HELLO, GOOD BUYS
How to budget for your next holiday
Congratulations! You just scored return flights to Europe for less than the price of your car rego but how much are you really signing up for? According to CommBank, a third of Aussies spend more on their trip than planned – and when the overall blowout equates to $900 million, it’s a pretty big “whoops”. Perhaps the figure is unsurprising, though, when you find out close to half of those don’t set a budget.
If you’re a buy-before-you-budget traveller, these tips could save you your sanity.
1 DON’T DREAD THE ‘B’ WORD
If you see yourself on a tropical island somewhere in the not-too-distant future, budgeting isn’t boring, it’s the first step in ensuring you’ll be relaxing rather than fretting over the first credit card statement when you get back home.
“There’s no easy way out,” says Expedia travel expert Lisa Perkovic. “You have to do the heavy lifting before you go. You don’t want to land in a destination and find all these amazing things to do and not be able to afford to do them. A lot of people ask me how to budget for holidays and it’s just about working out what your daily budget is going to be and how you might spend it.”
Then, the fun begins – if your idea of fun is squirrelling away a set amount of funds in order to meet your holiday goals.
“The key behind budgeting is consistency,” advises Canna Campbell, SugarMamma TV founder and author of The $1000 Project (out now via Penguin Viking). “Each year I normally go away for two weeks in summer and two weeks in winter so I have a set amount per month I transfer into a separate account that I’ve nicknamed ‘holiday savings’.”
2 PLAN, SAVE AND CONQUER
Before you skim past this step for fear of information drier than your bowl of All Bran, consider budgeting your ticket to stress-free holidays, happening more regularly.
“A lot of friends say to me, ‘you get away so often’, but it’s because we plan for it well in advance,” says Flight Centre head of marketing Jason Wolff.
From what Flight Centre sees, about 45-50 per cent of what you’re going to spend on a holiday is made up of flight and accommodation.
Start your budget planning by thinking about where you’d like to go but be flexible with your destination options; have a few in mind.
You might think the Greek Islands are out of your price range but next thing you know there has been a new airline route announced and flights are dirt cheap.
Then, look at the average accommodation costs for the destinations of your choice to figure out if it’s still a viable option for you. Allowing $200 a night for a twobedroom apartment will be easy in some places but impossible in a city like New York.
3 PAUSE BEFORE YOU BUY
Experiencing buyer’s remorse over $20 is one thing, but on a $2000 purchase you’re passing into stressrash, lost sleep territory. Before you click yourself into a purchase corner, take five and consider your other expenses so you don’t experience what happened to Expedia’s Perkovic after booking cheap flights to Hawaii.
“I thought, wow I can go to Hawaii, it’s really cheap … I didn’t realise it was an American public holiday weekend, all the accommodation was astronomically expensive and there wasn’t much left.
“Luckily we could compromise by looking for options where we could self cater to save some of the money we had to spend on accommodation.”
Check if travel agents or airlines you book with have a hold option, like Virgin’s Hold This Price, which lets you secure the price of domestic flights for up to 48 hours so you can suss other costs before committing. VIRGINAUSTRALIA.COM
A LOT OF FRIENDS SAY TO ME, ‘YOU GET AWAY SO OFTEN’, BUT IT’S BECAUSE WE PLAN FOR IT WELL IN ADVANCE
4BONUSES AVOID UNWANTED HOLIDAY
All your best-laid budget plans can fall in a heap before you even leave the airport if unexpected “hidden costs” rear their ugly head. The first step to avoiding them is prepping with protection.
“Travel insurance is a big one. A lot of people do forget about that until they’re just about to leave,” says Lisa Perkovic. “Sometimes if you use your credit card to pay for accommodation and flights, you get automatic travel insurance, which can save you up to $500,” suggests Canna Campbell.
Passports and visas can also slip travellers up. You might know you need an ESTA to visit the US, but did you know you need a visa to visit Canada or Brazil? Check the travel
I READ THE MENUS AT THE HOTELS ... I’VE BEEN STUNG ... I GOT INTO A SITUATION IN THE MALDIVES WHERE A BURGER WAS $US60
advice on the government Smart Traveller website and ensure your passport is valid for at least six months from the date you intend to return to Australia.
If not, “All of a sudden you might have to do an express passport application, which can be between $200 and $300,” says Jason Wolff.
Some countries will also charge a tax when you enter or leave, and by researching beforehand you’ll be prepared, or sometimes if you prepay it might be cheaper.
