Holidays without financial baggage

All / 13.12.2017

We all need something to look forward to and for many members of Generation X the lure of discount airfares and package deals are irresistible; others have luxury holidays high on the agenda.

And why not? We all love a holiday and what’s more, happiness, apparently, is not just in the holiday itself, but in the planning of it too.

Research conducted by Roy Morgan Research concluded that people with an overseas holiday planned are optimistic about the future. Not surprisingly, there’s a demonstrated link between optimism and health and well-being.

But it’s not just the planning; it’s how you fund your trip that has the biggest impact.

Alex and Tony are both in their mid-40s. During their annual portfolio review with us, Alex talked of their dream to visit Europe. With a hefty mortgage, they couldn’t see how they could afford such a holiday without refinancing their home.

To their surprise, we suggested they consider a savings account tailored to meet this specific goal.

These accounts are opened with a small initial sum, and pay bonus interest to encourage regular deposits.

Assisted by their local travel agent the couple planned the holiday of their dreams. They paid the upfront deposit, and with our guidance, selected a suitable account to save up the balance. An agreed amount was automatically transferred from each of their salaries every fortnight to this new account.

Eighteen months later, Alex and Tony sent us a selfie taken while sipping coffee beneath the Eiffel Tower.

Saving for something upfront may be considered somewhat old-fashioned. These days, there is a variety of options for funding the trip of a lifetime.

Some people sell assets like share portfolios or the ‘mid-life-crisis’ jet-ski that never got used.

Many others turn to credit cards or holiday loans.

Holiday loans are unsecured personal loans lending up to $50,000 over terms of up to seven years. They’re quick to establish and approved cash is easily accessed. Interest is calculated at personal loan rates, i.e. lower than a credit card.

Jules and Paul financed their holiday using a holiday loan and returned with some fantastic memories. They also came home to a sizeable debt.

Many returning holiday-makers experience a kind of depression known as Post-holiday blues. Seriously – you can Google it!

Post-holiday blues seems to coincide with the fading of the tan and the unwelcome arrival of loan statements.

With little incentive to save for the holiday before they left home, the couple had zero incentive to pay for it once they’d returned.

The Huffington Post suggests that to beat post-holiday blues, simply plan your next trip. Dispirited, Jules and Paul couldn’t even dream about another holiday. They were left depressed and servicing a loan that impacted their lifestyle for years to come.

Conversely, Alex and Tony returned from their big trip refreshed and debt-free.

With proof that it works, the couple drew up a new budget and savings strategy a few weeks after getting home. Having ticked Europe off the list, they’re eagerly anticipating their next adventure in South America. We’re looking forward to following their travels on Facebook!

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.


Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

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