Reading Time: 2 minutes

You Deserve a Break

With the Easter holidays around the corner, many people will be eyeing an opportunity to take a short holiday. However, with the cost of living continuing to rise in 2014, along with higher fuel costs and a weaker Rand, it is critical to ensure you have considered the long term financial implications that your dream trip could have.

Make a Plan

According to Hein du Plessis Managing Director at Debtsafe, whether your dream holiday destination is Parys or Paris, a well-defined savings goal can help you get there sooner than you think. “Start with creating a detailed and realistic budget that includes the cost of accommodation, travel, food, entertainment, and insurance. Always add an extra 10% for unexpected expenses. Now that you know what your holiday is going to cost, decide how much you can afford to save every month. Then work out how long it will take you to reach your savings goal.”

Du Plessis says that all too often, people find that they may not be able to save up enough by the time they want to go on holiday. “This leaves you with two options – save more every month, or find ways to make your holiday more affordable. “Fortunately, a holiday is a powerful motivator for making a few sacrifices. Giving up take-aways or not buying new clothes for a few months can help you reach your goal much quicker.” He says the other option is to reduce the cost of your holiday. “From putting up with budget accommodation to sharing the costs with a friend, there are many ways to cut corners and still have a blast. It also helps to plan your holiday well in advance as flights and accommodation are often cheaper if you book early. However, if you have some flexibility, there are great last minute deals to be found, particularly online.”

Rand to Dollar/Euro

Du Plessis adds that for those considering an overseas trip, particularly to “first world” destinations such as the US and many European countries, it is critical to factor in exchange rate fluctuations, with the Rand having recently depreciated significantly against most of the currencies used in these countries. “This means that in Rand terms, the cost of buying anything or staying in these countries has increased by as much as 10-20% this year alone.

“Ultimately, a holiday is a luxury, not a necessity, so resist the temptation to put it on your credit card. Interest rates charged on credit card debt are often extremely high, and due to the effect of compound interest, the total amount owed can snowball if left unchecked. Whether it takes a few weeks or a few years, when your dream holiday finally comes, you will enjoy it so much more when you know that you worked hard to achieve the goal you set yourself.”

Those under Debt Review

For those under debt review placing a holiday on their credit card is not an option since they no longer have access to credit. To get to your dream holiday you first need to work on becoming debt free. Once there a holiday is a well deserved reward for yourself. The same principles apply. Save and plan well to keep your costs down. For now your holiday destination might out of necessity be Parys but in the future…who knows?