compared to borrowing money or charging it to your credit card. Putting your holiday on your credit card means that you can pay large amounts of interest, especially if you pay your card off with only a small amount each month. This means your $2000 holiday could end up costing you around $3000!
However, charging major purchases to your card when you have already saved up the money and can pay it off straight away can actually be a really smart thing to do. Often purchases you make on your credit card are protected, meaning you can make a claim against an airline or travel agent if something goes awry. Some credit cards also carry inbuilt travel insurance.
Additionally, if your credit card gives you rewards when you spend, such as frequent flyer points, you’re already ahead on the costs for your next holiday on a pension!