YMFT Finance

Financial tips for a modern world.

Going on holiday can be expensive. Even if you manage to pay for the holiday itself there are also additional costs. You may need new clothes and luggage before you go and then you may need to buy food and treats while you are there. You may be eating out, paying or entertainment, buying gifts and having days out which all cost money and therefore it is not surprising that many people will go overdrawn while they are on holiday. Although it can be fun doing all of those things while on holiday, returning to an overdraft that you have to repay is not so much fun. There are many steps that you can take to help to prevent an overdraft and some are considered below:

  • Save up money before you go – if you want to be able to spend the money while on holiday and on the holiday and not go into debt then you may need to think about saving up money both to pay for the holiday and the extras. This is easier if you plan well in advance It can be wise to see how much money you want and then set up a direct debit to put some money into a savings account each month to pay for it. If you want to go on holiday in a year’s time then you will split the cost by 12, if you are closer and only have six months then you will divide it by six. Clearly, the closer you are to the holiday, the more quickly you will need to save up and therefore the more money you will need each month. If it is getting really close then you may need to try extra things. It might be that you could sell some things that you own and do not need to raise some cash to pay for things. You might also be able to work some extra hours, get an advance on your salary and cut down what you are spending to try to raise the necessary money.
  • Take out an alternative loan – another option might be to take out a cheaper loan. An overdraft can be an expensive way to borrow money and so if you can find a cheaper method then this could be a better option for you, it will certainly save you money. Even if you have a bad credit rating. Do make sure though, that you are careful to look at all of the costs involved. Do not just compare on interest rates as there could be other charges as well. Also make sure that you note how repayments have to be made, how much they are and how often they need to be paid to make sure that you are able to cope with them. You also need to think about any effect that repaying a loan might have on you in the future. An overdraft will still have an impact but it will be repaid automatically when money goes into your account so you will not have the same responsibilities that you will have with a loan.
  • Reduce expensive activities – it may be good to also consider whether you can reduce the amount of money that you are spending on your holiday. Perhaps go to a cheaper location if you can but also consider making the activities you do less expensive. There may be cheaper options, such as self-catering rather than eating out, playing games at your accommodation rather than going out and things like that. It may be worth prioritising what you want to do so that you can make sure that everyone that is going does things they enjoy but you do not overspend by doing too many things.

It may feel a bit annoying that you have to go through all these thought processes and take these steps. You may just want to enjoy your holiday and forget about the cost. However, it is important that you make sure that you are aware of how things might be when you return. If you have to think about finances and repaying debts it might cause you stress or worry. This might mean that the relaxation that you got from the holiday soon disappears as you start to worry and this will not be good. It is much better if you can come back from your holiday without debt worries so that you can continue to feel relaxed for longer. However, if you do want to borrow and spend more than you can afford then put together a plan of how you will repay it. Perhaps by taking out a more affordable loan or by working out what you will do to repay it when you return. Having a plan to work by should help to reduce or even eliminate the stress as you will know that you have a solution that you will be capable of working through. This should help you to feel in control of the situation and therefore feel less concerned about the situation. Do make sure though, that you have a plan before you go on holiday so that you do not worry about it while you are away or just after you come back and negate the benefits of the holiday.

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