The coronavirus pandemic has made many of us reassess how we manage our money. In fact, new research shows that more than eight in 10 UK adults (83%) are looking to improve their money management this year and have set at least one financial goal. While saving for a rainy day is still most people’s goal, a good number are also saving for a dream holiday in 2021.
The top savings goals for 2021
We’ve previously looked at the fact that half of Brits had no savings pre-pandemic. This all began to change when Covid-19 struck and lockdowns were enforced.
After being caught unprepared, many of us learnt the usefulness of personal financial responsibility and money-saving habits were widely adopted.
These saving habits seem set to continue in 2021.
According to new research by mobile money app Monese, the top three financial goals for most people this year are:
- Saving money for a rainy day (37%)
- Hitting a savings milestone (26%)
- Saving money for a dream holiday (25%).
Saving for a dream holiday in 2021
It’s no secret that travel and tourism have been among the sectors worst-hit by the pandemic.
Most of us have had to put our holiday plans on hold because of travel restrictions. Under the current lockdown, for example, holiday travel is not allowed.
However, there are reasons to be optimistic about the prospects of travel and holidays in 2021.
With Covid-19 vaccinations increasing, for example, it’s not unreasonable to believe that we might be free to travel or go on holiday again in a few months.
Some travel industry experts actually expect overseas holidays to return by May or June. The prime minister has also said that he is optimistic that people will be able to enjoy a summer holiday this year.
Nothing is guaranteed, of course, and there are still many unknowns. But people’s hopes seem to be relatively high. That’s perhaps the reason more than a quarter of us have made a dream holiday our top savings goal for 2021.
Saving money for a dream holiday in 2021
Whether you’re dreaming of a beach holiday, a city break, a cruise or even a safari, you‘ll need to have enough saved up to make your dream holiday a reality.
Here are three practical tips to help you save what you need for your dream holiday in 2021.
1. Track your expenses and cut back on non-essentials
Tracking your expenses over several weeks will help you identify areas where you can easily cut back or areas of low priority with expenses that you can redirect to your vacation fund. Here are a few ideas worth considering:
- Order fewer takeaways and cook at home more often.
- Cancel non-essential subscriptions (e.g. magazines, music and video streaming – it’s possible to replace them with free alternatives.
- Trim your weekly shopping budget by buying in bulk.
- If possible, cycle or walk to work to save on fuel costs or public transport fares.
2. Make a savings plan
Once you’re aware of your main expenses, you’ll be able to figure out how much you can afford to save each month towards your dream holiday.
Here, it’s useful to be realistic.
As mentioned by the Money Advice Service, it’s better to commit to a small and manageable sum than to try too hard and give up.
If your income varies from month to month or week to week, just put aside an amount that you know you can stick to, however small it might feel. You can always add to it later.
3. Keep your savings in a separate account
Keeping your savings in a separate savings account will help stop the temptation to spend the money on the spur of the moment. In fact, consider setting up a savings account specifically for the holiday.
Once you’ve established how much you can afford to save every month, you can even set up an automatic transfer from your current account to your savings account so that you don’t forget.
Remember: by putting your money in a savings account, you’ll earn a bit of interest on top, which could actually help you reach your savings goal even faster.
Final word
Following these practical tips offers a starting point to help you save enough for your dream holiday in 2021 and be ready to set off when freedom returns.
As a final tip, if you’re planning to holiday abroad, you can stretch your money even further by picking up a travel credit card. That way, you won’t be charged extra on foreign transactions and cash withdrawals.
