How Much Should you Spend on Holidays?

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  


Are you starting to dream of travelling again?

Leaving home over the past 2 years has been a risky endeavour, with local and border lockdowns occurring frequently and at short notice.

After booking and rescheduling at extra cost again and again I have avoided booking flights anywhere recently. But with state border lockdowns coming to an end soon, and international borders open, my feet are getting itchy.

After 2 years of minimal travel, (I haven’t even been interstate, despite several attempts to) I want to go EVERYWHERE this year. It’s hard to narrow down, but visiting overseas (and Australian) family will be a priority.

Prioritising Now vs Later

This is the debate I am (and I think we should all be) constantly having.

I’m guessing anyone reading this blog is interested in optimising their finances. If you are a high-income earner, even a short period of time focusing on sorting out your finances results in outsized benefits.

There are a few perfect freaks who started investing in their teens and religiously saved a percentage of their income since birth. If you are not one of those, getting to a great financial situation is still going to take some work and effort initially.

Most of us are guilty of unconscious spending, and high earners are likely the worst offenders. It’s easier to pick up bad habits, and not bother thinking about spending.

The initial phase of finding ways to cut spending usually feels pretty painful, but it soon gets easier. Once you find the right balance, when you have cut out low-value spending, and automated your investments, it becomes as easy as your original unconscious spending lifestyle. At this stage, your financial freedom increases, allowing options that weren’t available to you. If circumstances change you are less and less “stuck” as your investments grow.

It took us 5 years of gradually increasing our savings rate to reach coast FI (for retirement age 60). At the end of this, we are ahead of schedule to meet all our goals with our current savings rate. Our savings and investments are automated and don’t really require a lot of thought anymore.

It is easy at this point to continue being finance obsessed, saving every dollar and “Unconsciously saving” as the habit of saving everything can become as entrenched as unconscious spending.

Reflecting on life, and what you want out of it is vital. Too many people let the years pass by without really thinking about any of this. No one has a guarantee of how long we have to enjoy life. There has to be a balance between now and later.

If travel and holidays are a priority, you may want to allocate more spending to this, or work out how to get more for less.

holiday budget

What is the Average Spend on Holidays for Australians

The average Australian spends $4,750 on an overseas trip, around 7.6% of the average yearly income.

Concerningly, around 1/3 spend more than they intended.

How Much Do Holidays Cost

Australia is the 12th most expensive country to fly internationally from.

I have certainly noticed a return flight from the UK to Australia tends to be cheaper than the same trip leaving Australia.

Some data collated by Budget Direct suggest it’s not necessarily cheaper to travel domestically.

The average cost per night of an Australian domestic holiday is $193 per person, for a trip overseas the average cost of a night ranged between $162.25 and $233.33. Average holiday cost statistics 2020 | Travel Research & Statistics — Budget Direct™

What are your Priorities?

The key to all of these articles is that you should spend your cash on what truly brings you great value and enjoyment. If you find travel stressful and would rather be at home, you would have to be crazy to pay these prices to travel voluntarily.

But I enjoy a change of scene regularly and love to see new places to explore.

If travel is something you prioritise, budget for it. Work out how you can get the trips you desire inside your budget.

For some people, travelling is about experiencing Michelin 5* restaurants and staying in the fanciest hotels. I feel like I don’t have the upbringing to feel comfortable in these places! I’d rather carry my own bag to the room than fret about what (and how) to tip a bellboy. I cringe at the thought of taking small children to these fancy establishments.

For me, travel is about experiencing as much as you can. My priorities are seeing the sights, the kids having loads of fun and being able to relax. I like to stay somewhere comfortable, but can still enjoy roughing it for shorter breaks when the dollars are better spent elsewhere.

Work out what your priorities are when you holiday.

Holiday Goals

Time to write a bucket list. If you’re anything like me, the list of trips will be large and varied! If you start with everything, you can start to work out the best order for your trips.

holidays timing

Timing (Read Die with Zero)

When you are young, fit and healthy it is time to enjoy the most energetic activities. Splash your cash on the activity (bungy jump?) you won’t want to do when you’re older and save splurging on the fancy hotel until you’re older (and fussier).

If you are planning to start a family in the next few years, which trips would be best before travel gets a bit more complicated?

Young families are very varied in their willingness to travel. Some avoid it as the stress of transporting kids away from their familiar environment means parents can’t enjoy the trip anyway. Others are intrepid explorers even with small kids, strapping them into backpacks for extended travel. You kids could have medical conditions that may alter your ability to travel, but otherwise, I suspect do just adapt to what the parents expose them to.

We are somewhere in the middle. I do tend to plan travel around the kids’ needs. If they are happy and entertained, I can actually relax.

You may want to time your trips around the kids’ ages. Their ability to partake in kids clubs and sports lessons may also alter the ideal timing for your trip.

Lastly, small kids are very easy to impress. Don’t use all your money with the “Wow” holidays until they are ready to appreciate them.

Under 5’s love nothing more than to camp, cook marshmallows on a campfire and collect twigs and rocks. My under 10’s still love camping but also really enjoy playing with other kids at cheap family resorts with pool slides. I imagine it’s going to take a bit more effort to get teens to declare a family holiday as the “best trip ever”.

