The majority of British holiday makers admit to overspending while they are away on holiday, and 40% are not always aware of the exchange rate when abroad, a worrying new survey reveals.
British holiday makers are not in control of their holiday expenditure, according to the latest NS&I Quarterly Savings Survey.
Over a third of Brits abroad fail to set a budget for spending money while they are away, but nasty surprises are common, with over a quarter of holiday makers alarmed at how much money they spent while away, the survey reveals.
A fifth fail to look at their financial situation before booking their holiday, and over three-fifths overspending while away. On average each person claims to exceed their planned spending by over £133, and half of them say they do so simply because they feel like they are 'worth it'.
But nearly a third of people spending more than they expect do so as a result of getting caught up in the excitement of being on holiday, and worryingly, nearly one in ten attribute overspending to a lack of understanding of exchange rates.
Holiday Spending: Financial Consequences
Each year Brits spend a considerable amount of money on holidays (nearly one in ten spend over £2,500 per year). But despite the large amount of money involved, many Brits fail to plan their holiday finances.
Over 43% stated that foreign currency did not feel as 'real' as pounds and pence and 40% said they were not always aware of the current exchange rate when travelling.
Over half of people who overspend on holiday do so because they are buying gifts, souvenirs or clothes. Another unplanned cost is 'extra activities' such as adventure sports, on which nearly a third find themselves spending more money. And catching nearly a quarter out is those 'hidden incidentals' that are often forgotten about when budgeting, such as transport costs to and from the hotel.
"There is no doubt that holidays and spending while abroad are costing Brits a lot more than many bargain for, but people need to think past simply enjoying themselves and to plan their finances so there are no nasty shocks when they get home and face the bills,” said Dax Harkins, senior savings strategist at NS&I. “Given the expense, it is great to see that a quarter of people do save in advance, but it is clear that more of us need to set money aside specifically for holidays or the holiday spirit will come back to earth with a bump on the return home."
As soon as the holiday begins to recede into a happy memory, people have to face the consequences of lack of planning. Nearly half of people admitted they did not look at how much money they had spent while they were away, so it is not a surprise that 26% of holiday makers said they were alarmed at how much money they had spent. A further 20%, however, said they were never surprised to find out how much they had spent on holiday, as they never even set a spending limit for when they were away.
This tendency for Brits to bury their heads in the financial sand is concerning, especially given the importance people put on their foreign breaks - 31% of Brits confessed they were already thinking about their next holiday before returning from the last.
However many people are not giving themselves enough time to save for such outgoings, as just over a fifth of holiday makers say they tend to book holidays spontaneously or less than one month in advance.