While a majority of Belgians save money earmarked for an annual holiday, some of them just take out a loan. “Is it feasible to pay it off if it wasn’t feasible to save it in the first place?” asks one financial advisor
Be honest: Did you take out a loan to go on holiday this summer? If you did, you are not alone. About 11% of people living in Belgium borrow money to pay for their annual vacation. The figures come from a study conducted by DataSynergy and BNP Paribas Fortis among 1,000 residents.
Financial experts warn against this idea for a number of reasons. “Ask yourself whether it is feasible to pay off the amount on time if it was previously not feasible to save for your trip,” says Flemish financial literacy expert Els Lagrou. “Do the math so that you know ahead of time that you can for sure pay the loan back.” And be aware, she adds, that loans come with interest, so your trip will actually cost more.
It’s logical that you spend more money when you are on holiday than when you’re at home
Els Lagrou
She suggests that potential borrowers instead join the more than half of all Belgians who save ahead of time for their annual holiday. And create a separate account for it. “Then you can see the amount increasing and that motivates you to keep saving,” says Lagrou. “If it’s just mixed in with the rest of your savings, you don’t have a clear overview of your actual holiday money.”
It’s always a good idea to make a budget for your holiday, she continues, but include a buffer because almost everyone goes over their budget. “It’s logical that you spend more money when you are on holiday than when you’re at home,” she says. “You want to unexpectedly visit this museum or order that one extra cocktail. So if you know you’re holiday will cost €800, save €1,000.”
If you do borrow money to go on holiday, don’t for goodness sake use a credit card on top of that. “Otherwise at the end of the month you’ll have to make two payments, and that can lead to some unpleasant surprises.”