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Start your summer holiday savings now

Start your summer holiday savings now

September 4, 2009

With record low overseas air fares across the country, your dream holiday may be just around the corner with a smart savings plan. Jack Han reports.

Now that spring has arrived, Australians are starting to think about saving up for the summer season and the promise of a relaxing holiday. However, the right savings plan could mean the difference between lounging on white sandy beaches and settling for a sunny spot in the backyard.

Tourism Research Australia is forecasting outbound trips made by Australians to decrease 1 percent in 2009 to 5.8 million – the first drop in six years .

This has been attributed to rising unemployment and the recovering economy, which has seen Australians reduce their spending habits. Many are also hesitant to take time off work when unemployment is expected to increase.

This will deal a big blow to expensive destinations such as the United Kingdom, which is expected to see a decline in Australian visitors of 7 percent compared to 2008.

However, the costs of travelling to foreign destinations have reached many record deals recently, with return flights from Sydney to London costing around $1,400 , and the infamously expensive Sydney to Los Angeles trip has been scaled back to less than $1,000 .

So what can you do to take advantage of the cheap holiday season? The important thing is to start saving right away, and set up a savings account specifically for your goal so that you don’t become tempted to dig into the funds.

By putting away just $100 a week, you’ll be able to afford return overseas flights by Christmas. And if you’re looking after a tight budget, the most popular destination remains to be New Zealand, where the cheapest flights are below $300 .

How about if you wanted to save for a bigger holiday next year? This is where finding the best savings account can help you pocket valuable dollars for your trip.

For example, let’s take Angela, who wants to save up $5,000 for a summer holiday at the end of 2010. This will cover all of her accommodation, airfares and insurance needs for at least three weeks, but she doesn’t want to use any of her existing savings to travel.

On today’s highest online savings account of 5.11 percent, Angela could open a UBank USaver account and achieve her goal by only depositing about $75 per week for the next 16 months.

On low interest savings accounts of around 2 percent, Angela would need to save $80 per week for the same goal. At the end of her 16-month savings plan she would return two-thirds less in interest than the UBank account, which is about $62 compared to $158.

Therefore, by taking the time to compare for the best account, and sticking to a savings plan, Angela will be able to maximise her return and secure the bonus rates offered by online savings accounts.

Saving for a holiday should be as relaxing as the vacation itself. Many online savings accounts will plan your savings goal for you, so the hardest thing for you to do is picking your paradise escape.

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