How to budget for a holiday

Find out how to budget and save for the holiday of your dreams and how Aqua can help.

Young adult female smiling while on a travel journey, with airport departures board blurred in the background.

Written by Team Aqua

Published on January 7th, 2020

Last reviewed on September 21st, 2023

6 mins read

Budgeting your money

Saving for your dream holiday doesn’t have to be a headache. Whether you’re looking at a city break or have your sights set on an all-inclusive holiday in the sun, this guide shares our money saving tips for budgeting for a holiday and what you need to know if you’re taking your Aqua card abroad with you.

Saving for a holiday

Saving for any big purchase can be daunting, but learning how to budget puts you in the best place to start planning, and breaks it down into more manageable chunks.

Getting clued up on the full cost of your trip is the best place to begin. Researching all aspects of your trip, from accommodation and travel, to city taxes and spending money will help you to save and plan a stress-free getaway.

Top tipIf you’re saving for a holiday with a partner or friend, why not make it fun by setting up weekly or monthly saving goals and tracking your progress.

Decide on where you are going

The first port of call when planning your holiday is deciding on a destination. If you already have one in mind, have a look at the best time to travel. For example, travelling outside of the school holidays where possible can save hundreds of pounds on your holiday, but check to see when the destination is in season. You don’t want to book a beach holiday in the middle of monsoon season!

Digging a bit deeper with your research could save you money, too. For example, staying in a lesser known or up-and-coming area or resort may be a lot cheaper.

Top tipIf your destination is a known tourist hotspot, try to stay slightly out of the city. You’ll save money on your accommodation and eating out, and can use affordable public transport to see the sights.

Work out current costs of the trip

The best way to save for a holiday is to work out the total cost of the trip – that includes more than just travel and accommodation. Think about the activities you want to do, eating and drinking out, spending money for shopping.

Making sure you’ve accounted for any excursions, additional transport and any taxes too means you can manage your budget better and set a realistic saving goal. Then once you’re there, you can have stress-free holiday and make the most of your time away.

Top tipInclude a ‘just in case’ contingency in your budget. This way, if an unplanned activity or experience comes up you don’t have to miss out.

Costs of a holiday

Travel

Whether you’re flying, taking the ferry, or catching a train, you automatically budget for your mode of travel to get to your destination. But what about when you arrive?

If you’ve bought a package deal your transfers from the airport to your hotel may be included in the cost.

If not, shop around to see what’s available. If you’re in a group and your accommodation isn’t too far from the airport, it might be faster and work out cheaper to book a private transfer or taxi.

If you like to get out and about to explore, you’ll want to budget for daily travel expenses. With some quick online research you should be able to get an idea of local transport cost or how much certain taxi journeys costs.

Some popular city break destinations offer 24 or 48 hour travel cards that give you unlimited access to certain forms of public transfers. They often also include free or discounted entry into named museums and additional discounts on restaurants or other experiences.

Top tipIf you’re booking your hotel and flights separately, set up a Google Flight Alert - Opens in a new windowfor your destination and dates to keep track of prices. You’ll receive an email to let you know whenever the prices change for your dates.

Accommodation

The type of holiday you have in mind may open up your accommodation options. For example you might enjoy renting out an apartment or villa rather than a hotel. If there’s a big group of you or it’s a short stay for two, this might work out cheaper per person than staying in a hotel.

If a hotel stay takes your fancy, find out the different type of board options on offer. For an additional cost you could go all-inclusive to have all your food and drink included in your stay, or if you like to go out and experience authentic local foods, culture and atmosphere, then opting for a hotel that includes breakfast included in its price could be for you.

Top tipSome European countries charge a small city or tourist tax when you arrive at the hotel. Make sure you look this up before you leave.

Insurance

Even with all the planning in the world, it’s best to be prepared for the unexpected. Travel insurance is a worthwhile investment for any holiday. While there are different types of insurance available depending on what type of holiday you’re going on, they all cover you for things like illness and injury or if your holiday gets cancelled by the provider.

As with all insurance, it’s best to shop around and compare quotes using a price comparison tool. If you’re going away more than once in a 12-month period, have a look at the annual policy to save you money.

Top tipYou might already have valid travel insurance with your bank – double check before you leave so you don’t end up paying for it again.

Food

If you haven’t opted for all inclusive, a look on TripAdvisor or other reputable travel websites will give you an idea of the average cost for a meal in the area and reviews of local restaurants. Use this insight to create a daily eating out budget, and if there’s a nice restaurant that’s a bit more expensive you can plan for that too.

In some countries they may charge for seafood or meat by weight, rather than for the dish so it’s a good idea to clarify this before you order to avoid any surprises!

Top tipGet to know the local lingo for set menu offers. For example in some parts of Spain there is usually a Menu del Dia at lunch, which will generally offer you a small three course meal and drink for eight to 14 euros.

Other spending money

Other things to include in your budget are:

Trips and excursions – this may be something you can book through your hotel, or travel agent. Have a look to see if there’s anything you’d like to do so you can get an idea of cost before you go.
Sunbeds – if you’re going to the local beach or a beach club, there will be a charge. Local beaches usually charge a small amount to rent a bed for the day, whereas going to reputable beach club could cost £30 upwards for a standard bed.
Tips – always check what the tipping culture is like in the area you are visiting, and include this in your budget too.

Holiday budget planner

Once you’ve planned your dream holiday and have an idea on the total costs listed above it’s a good idea to create a Holiday Budget Planner - Opens in a new window. This handy tool allows you to manage your daily holiday budget by individual costs and map out everything you plan to spend.

Now you’ve set your saving goal you can check your monthly household budget to see what you can comfortably commit to saving each month, and find out how long it will take to save for your holiday.

Top tipMaking small savings in your everyday budget, like swapping your lunchtime trips to the sandwich shop for a packed lunch could see you jetting off sooner than you think.

Credit card for a holiday

A credit card can be a useful tool when going on holiday, if used correctly. Booking flights and hotels on your credit card can be a sensible move, as you’ll be protected for purchases over £100 under Section 75 of the Consumer Credit Act. That means you could get a refund if something goes wrong, like a flight operator going bust, or the hotel overbooking its rooms.

If you are planning on using your card to book any part of your holiday, make sure you’ve made a repayment plan or you’ve put aside enough money to pay it off. Most importantly, don’t use a credit card to pay for a holiday that you can’t really afford.

The other time you might use your card is when you’re on the holiday itself. In this situation, a credit card can be a useful emergency measure, for example, your flight is delayed meaning you need to pay out unexpectedly.

If you are planning on using your card abroad, make sure you’re aware of any fees for spending outside the UK. If your card provider charges fees, it’s probably best to stick with cash or a travel card as it’ll be cheaper than using your card.

Failure to make payments on time or to stay within your credit limit means that you will pay additional charges and may make obtaining credit in the future more expensive and difficult.

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