This article is for general information only. It is not financial advice and does not recommend a specific lender or product.

Holidays cost more than people expect. Flights, accommodation, spending money, travel insurance, airport transfers, it all adds up before you have even packed a bag. The good news is that saving up in advance is more straightforward than it feels, and a little planning goes a long way.

What has changed

MoneyHelper, Citizens Advice, and the UK Government's cost-of-living guidance have all updated their budgeting and savings resources in recent years. This article brings those sources together in one place and replaces an older version of this page from 2018.

Key updates:

  • MoneyHelper's free Budget Planner is now one of the most comprehensive free tools available to UK residents.
  • Citizens Advice has expanded its guidance on avoiding high-cost borrowing for discretionary spending such as holidays.
  • The UK Government's Help to Save scheme (for those on qualifying benefits) remains open and offers a 50p bonus for every £1 saved.

Why it matters

Borrowing to pay for a holiday is not always a bad idea, but it is worth thinking through carefully. If you take out a personal loan or use a credit card and then struggle with repayments, the holiday is long gone but the debt is still there. A bit of forward planning can mean you enjoy the trip without a financial hangover when you get home.

Who may be affected

  • Anyone planning a UK or overseas holiday in the next six to twelve months.
  • Households on a tight budget who want to avoid borrowing for non-essential spending.
  • People who have previously used credit cards or loans for holidays and want to try a different approach this time.

Practical steps worth considering

Work out the real number first. Before you start saving, try to get a realistic figure for the full cost: flights or travel, accommodation, food and drink, activities, insurance, and a small buffer for the unexpected. The MoneyHelper Budget Planner can help you see how a savings target fits alongside your existing outgoings.

Open a separate savings pot. A useful first step is putting holiday money somewhere you will not accidentally spend it. Many current account providers let you create named pots or sub-accounts at no extra charge. Some easy-access savings accounts also pay interest, which means your pot grows slightly while you wait.

Save a fixed amount each month. Divide your target by the number of months you have. Even a small regular amount builds up. If the monthly figure feels too high, look at whether the travel dates can shift to give you more time, or whether the overall budget can be trimmed.

Check whether Help to Save applies to you. If you receive Universal Credit or Working Tax Credit, the UK Government's Help to Save scheme lets you save up to £50 a month and earn a 50% bonus (up to £1,200 over four years). A holiday fund is a perfectly valid use of this scheme.

Think carefully before borrowing. If you do consider a loan or credit card to fund part of the trip, it can help to check the total amount repayable, not just the monthly figure. Our guide to holiday loans explains what to look for and what questions to ask before you apply.

Do not forget travel insurance. Citizens Advice recommends taking out travel insurance as soon as you book, not just before you travel. An unexpected illness or cancellation before departure could mean losing non-refundable costs.

What to read next

Sources

  • MoneyHelper, budgeting and savings guidance for UK residents
  • Citizens Advice, guidance on borrowing for holidays and avoiding high-cost credit
  • UK Government, Help to Save scheme eligibility and terms
  • StepChange, free debt advice if borrowing is causing concern (0800 138 1111)
  • National Debtline, free debt helpline (0808 808 4000)

If borrowing is already a worry, speaking to StepChange or National Debtline costs nothing and they can help you look at your options without pressure.

Related guides