Family holiday without blowing the budget

Family holiday without blowing the budget

Whether you would like to expose your children to other cultures, perspectives and experiences, or simply kick back and relax while the kids indulge in supervised water sports, an overseas family holiday can offer many rewards. It can also break the bank.

But it doesn’t have to. It is possible to have a family holiday overseas and keep costs within a reasonable budget – all it takes is some planning ahead, a little flexibility and savvy financial decisions.

Be flexible

Travelling at peak seasons can be up to 30 percent more expensive than at other times of the year, as flights, accommodation, car hire, and even restaurant costs rise accordingly. Leah Squire, owner of online travel agency, encourages families with children not yet in school, or with kids in kindergarten, to travel outside the school holiday season to avoid paying a premium.

Or simply opt for destinations where the low season coincides with school holidays here. Squire suggests travelling to Europe or the US during the Christmas break rather the more expensive northern hemisphere summer months of July and August. If you would prefer a warmer holiday, she recommends Florida and Los Angeles in the US, and the Caribbean.

Plan ahead

Unless money is no object, don’t leave it to the last minute to book your family holiday, Squire advises. “The earlier you can possibly book, the cheaper it will be,” she says.

“The old myth that if you book flights at the last minute you will get a standby rate is simply not true. There is no such thing as standby rates. The closer you leave it to your departure, the dearer it will be.”

An additional benefit of booking your holiday early is having a time goal in which you can concentrate on saving your spending money.

Opt for an all-inclusive package

The epitome of hassle-free holidays, all-inclusive packages at multinational resorts – such as Club Med – can save you a lot of money by including flights, accommodation, all meals and endless free activities for active youngsters, all in the one price.

“It can seem a bit more expensive upfront but you can save thousands,” says Squire. “At the end of the day, your flights and accommodation aren’t the only costs to worry about – you end up spending a lot once you arrive at your destination, but all-inclusive holidays eliminate that problem.”

Speak to a travel agent or expert to uncover the best packages, bonus-nights deals, kids-eat-free specials and activities.

Choose money options wisely

These days you can arrive in any country in the world with just your regular debit card and credit card and have instant access to cash or credit. However, the cost of such a convenience comes in the form of currency exchange fees and ATM fees. Using a debit card to withdraw money from an ATM overseas can cost you around $5 per transaction.

A travel money card, a popular option now offered by all banks, is a cost-effective alternative. You pay a small fee for the card (Commonwealth Bank, for example, charges $15) but you avoid currency conversion fees and there are no transaction fees on purchases. You can also lock in the exchange rate to avoid any nasty surprises.

“You can load the card with your spending money and have peace of mind because it’s not linked to your bank account, so there is no safety issue,” Squire says.

If you use up all the money on your card, you can easily reload it online from your overseas destination.

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Learn more about savings accounts

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.