British adults are planning to spend an average of £5,517 on long trips this year, according to Nationwide’s 2026 spending trends report. Mad when you see it written down like that. For a lot of people that money goes straight on a credit card and they deal with it when they get back. I’ve done exactly that. Came back from a trip once with a balance that took four months to clear and spent the first week home feeling rubbish about it. Completely killed the good feeling from the holiday. It’s got nothing to do with how much you earn either. It’s whether you actually bothered to plan for it.
Why Travel Budgeting Matters More Than People Think
People treat holidays like they exist outside their normal finances. It’s a one off, the rules don’t apply, you’ll sort it when you’re back. But five grand on a holiday is five grand that’s not going into your ISA or sitting in your investment account growing. That gap is bigger than most people want to admit.
Say you’re putting £300 a month into a Stocks and Shares ISA. You spend £3,000 on a holiday you hadn’t saved for and you’ve effectively wiped out ten months of investing in one go. Do that every summer for ten years and the compound growth you’ve missed adds up to a serious amount. Go on holiday. Genuinely, go. Just don’t blow up everything else you’re trying to build in the process.
How to Actually Budget for a Holiday
Set a Number Before You Start Looking
Everyone does this the wrong way round. They go on Skyscanner, find something they like, fall in love with it, and then try to justify the cost. Before you look at a single flight, decide what you can actually spend. Total. Flights, hotel, food, drinks, day trips, spending money, all of it. Then find something that fits in that number.
Treat the holiday like any other savings goal. Work out the total, divide it by how many months you’ve got until you go, and set up a standing order into a separate pot. If your budget is £1,800 and you’re going in July and it’s January now, that’s £300 a month. Six payments, job done. You get there, you enjoy it, you come home and there’s nothing sitting on a card waiting for you.
Book Early and Stop Going in August
According to the Post Office Holiday Spending Report, booking flights early gets you consistently lower prices than leaving it late. Three to six months out is the sweet spot for Europe. Long haul, earlier than that.
Honestly though the bigger win is just not going in peak season. The same hotel in Tenerife is literally half the price in October compared to August. It’s still 25 degrees in the Canaries in October. Less people, cheaper everything, same sun. There’s no downside. People just default to summer because that’s what they’ve always done.
Actually Track What You’re Spending Out There
Most people plan the flights and accommodation and then just freestyle everything else for two weeks. According to the Post Office’s 2025 Holiday Spending Report, food and drinks are where UK travellers overspend the most when they’re abroad. Shocking to nobody who’s ever had a holiday.
Set a daily number before you go and check where you’re at each evening. Something like £60 a day per person covers food and activities fine in most of Europe as long as you’re not eating at places with laminated picture menus every night. That’s £420 for a week. Manageable, predictable, and you won’t be wincing at your bank statement when you land.
Protecting Your Finances While You’re Away
Use a Proper Card
Your regular debit card is probably costing you money every time you use it abroad. Transaction fees, rubbish exchange rates, ATM charges. Monzo, Starling, and Chase all do fee free spending abroad on their standard accounts according to their published terms. Takes ten minutes to set one up and saves you £50 to £100 on a typical trip for doing basically nothing.
Don’t Touch Your Investments
If you’re the type who checks their portfolio every day, being on holiday with nothing to do and markets moving is a recipe for a bad decision. Get everything sorted before you leave, turn the notifications off, and actually relax. Markets will do what they do. Nobody has ever made a great investment call from a sun lounger watching their balance drop on day three of a holiday.
Get the Travel Insurance
This one does my head in because it’s such an easy thing to sort and people skip it to save thirty quid. According to the Association of British Insurers, the average medical claim on travel insurance was £1,528 in 2024. A single trip European policy is £20 to £40. Just get it.
To save on every card payment and cash withdrawal abroad, see my guide to the best travel money UK options.
FAQ
How much should I budget for a holiday in 2026? Nationwide’s data puts the average at £5,517 for long trips. If that feels too much, a week in Europe for one person can be done for £1,200 to £1,800 all in if you book ahead and go shoulder season. Save for it monthly rather than sticking it on a card. Our free budget planner makes it easy to work out your own numbers.
Is it better to save for a holiday or put it on a credit card? Save for it, always. You’re literally paying more for the holiday if you’re paying interest on it afterwards. The only version of a credit card that makes sense here is a 0% purchase card where you clear the full balance before the interest kicks in. That works if you’re disciplined. Most people aren’t.
How do I stop overspending when I’m away? Set a daily cash limit and check it every night before bed. Simple as that. When you can actually see what’s left it’s much harder to blow through it. Avoid all inclusive deals if you’re trying to keep costs down too, they sound brilliant but they basically encourage you to eat and drink twice as much as you normally would just to feel like you’re getting value.
Sort the budget before you book, save for it monthly, take a fee free card, and don’t go near your investment account while you’re away. Most people know this stuff already. They just don’t do it.
Content on IceburgWealth.com is for general information only and is not financial advice. I am not a regulated financial adviser, and tax rules and figures can change. Always do your own research and consider speaking to a qualified adviser before making any financial decision.
This article is part of our Saving and Budgeting Guide, where you will find every related article in one place.
What Would You Do?
I'd love to hear your take on this. Have you been in this situation yourself, or would you do things differently? Let me know in the comments below. Your experience could help someone else make their decision.
Disclaimer: This article is for general information only and is not financial advice. I'm not a regulated financial adviser. Rules, rates and allowances can change, so check the latest details and speak to a qualified professional before making any decisions.
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