5YOURSELF DON’T FORGET TO FEED
The pre-travel work is done, now it’s time to get savvy on the costs you’ll be up for when you arrive in your dream destination. You could start, as Canna Campbell suggests, by contacting friends via social media to get an idea of living costs in the destination you’re heading to, then use online fare calculators or Uber to check transfer costs, and doublecheck for any hidden “hospitality” or “resort” fees attached to your accommodation, which are common in North America. There’s no detail too small to consider – right down to what you’ll eat each day.
“I read all of the menus at the hotels I am staying at,” says Lisa Perkovic. “I like to plan what I’m having but also, I’ve been stung before. I got into a situation in the Maldives where a burger was $US60 (about $80).”
Similarly, weigh up hotels versus apartments. You might forgo breakfast for a cheaper room rate but are there breakfast options close by? What restaurants do you want to eat at? And don’t forget about having to meet tipping expectations.
If you’re self-catering somewhere with a captive market, like the ski fields, it’s a good idea to do a quick search to see if you can order groceries online to help cut costs.
6 PRE-BOOK LIKE A BOSS
There’s nothing worse than arriving in a new city and not having the funds to do the experiences you really want to do. Researching the tours or shore excursions will help you to work out your spending money budget.
If you see yourself doing a food tour in Rome or skydiving in Hawaii, search for options on a site like Expedia or work with your travel agent to pre-plan.
“Most tours you can pre book will usually give a better deal than if you leave it till the last minute,” says Jason Wolff. “You cannot only get stung on price but sometimes there’s limited ticketed availability and you might just totally miss out.”
7PACKAGE? TO PACKAGE OR NOT TO
If you’re thinking, “ain’t nobody got time for that” level of research and prefer to go for an all-inclusive package, tour or cruise, there are still things to consider.
While bundling flights, accommodation and activities from one supplier delivers attractive rates, you might end up paying more in customisations or find yourself in a resort miles from the action.
“Make sure the accommodation suits your needs and check what it includes,” Canna Campbell cautions. “For example, if there’s a kids’ club at the hotel, does the package include it? Really try to check the fine print and also check the cancellation policy.”
On a cruise, enticing packages are laid out on a platter, but you’ve got to weigh up the pros and cons. Will you really drink enough cocktails to make that alcohol package economical?
8 AVOID UNWANTED FEES
Banks and telcos love travellers. When you switch on data roaming or start flashing the plastic overseas, there’ll be a whole lot of dollar signs awaiting your return, so arm yourself against a nasty shock by researching costs.
Does your phone provider offer a daily data package for your mobile overseas and if so, what are you in for when you accept? That $10 day pass might sound like good value, but if you’re not able to turn it off and on, it can add up to a huge bill at the end of your two-week holiday.
Then, there’s the old cash versus credit card debate when it comes to spending. Some banks like ING offer free international ATM withdrawals and eftpos transactions, reversing any ensuing charges from local ATMs, while others will be sure to sting you for every swipe.
If you’re planning on using your card overseas, check the fees or research the travel cards that will allow you to load funds, lock in your exchange rates and thereby reduce transaction costs.
9 APPROACH INTEREST-FREE WITH CAUTION
In an ingenious, or concerning, move, depending which way you look at it, interest-free holidays are now as easy as buying a new fridge or TV.
Flight Centre has offered interestfree finance for the past 18 months and Jason Wolff says the take-up is strong. “For those people that haven’t done the planning, when a great deal pops up they don’t want to miss out, and (interest-free finance) makes it possible for them to grab that deal,” he says.
Webjet Exclusives is another firm offering up to 12 months’ interest free in partnership with Latitude services and ZipMoney. But before you sign on the dotted line check the set-up and card fees involved and what it means if you don’t pay it off within the interest-free period.
“It’s really important that you factor those lay-by payments into your budget so you know you can genuinely afford it, and try to pay as much of that cost upfront as possible,” says Canna Campbell. FLIGHTCENTRE.COM.AU/INTEREST-FREE EXCLUSIVES WEBJET.COM.AU/UP-TO-12-MONTHS-INTERESTFREE/
10TOOLKIT YOUR BUDGET PLANNING
Financial adviser Canna Campbell’s Sugar Budget app helps make holiday savings part of your everyday.
ASIC’s MoneySmart website provides savings goals and budget planner calculators to help you plan and save for a holiday.
MONEYSMART.GOV.AU/MANAGING-YOURMONEY/SAVING/SAVING-FOR-A-HOLIDAY Specify your maximum budget in Webjet’s “Where can I go” tool so there’s no temptation to overspend.
Run through Webjet’s “Before you go” checklist to avoid unwanted, and expensive, surprises.
On a cruise, consider if you really will drink enough cocktails to make that alcohol package economical.