Personal FinanceTravel

Budgeting For Your 2021 Holiday Abroad

South Beach, Miami. America

The past year has been tough for travelers. We’ve seen closed borders and travel bans, while loss of income has made it more difficult for many of us to afford flashy holidays abroad.

However, with positive results from the Covid-19 vaccine as well as a cautious roadmap to ease the UK out of lockdown, the possibility of kicking our feet back somewhere hot and sunny is starting to look a little more hopeful. 

Travel companies have really struggled to make ends meet this year, so we wouldn’t be surprised to see the cost of flights and accommodation soar this summer. With that in mind, it’s worth starting to think about how you’ll pay for your holiday sooner rather than later. 

Review your current spending

How are you using your money at the moment? If you need to find some spare cash for your holiday, it’s worth looking over your last few bank statements and considering whether there are areas of spending to cut down on. Whether it’s too many entertainment subscriptions or an addiction to the local take away, most of us have one or two unnecessary expenses. You can also look at fixed costs such as your mobile or internet bill and consider whether it’s time to move to a cheaper contract. 

Set up a dedicated savings account

Once you’ve decided how you’re going to save money, we suggest setting up a dedicated holiday savings account. Many modern bank accounts will let you split your money into separate ‘pots’, allowing you to separate out money depending on how you want to spend it.

Sunny beach pink piggy bank with sunglasses

Having your holiday fund separate from your main savings can help you avoid spending the money elsewhere. It’s also a great way to start building your excitement, and can motivate you to stay on track with your savings goals. 

Create a holiday budget

A budget needs to do two things. Firstly, it should set a realistic expectation of how much your desired holiday will cost. Secondly, it should show you how much you can actually afford to spend based on your desired travel date and monthly savings.

The amount that you’ll need to spend on your holiday will vary wildly depending on where you want to go and whether you’re willing to compromise on a few luxuries. Some trips are once-in-a-lifetime opportunities, and it can be worth splashing out – that all-inclusive cruise, or the family trip to Florida. If, on the other hand, you’re trying to cut costs and just want to get away for a few nights, a cheap flight and an air BnB somewhere in Europe might only set you back a couple of hundred quid. 

Since international travel is still some way off, you may need to be a little flexible with your budget. After all, none of us have a crystal ball to see what costs might be six months in the future. However a bit of research into your preferred destination and dates will give you a ballpark figure, and you can certainly start to calculate how much you’re going to be able to save. 

Sort out the required paperwork 

There are a few different bits of admin that you’ll need to do before you travel, and the sooner you can sort them out, the less you’ll need to worry about them. For starters, you’ll need to make sure you have a comprehensive travel insurance policy – especially given the current uncertainty that means holiday plans can easily go awry at the last minute. You’ll also want to think about whether you need a visa to travel or, in the case of holidays to America, an ESTA. 

Statue of Liberty. Aerial View of Jersey City and NYC

An ESTA – or Electronic System for Travel Authorisation – lets UK citizens (and those from other eligible countries) travel to the US without a visa. You need to be going there for holiday or business reasons, and your trip needs to last 90 days or less. For most of us, an ESTA will be more than enough to cover a jaunt to the States. 

You need to complete your ESTA application at least 72 hours before you travel, although doing it sooner will be better for your peace of mind. An ESTA is valid for two years once it has been approved, and will cover you for multiple trips to the US if required, so there’s no harm in applying early – even if the details of your trip are still being ironed out. Getting the paperwork in order it can help to ease a lot of the stress associated with planning a holiday, leaving you to focus on the fun stuff. 

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