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How to save money on your holiday

Millions still plan to have a holiday in 2023, despite the rising cost of living.

But how do you best prepare your finances to help save you money?

New HSBC research suggests nearly three-quarters of Britons (71%) want to make sure they can take a break this year.

Here, we look at:

Ways to save up for a holiday

The study, carried out by Sticky for HSBC, surveyed 2,018 adults in the UK.[@sticky-hsbc-research-holidays]Footnote link 1, sticky-hsbc-research-holidays

The top 5 ways people have been managing their finances, so they can save money and afford a holiday, include:

  1. Spending less on eating out.
  2. Saving more money each month.
  3. Spending less on nights out.
  4. Spending less on clothes.
  5. Putting off large purchases such as a car.

The survey also shows almost half of holidaymakers (46%) prefer budget holidays, where they can spend less and stay away a little longer, rather than splashing out on a shorter luxury trip.

Are holidays more expensive?

If you've already booked somewhere in 2023, you probably noticed how much more expensive it is this year. Don't forget that the rising cost of living is not just confined to the UK.

For example, the cost of package holidays to Spain, Turkey and Italy has gone up by at least 20% since 2022, according to research by Which? In Greece, it's 30% more on average.

Hotel prices have also increased (more than the rate of inflation) and flights have gone up by as much as 71% compared to last year.

Which? also found that holiday lets in Spain, Greece, Portugal, Italy and France were 10% higher than last year.

Inflation is now falling in many tourist destinations but that doesn't mean prices are going down. If you're self-catering, you'll find the cost of food in supermarkets has gone up sharply compared to previous years. You may also need to budget more for eating out or going for a drink. 

How to budget for your holiday

It's a good idea to work out a holiday budget before you travel. 

Think about how many people are going, how long you're going for and how much you may need each day. For example, it's worth doing some research on your destination to find out the typical cost of things like a bottle of water, a coffee and an ice cream. And don't forget that restaurants often add tips automatically to bills in some places, such as the USA and Canada. 

According to the survey, here are the top 5 ways to plan your spending while on holiday:

  1. Set aside a certain amount of cash per day.
  2. Make sure you have money set aside for unexpected expenses.
  3. Prioritise your spending based on your budget and interests.
  4. Track your spending on a banking app.
  5. Look for low-cost activities.

What's the best way to spend money outside the UK?

There are lots of different ways you can choose to pay for things when you're on a foreign holiday. You may prefer to take cards or travel money – or a mixture of both.

Our survey says the most popular ways to do so are local currency cash (27%), followed by debit cards (23%), credit cards (18%) and prepaid currency cards (10%).

More than a third of people (35%) admit they don’t know how much money they’re spending when they’re on holiday because they don’t know the exchange rate

It can pay to do some research into fees and exchange rates, especially when deciding how to pay. For example, If you choose to pay in local currency, you'll avoid dynamic currency conversion fees and in most cases will get a better exchange rate. 

Our HSBC Global Money Account allows you to spend money abroad (withdraw cash or make card purchases in multiple currencies) without paying HSBC fees. Other non-HSBC fees may apply. It removes some of that unexpected spend – making it easier to plan and stick to your holiday budget.

Global Money is available for eligible HSBC current account holders who have the latest version of the HSBC UK mobile banking app. Terms and conditions apply.

You can also order Travel Money online from HSBC – choose home delivery or collect in a branch. If you choose to order travel money, we have tips to help you weigh up your options.

This article was last updated: 17/05/2024, 10:17