Are your finances beach-holiday ready?

Ad agencies know better than to use that loathsome expression to exhort us to contort, distort and “ought“ our body into their conception of how it should look.
That was more about the superficialities in buying whatever product they were flogging than about our underlying health anyway.

I’ve come up with an alternative:

How to get our finances beach-holiday ready.

But we can return to the analogy. This is not a question of deprivation, punishment and then binge. It’s more about balance throughout the year, mindful spending, mindful investing and mindful saving. It’s about consciously avoiding loathsome comparisons, whether about our body, what we clothe it in or what home /holiday /vehicular backdrops we choose or don’t choose for our social media shots.

So how do we get our finances holiday-ready?

First off, set a realistic bar. Resist social spending, keeping up with the Joneses. This holiday is for you not for your platform.

Once you’ve set your bar and given yourself a goal, you’ve taken the first decisive step as the act of having a goal will help us achieve it. There’s a ton of research to show that saving towards a specific goal is much more effective than just random saving (although that’s good as well!)

Next, in terms of reaching that bar, think step-by-step. Try and maintain balance, not depriving yourself excessively which can actually set you up for binge-spending.

One way of increasing a holiday budget very simply is to have a “sinking fund” where we transfer money out of our monthly income into a dedicated bank account. That is great but I would not let it sit in that bank account unless you’re going to use it within the year. If you’re planning for holidays in several years then take money from that dedicated bank account and invest every month in the stock market, via an ISA if you haven’t already hit your £20,000 annual upper limit. [Have a read of my book for different stock market investment strategies and time horizons: discover it at bit.ly/10thingsmoney .]

This also has the advantage of what is called “pound cost averaging.” This is where you are not attempting to time the market by picking the perfect moment but just steadily investing month by month and riding out the shorter term gyrations while taking advantage of periodic market dips.

In this way, you can plan for holidays in years to come by putting your savings to work, not just amassing cash in the bank where its value will be eroded over time by inflation. And yes, gyrations in stock market values can also erode the value of your savings which is why you might want to split them into cash saved for next year’s holiday and cash invested in the stock market or in “alternatives” for holidays in five years’ time.

Another way of saving for future holidays is via “alternatives” like casked whisky or fine wine or coins. Any increase in the value of these assets over time has the advantage of being free of capital gains tax as they are classed as “wasting assets.”
Saving coupled with investing in this way gives our holiday budget a positive double whammy in helping us to live within our means and making our means go further.

That, my friends, is how we get our finances beach–holiday ready or mountain-holiday ready or spa-holiday ready or whatever you have in mind.

Happy holiday!

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