Tips on saving for your dream holiday

There are two extremes on the spectrum of financial planning. On one end, there are those who are overly frugal, saving for the future at the expense of today’s enjoyment. On the other end, there are those who enjoy extravagantly in the present, spending their income without consideration of the future.

We don’t have to be in either groups of those extremes. This life is not black or white, zero or one. There are many grey lines in life. Similarly, in financial planning, we want to save for tomorrow yet want to enjoy the things in life of today.

What’s the point of collecting wealth in your youth if you might not be able to enjoy it later in life?

In financial planning, we can break financial goals down into 3 parts. They are long-term goals such as retirement and child(ren) education planning, mid-term goals such as buying a home, and finally short-term goals such as traveling.

You would need to plan and prepare budgets for every one of your goals.

You may also make going on holidays as one of your yearly goals. If you have a higher budget, you can place going on holidays twice a year a yearly goal. What’s important is that you plan for it. Make it a part of your family’s savings plan.

How to plan for a holiday?

1.     Estimate a budget for holiday expenses.

List down all estimated expenses for you to travel to your chosen destination. The important expenses include:

1. Traveling: Fuel, toll or flight tickets
2.  Accommodation
3. Food and beverage
4. Activities: Tickets and fees
5. Emergencies: Allocation for unexpected expenses

Why is it important for you to have a travel budget? It is so that you don’t spend more than you’re able to and avoid from jeopardising your other financial goals.

2. Set aside an amount for monthly savings.

Let’s say, after calculating your estimated expenses, you would need RM5,000 for a trip to Thailand for 2 adults and a child. And if you plan to travel in the next year, you would need to save as much as RM417 a month.

3.  Prepare a special savings fund for holidays.

You can set up a separate bank account from your usual one as a savings fund for holidays. However, if you want to get returns on your holiday savings, you can save it in Amanah Saham Bumiputera (ASB) or Tabung Haji (TH), whichever can give you great returns without the risk of losing your capital.

When you have short-term goals like going on holidays, you will be far more excited and eager to save. There’s no need to wait too long until you have aged to enjoy the effort you’ve put in through the years.

Even going on holidays has its many benefits.

Firstly, resting outside the hustle and bustle of the city can increase your creativity and performance at work. According to a study by Ernst & Young, for every 10 hours of leave applied by employees, work performance improved by 8%.

Secondly, holidays can improve your health levels. In an experiment on 749 women in the United States, researchers found that those who went on holidays once every six years had 8 times the risk of heart issues compared to those who went on holidays twice a year. Remember, your body needs a break too.

Thirdly, you can spend quality time with your family when on holiday. Leave your work, mobile phone, and computer. Focus on your wife and children. This is the time to build the relationships within your family.

It’s clear that holidays have benefits. So it is not wrong for us to want to spend money to have a little bit of fun. Saving is not just for emergencies and retirement, we can also use our savings for enjoying life’s pleasures if we do have enough and a strategy to back it up.