Saving for a holiday

A holiday is one of the biggest one-off expenses most people face each year — flights, hotels, and spending money can add up fast. By starting early, you can compare prices on flights and accommodation, avoid the stress of last-minute costs, and reduce the temptation to rely on credit cards or loans.

Behavioural science shows that creating a dedicated ‘holiday pot’ helps keep your plans on track. This is known as mental accounting — assigning money to a single goal makes you less likely to spend it impulsively elsewhere.

Research also shows that saving in advance can make a holiday more enjoyable. The process of building your fund and counting down to the trip builds excitement, making the experience feel more rewarding when you finally set off.

Use this calculator to estimate your total holiday cost. Add flights, accommodation, parking, and extras. Switch to package mode to replace flights and accommodation with a single package price.

A clear timeline turns the holiday from an idea into a practical savings plan. Start with the target from Section 02, decide when the money must be ready and break the gap into contributions you can sustain.

1. 1

   Start with the full holiday cost

   Use the target from your holiday budget, including booking costs, spending money and a sensible buffer for unexpected expenses.

2. 2

   Choose when the money must be ready

   Work back from the payment deadline rather than the departure date. If a deposit is due earlier, make sure that amount is available first.

3. 3

   Set a regular contribution

   Allow for anything already saved, then divide the remaining target across the time available. Use the calculator in the next section to test whether the contribution is realistic.

Enter your target, timeframe, starting balance and AER. The calculator will show the monthly contribution needed to reach the holiday target from Section 02.

Choose an account that balances interest, access and separation from everyday spending.

An easy-access savings account is often a good fit for a holiday fund, while regular savers may offer higher rates if you're paying in each month. Savings pots can also help you keep the money ring-fenced and track your progress.

Remember that you may need the money before you travel to pay for flights, accommodation or deposits. Only use notice or fixed-term accounts if the money will be available when you need to book.

Look for accounts specifically designed for short-term savings, such as easy-access accounts, regular savers, notice accounts or a fixed-rate term that ends before you need to pay. A dedicated holiday account makes it easier to track progress and avoid dipping into your fund.

Building a holiday pot isn't just about cutting back — small, smart strategies can accelerate your progress without major lifestyle changes. Behavioural research shows that breaking goals into clear actions, such as £50 from a side sale, feels more achievable than chasing one large target. Here are a few proven approaches:

• Sources of extra money

  Put bonuses, refunds, cashback and money from selling unused items straight into the holiday fund.

• Make room in your budget

  Redirect low-value spending and use separate pots for travel, activities and spending money.

• Automate your saving

  Set a standing order after payday and use round-ups as a small extra boost.

A holiday fund can quickly be derailed by unexpected costs or poor planning.

Once you've built your holiday fund, the next step is to spend it wisely. Timing your bookings, securing a suitable exchange rate, and avoiding hidden fees can stretch your savings further. These strategies help every pound you've saved go as far as possible.

Prices for flights and hotels can swing dramatically depending on when and how you book. Planning your purchase carefully can make your holiday budget work harder. Poor exchange rates and unnecessary fees can eat into your holiday fund. Preparing in advance helps you avoid the worst rates.