A holiday is more than a chance to relax – it can also work wonders for your physical and mental health. Unfortunately, the happiness of a holiday is tarnished for many Australians who return home from their trips saddled with debt due to inadequate financial planning.
Read this guide for ideas of how to finance your travel plans and how to save money on your trip, and speak to our experts for more financial advice and to compare your travel loan options.
Setting a budget should be the first step in any financial undertaking. Calculate how much money you have coming in and going out, then look for all areas where you can cut costs to help you save for your holiday.
If you don’t have enough room in your budget for holiday savings, this means you could struggle to repay a travel loan or other debt. This could require downsizing your travel plans for something more affordable, or delaying your trip until you can better afford it.
Saving up for your holiday means you won’t have to worry about borrowing fees or interest, but it can be easier said than done, especially if you don’t want to wait.
Research holiday costs to set a goal of how much you want to save and consider opening a dedicated holiday savings account to make it easier to track your progress. You could transfer funds into this account regularly or have a portion of your income deposited directly.
Saving is a long-term commitment, but the earlier you start, the more options you’ll have for your trip. If you don’t want to wait around, you’ll need to consider other finance options.
A travel or holiday loan is a type of personal loan provided specifically to cover travel expenses – from airfare and accommodation to activities, spending money, insurance and other costs.
How much you can borrow for a holiday loan and other details such as the interest rate and repayment period of the loan will be assessed by the lender based on your individual needs and circumstances. Most travel loans have a fixed rate, which means you agree to pay the same amount each month until the loan is repaid in full.
A travel loan can cost less overall than paying for your holiday by credit card, but you may not be approved for a loan if you have a bad credit history or are struggling financially, as there will be a higher risk of you becoming trapped in debt.
Paying for your holiday by credit card could be an option if you don’t have savings, but it can be riskier than a travel loan, and you may not be able to borrow as much.
You will need to make sure that your credit card is accepted by your travel agent and any companies you’re booking with separately for flights, hotels and other costs. If you’re planning to use a credit card overseas, there may be international fees involved.
Unlike a travel loan that’s repaid in regular instalments, the balance of a credit card must be paid off in full when it’s due, or you could face high fees and penalties. There may also be a risk of your card being lost or stolen on your trip, which could be difficult to replace.
On the plus side, you may find that your credit card provider automatically offers you travel insurance for your trip.
Remote working doesn’t have to mean working from home. If your employer offers remote work as an option, consider whether you could still complete your tasks every day from your hotel or on the move while leaving time for experiences.
If you don’t have a job that allows for remote working, you could top up your travel funds by working online or working overseas (if permitted). Some accommodation, such as hostels, may allow travellers to work in exchange for free room and board.
Holidays can be expensive, but there are plenty of ways to save money and ease the strain on your travel finance, depending on what you want from the trip.
Find out how much your holiday is likely to cost by adding up all the prices involved, from flights, hotels and tours to everyday expenses like food, spending money and requirements such as insurance, visas and vaccinations.
This will give you an estimate of how much you need to save and where you could make savings. As with any budgeting, it’s recommended to leave yourself extra as a buffer for unexpected expenses and emergencies.
You could save on many aspects of your holiday by shopping around. Organising your own flights, hotels and other details separately can work out cheaper than a package deal, especially if you’re happy with budget options.
You might not even have to cut corners on your dream holiday if you keep an eye out for offers or set up price alerts.
Where and when you travel can have a big impact on the price. A domestic holiday in Australia or even within your state could be cheaper than going overseas.
If you have your heart set on a destination, travelling outside of peak seasons will usually mean you can access more deals and avoid the crowds, though you may also be risking less favourable weather.
Like saving for your holiday, the earlier you start planning your trip, the better off you’ll be. This gives you more time to find the best deals and to take advantage of early rates.
Making some bookings early could also mean you’ll have more to spend and will be less worried about finances by the time you go away.
Travel insurance is an extra holiday expense you might be tempted to skip, but this could leave you vulnerable if you find yourself in an expensive emergency situation.
Compare travel insurance to find the cover that’s appropriate for your needs and the type of trip you’re taking.
If you’re considering a holiday loan or want more financial advice about your trip, talk to one of our personal lending specialists today. We’ll help you explore your options and find and tailor the best travel loan for your circumstances.
After graduating year 12, Dan began his banking and finance career at Westpac Banking Corporation in Brisbane in 1988. He worked for the bank for seven years, excelling in his career and working his way up to management.