Setting a Budget

We should all set an annual budget for holidays. However, it is perfectly reasonable to spend more in one year, as long as you cut back the year before to make up for it. A big overseas holiday to a bucketlist destination is almost always out of budget. But perhaps you could manage it if you stick to camping the year before whilst saving up?

The average spend quoted above really doesn’t mean much. The amount you should budget annually depends on your income, goals, priorities as well as how far along the financial journey you are.

If you are just starting out investing, and aren’t yet on track to your goals it’s wise to reign in the travel budget. Once you are on track (or ahead) towards your big goals, it may be time to prioritise travel more in your budget.

Sticking to Budget

Remember to budget for:

  • Flights if appropriate
  • Travel insurance
  • Car rental or public transport / taxis
  • Accommodation
  • Meals
  • Drinks
  • Special ticketed activities
  • Catching up with friends
  • Any new clothes / luggage / equipment you will need to purchase for the trip
  • 10% Overspend fund

It is very likely you will come across great experiences on your travels that you haven’t budgeted for. Do yourself a huge favour and allow 10% or so for these unpredicted expenses. You will want to make the most of your time on holiday, and do all the things.

It can be sad when holidays come to an end, you don’t want to come home to a credit card debt to be paid off as well.


Squeezing Everything Inside the Budget

I’ll bet your ideal trip won’t fit inside your budget! Time to make it fit. Work out what are your priority “Must do” expenses and cut back on the lower priority items.


  • Using credit card/supermarket points to pay partially or fully for flights or accommodation
  • Staying in cheaper accommodation (camping, youth hostels, airBnB…)
  • Renting self catering accomodation so you can prepare most meals at home. Given eating out generally costs multiples of cooking for yourself, this is likely to be a great saving (and ideal for families with picky kids)
  • Using public transport instead of renting a car
  • Reducing car rental expenses by using credit card insurance instead of being ripped off at the airport
  • Bringing your own kids car seats to avoid the daily charge which seriously adds up!
  • BYO alcohol or abstaining
  • Reducing the number of ticketed events, and looking for natural and free attractions
  • Borrowing or buying second hand clothes/luggage/equipment

You may want to earn some find some extra money to cover the gaps

  • Working an overtime shift for holiday money doesn’t seem so bad!
  • Selling items from your home you no longer use

Planning Cost Effective Travel

An Epic Road Trip

Planning an epic road trip from home can result in a fun, fantastic, and reasonably cheap holiday. Australia is an incredible destination, and could take an entire lifetime to fully explore. We took 5 months to explore with our little family in 2016, and have barely scratched the surface.

Where have you still not been within an 8-12 hour drive of home? Perhaps this year is the time to get exploring! By avoiding flights (particularly once you have kids > 2 years old) you will save hundreds, or thousands of dollars.

The bonus of adventuring for the first time is the flexibility. You can adapt the journey depending on how it’s going. Worst case scenario, you can easily pack up and come home.

Travel to More Cost Effective Countries

Travel to certain countries is obviously a lot cheaper than others. Once you have paid for flights, a long holiday in Thailand or Bali can be very cost effective. Given the flights are usually the biggest expense with these trips, it is worth going to your destination once rather than have more than one holiday to the same area. You will need long enough to do everything you wish whilst you are there.

die with zero

Tack on Holidays to Family Visits

For those of you like me, with family overseas, consider booking flights with an extended stopover for a second holiday en route to your family. It means you get a pure holiday on top of the family trip, and save significantly on flights in comparison with booking a completely different trip.

Similarly, with family in Australia far enough away you need to fly, try and extend the trip and taking a side trip whilst you are there. Visiting family is awesome, but it can easily use all your paid time off as a full time employee.

Being able to take long enough off work for extended trips to make the most of your holiday dollars usually relies on being financially healthy with a flexible employer. Some employers (including public health) allow time off at half pay which massively increases your holiday flexibility. Being self employed can provide the most, or least flexibility depending on the business you run. I don’t see many farmers taking holidays!

Working Holidays

Are you a highly skilled worked in demand? Doctors and nurses are in short supply in so many rural and regional towns, often in fantastic locations.

Locum agencies will usually pay to fly you to the location, and will often provide family friendly accommodation if requested.

You may be able to negotiate days off between shifts, or to delay employer paid flights home for a few days. That way you can tack on a mini holiday to the (largely employer paid) work trip.

This is a great solution to those in the early days of getting serious saving and investing, and with little cash to spare. You often get to see a part of the country you would never have known about prior, and do some sight seeing without spending much. Meanwhile, you boost your savings with the extra earnings and help out a much in need workplace.

Don’t Miss out on Holidays Because you are Saving

No matter what stage of getting your financial life sorted you are at, I don’t think it’s a great idea to miss out on holidays all together.

Work out your goals, priorities, financial stage and get imaginative. Work out the best way to get maximum holiday fun for your budget.

Comment below, do you have any other tips to squeeze more awesome experiences from a tight holiday budget?

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Leave a Reply