The easiest way to save for a holiday without sacrificing everything is to cost the whole trip, divide it by the number of months until you pay, and move that amount into a separate holiday pot on payday. Starting earlier makes each payment smaller, which is what lets you keep your emergency savings, pension and day-to-day life intact.
Most of the pain in holiday saving comes from leaving it late, underestimating the total and raiding other savings to fill the gap. This guide shows how to avoid all three.
Price the whole trip, not just the flights
A holiday budget that only covers flights and accommodation will run short. List every cost before you set a target:
- Flights or ferry, including bags and seat fees, or fuel and tolls if driving
- Accommodation, plus any tourist tax charged locally
- Getting to and from the airport, and parking
- Travel insurance, ideally bought when you book so you are covered if you have to cancel
- Food and drink for each day, attractions and local transport
- Spending money, plus a buffer of around 10% for surprises
- Passport renewal or kennels if needed
Work out your monthly number
Divide the total by the months until each cost is due. Deposits are often due months before the final balance, so plan for those dates rather than the departure date. The table shows how much timing matters.
| Holiday cost | 12 months to go | 6 months to go | 3 months to go |
|---|---|---|---|
| £800 | £67 a month | £133 a month | £267 a month |
| £1,500 | £125 a month | £250 a month | £500 a month |
| £3,000 | £250 a month | £500 a month | £1,000 a month |
Plug your own numbers into the savings goal calculator. If the monthly figure is more than you can spare, change the trip, not your emergency fund: go later, for fewer nights, or somewhere cheaper.
Run it alongside your other saving
A holiday is a planned expense, so it should have its own pot, separate from your emergency fund. If you only have one savings account, the holiday tends to drain the safety net, and the next car repair goes on a credit card.
- Open a separate easy access account or a named savings pot with your bank
- Set a standing order for the day after payday so the money moves before you can spend it
- Keep paying into your emergency fund and pension; if something has to give, reduce the holiday budget first
- Add windfalls such as a tax refund, birthday money or selling unused items straight to the pot
Find the money without feeling deprived
You do not need to cut every pleasure. Target costs you will not miss, and leave the things you enjoy.
- Cancel one or two subscriptions you rarely use until you travel
- Switch or haggle on one bill, such as broadband, mobile or insurance, and send the saving to the pot
- Use a savings challenge for a visible boost: the 52-Week Challenge builds £1,378 over a year
- Plan a budget for the holiday month too, so you are not short when you get home; the budget planner helps
Cut the cost of the holiday itself
Reducing the price is often easier than saving more. Travelling outside school holidays, being flexible on dates and airports, and booking self-catering for some meals can all lower the total. Our guide to saving money on holidays covers booking tactics, and holiday money tips explains how to avoid foreign transaction fees and bad exchange rates.
Get a free Global Health Insurance Card (GHIC) through the official NHS website if you travel in the EU. It does not replace travel insurance, and you should never pay a third-party site to apply.
Protect the money you have saved
Once you start paying for the trip, protect yourself if something goes wrong:
- Package holidays that include a flight should be ATOL protected, so you can get your money back or get home if the company fails
- Paying for something costing between £100 and £30,000 on a credit card gives you Section 75 protection, even if you only pay part on the card. Clear the balance in full so you do not pay interest
- Buy travel insurance when you book, not just before you leave, so cancellation is covered
Avoid paying for the holiday after you get home
A holiday on a credit card you cannot clear can cost far more than the trip itself once interest builds. Buy-now-pay-later plans also need careful tracking. If you are tempted, read how to save for a holiday without going into debt first. A small daily habit helps more than you might think: SYM tells you how much to put aside each day towards a goal like this and keeps a streak going so the pot keeps growing.
Frequently asked questions
How much should I save for a holiday?
How far in advance should I start saving for a holiday?
Should I use my emergency fund for a holiday?
Is it better to pay for a holiday by credit card?
Where should I keep my holiday savings?
- holiday savings
- sinking fund
- travel budget
- saving goals
- UK holidays