Get your finances in shape for summer


You’ve been dreaming about your holiday on the beach for weeks.

Now that it’s almost time to pack your bags, the panic is setting in.

Have I packed the essentials? Is my passport up to date? Do I need travel insurance? Have I purchased my currency?

Endless questions… but perhaps one of the most important is, how can I manage my money to make the most of my holiday and avoid a financial hangover?

Here are a few tips to get you started. They’re not just for holidays; our tips should help you manage your money more effectively once the holiday becomes a distant memory…

It’s time to budget!

Budget. The word that can dampen anyone’s mood. But before jetting off, make sure your hard-earned holiday money will last! Setting yourself a budget for your holiday will help you avoid the temptation of overspending while you’re away and coming home to a painful financial hangover.

A budget planner helps me keep track of what I spend each day of each week, whether I’m going on holiday or just coping with daily expenses. You can take the traditional approach and write down all your expenses, or you can turn to online free tools such as Money Advice Service budget planner or apps like Money Manager Expense & Budget or GoodBudget to help you keep track of day-to-day expenses.

You will definitely want to let your hair down on your holiday, but the last thing you want is to come home broke! What if there was a way to save money while you’re away, automatically without noticing? Personal finance apps, such as OvalMoney and Chip, are making saving almost pain free.

OvalMoney, for example, combines tracking, saving and investing in one app. It rounds-up spare change from each transaction and deposits it into your digital savings account via a weekly transfer. You can opt in or opt out anytime you want. That way, when you are paying for things on your holiday, you can save as well. It’s a win, win!

Back home, but short on cash?

You’ve saved enough cash for your holiday and budgeted carefully so you know how much you’re going to spend while you’re away. But what about when you come home? Most of us have a cash flow problem after a holiday, and it’s tempting to think about using an overdraft.

An overdraft will allow you to borrow money through your bank account, but it can be a costly debt. You may find comfort in being able to use an overdraft as a ‘buffer’ at the end of the month when your cash is running low. But an overdraft comes with hefty interest and should only really be used for emergency funds.

There are two types of overdrafts: authorised overdrafts where you agree a borrowing limit with your bank; and unauthorised overdrafts, allowing a customer to spend more than they have in their bank account without agreeing a limit in advance. Both can be expensive and will incur charges. Bank account fees may differ, make sure to look on the bank’s website for updated fee prices or read your bank’s terms and conditions for overdrafts in their printed guides.

So have you thought about using your credit cards?

Another option to manage your cash flow could be to use a credit card. If you use a credit card for your expenses and pay off your bills in full every month, you won’t pay any interest.  But some people approach credit cards like ostriches with their heads in the sand. Don’t look at the account and the problem is gone. Make sure you keep a note of your spending and pay off your bills, in full and on time.

One way to avoid paying interest is to set up bank transfers from your debit to credit accounts to clear your balance automatically. And monitoring your account will help maintain your credit score and make informed spending choices. At the end of the month, if you look through your purchase you may be surprised how much you’re spending on ‘incidental’ purchases, such as coffee or lunch. There may be potential to make savings there!

You can also track your spending by opting to receive texts from your bank or credit card company. Text alerts can prevent overspending, help you reach targets and protect you from fraud.

Start planning your next holiday today!

So, now you’re budgeting, saving and managing your cash flow wisely… sit back, watch your savings grow and enjoy your dream holiday, whatever the weather!

About the author

Alison Pask, Managing Director of Financial Capability and Community Outreach at The London Institute of Banking & Finance, a registered charity and leading provider of financial education. It’s a specialist university college providing undergraduate and postgraduate degrees in banking and finance; and an awarding body for professional qualifications in the sector.

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