Is my holiday addiction holding me back from my dream of home ownership?
In the past year I was alarmed to find out that I spent almost a fifth of my salary (18%) on holidays. I fear this extravagance may be holding me back from achieving one of my main financial goals in life – saving for a house deposit.
Although 18% may not seem a huge amount, with London being one of the most expensive cities in Europe for rent and transport, there’s not a lot left for me to save at the end of the month.
Travelling the world during that golden period between leaving university and before becoming fully encumbered with the trappings of adult life (children, mortgage etc.) has been an amazing experience. I am incredibly lucky to be able to do so. However, as I get closer to 30 I feel it is high time I took a more serious and practical approach to my finances.
I have always had a vision of what I want from life and that future has always included a house and a secure, carefree retirement. However, I am becoming increasingly aware that my holidaying habit is making this vision more blurred and less of a reality with each passing year.
When I sat down to put into figures how much I spend on holidays and then considered this next to my life goals, it definitely highlighted a serious mismatch of current habits versus desired achievements.
When was the last time you sat down and thought about your financial goals? More importantly, when did you last consider if your current habits are helping you to achieve these or pushing you further from them? It gave me a wake up call that my holiday addiction is definitely hindering my ability to save; I already knew this really but I was afraid to admit quite how much by.
It would appear I am not alone in my travel bug. The International Passenger Survey (IPS) by the Office for National Statistics reported that there were 72.8 million visits overseas by UK residents in 2017, a record high. The driving force behind this trend is millennials (those of us born in the 1980s and 1990s), who are predicted to drive tourism growth in 2019. A study by GfK found that millennials spend around $150 billion each year on holidays, prioritising regular travel and holidays over saving for a home deposit.
The problem is that for many people my age, the prospect of home ownership can often seem out of reach (especially in London). Spending on holidays is infinitely more appealing than scrimping and saving for a deposit, particularly for those of us forking out exorbitant amounts in rent each month.
Only one of my friends has managed to become a homeowner before the age of 25, and to do so he made considerable sacrifices. It would appear that to become a young homeowner these days requires not only a steely determination, but also extreme frugality and a ruthless approach to saving.
Such is my travel habit that I know I could never survive without my holiday fix and so going “cold turkey” (cutting out travel altogether) is not an option. I imagine I’m not the only one who feels this way. So, I have reset my expectations and set some goals. I have given myself two years to save, or at least start saving for a deposit, before looking to buy a property. I have also had to give up the dream of buying a property anywhere close to the centre of London, perhaps an unrealistic goal to begin with.
I have also decided to try find ways to curb my holiday spending. For any holiday addicts like me out there, here are six ideas that I plan to implement, which could help us spend less and save more, whilst still enjoying the occasional trip (or three).
Decide how much you are going to save each month for your life goal, move it into a separate savings account at the start of each month and DON’T be tempted to spend any of it. If you save in a Help to Buy ISA (individual Savings Account) the government will top up your savings by 25% (up to £3,000) when you use the money to buy your first home. Click here for further details.
Make a holiday budget for the year (decide what percentage of your income you are going to spend on holidays) and stick to it.
Set an ‘on holiday’ spending budget and let whomever you are holidaying with know – they might thank you for it. Do your research before you leave to find the cheapest places to stay. Airbnb isn’t always the cheapest option! However, Airbnb does have amazing self-catering options to help save money on food and drinks. Try to find out where the locals eat, as the cheapest (and often the tastiest) dining options are often outside of the main tourist hotspots.
Consider all destinations including staycations – could the Scottish Highlands be just as exciting as New Zealand? There are many exciting cities and places to visit in the UK that won’t break the bank and are truly stunning.
Book early and be flexible. Booking flights and train tickets as early as possible and being flexible on dates and times can save a huge amount of money. Skyscanner has a great tool for finding the cheapest fares. Why not change destination if the price has risen above your budget? The world is a very big place!
Don’t get caught out by hidden charges when using your card abroad or converting your money into local currency. There are a multitude of start-up banks waiving international charges which can save you a surprising amount of money.