Saving for a Family Holiday (Warren Ingram)

If there are two people that love going on holiday the most, it’s Warren Ingram and I! Unfortunately holidays don’t come free, so this episode deals with how to save for holidays. I am sure that almost everyone has a favourite childhood memory of a holiday taken with friends or family, or maybe even a school trip. Holidays make a huge impression on us, as children and as adults.

As Warren points out, spending money on shared experiences makes us happier than anything else we could spend money on. Family holidays are an important way to make memories and strengthen family bonds. Travel also enhances your child’s personal development and independence. For all these reasons, and more, family holidays are a worthwhile goal to save for.

Warren offers these tips for savings for your dream family holiday: 

• Make your older children part of the planning process.
• Decide which kind of holiday suits your family.
• Understand how much this holiday will cost.
• Set your joint savings goal, with the entire family, at the start of the year.
• Put aside money on a monthly basis, and track your progress against your goal. This may involve making sacrifices as a family, for example, eating less takeout. 
• Save into a money market or mortgage account since this is a short term savings goal.
• Take your dream holiday when you reach your goal!  

Disclaimer: Old Mutual Life Assurance Company (South Africa) Limited is a Licensed Financial Service Provider. This material is not intended as and does not constitute financial advice  or any other advice and is neither exhaustive nor prescriptive. It does not take into account your personal financial circumstances. Your financial adviser will assess your financial situation and needs and assist you to draw up a plan to help you achieve your financial goals. The views expressed by the contributor are his or her own (as an independently registered financial services provider, financial adviser or other independent capacity), and not necessarily endorsed by Old Mutual (as a separate financial services provider).

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Transcript

Old Mutual  00:00

Welcome to the Family Finance Show with Diana Granoux, proudly brought to you by Old Mutual. This podcast is your weekly guide to effective budgeting, planning, and future proofing of your family's finances. Because money matters to every family, and every family matters at Old Mutual. Enjoy the show.

Diana Granoux  00:20

My name is Diana, and this is the Family Finance Show, the podcast to help you manage your family's finances better. Every week, we share an episode on topics relating to increasing your family's income and managing expenses, controlling your debt, and investing for the future. 

Diana Granoux  00:40

Welcome to the Family Finance Show, and thanks so much for listening. Today, Warren Ingram is back on the show to talk about family holidays. Welcome, Warren.

Warren Ingram  00:49

Thanks so much for having me on the show again.

Diana Granoux  00:52

So, I think I've been looking forward to this topic, this specific topic for the longest time because I know that we both love going on holiday, and we both prioritise this spend item in our budget. So, maybe we can start off with a favourite childhood holiday memory. Do you have anything that sticks out?

Warren Ingram  01:09

Favourite childhood memory? I think it was - it wasn't very glamorous, I can tell you, I think it was Swellendam in the Cape. And it was one of those kind of real farm stay places where, you know, you rent out an old farmhouse. And we had a whole bunch of different families all around us. And I think we did, you know, it wasn't going into a city or into a coffee shop. I think we spent the whole holiday wandering around this farm and just spending the time as kids in the wild if you can say. And for me, that was certainly right up there as an all-time favourite.

Diana Granoux  01:45

Yeah, I think with kids you don't need to go on any fancy holidays. I have the same childhood memories. We never stayed in hotels or anything like that. We always camped; my parents love camping. And we went all around southern Africa. It was just great to be outdoors and to be away from home and discovering new places. So, yeah, that was my childhood, full of camping holidays. And any standout holidays recently that you've taken with your wife?

Warren Ingram  02:14

Well, I mean, so you know, I have to start because people are gonna always think I'm crazy. So, it's double income, no kids, and a massive priority on holidays over cars and everything else. So, we travel a heck of a lot. And for fun. So, you know, in the last while, the things that stand out for me would be Madagascar. I think that was certainly a trip of a lifetime for me. And it compared really well with a place like the Maldives. And actually, I think a little bit better than the Maldives, in all honesty. 

We've done a heck of a lot in the wild. So, you know, we've done Lion Sands, which I thought was really lovely, just an incredible experience to go, you know, in that sort of Kruger area. Quite a few years ago now, we've done the Serengeti and Ngorongoro Crater, and then a little kind of unheard-of gem called Mafia Island, which is south of Zanzibar Island. You know, again, one of those places that's not really kind of overcrowded with tourists, which is a big thing for me. Reunion Island wasn't bad either. 

So, we try and do a lot of islands. That's kind of our goal, we've got this book called "The 500 Islands You Must Visit Before You Die" and I'm doing my best to clock it as we go.

Diana Granoux  03:39

Sounds like you've been to some lovely islands and lovely places, and I think in my opinion there isn't a better way to spend your money. Definitely travel has been a priority for me, too. And I think just from my side, Cuba in 2011 was probably one of my most favourite holidays. And I think it was because it was just such an authentic experience. I just love that way of travelling, and I found a guy online who booked all the places for me. 

I stayed in little casas, which are like B&Bs, and I saw such an authentic side of the country. Something that you wouldn't see if you stayed in big chain hotels, which is my preference. Everyone has a different preference for holidays, obviously. And then I think with my husband, Namibia is my favourite. Such a great - such a great and unusual place, amazing landscapes. Botswana is also pretty cool. 

So, ja, we're lucky that we have those memories. I think that's also a great part of spending money on holidays, is that you're left with memories, not something that's thrown away after you finished using it. So, holidays are something that lasts forever in your memory.

Warren Ingram  04:46

I agree, and I think it's important as well if you are in a family, you know, that the family agree on those as a priority. And my wife, in the early days, felt that way. She just felt it was a bit wasteful for us to spend this money on all this travel. And so, I had to find, you know, ammunition to kind of help convince her that we weren't wasting the money. And one of the things that I found is there are actually studies on what makes us happy, you know. I'm not saying happy in the sense of being happy every day, that's an impossibility. But what are the things that, if one were to spend money, would actually cause you to feel better or feel, you know, better than you would having not spent the money? 

One of them is spending money on experiences, and most importantly, on shared experiences with other people. And there's a whole psychology around that, you know, it's the anticipation of the event and planning it, and then actually going on the event. And then it's the months and the years thereafter, where you spend time reminiscing about all the adventures that you've had. 

And so, that was kind of part of the logic that I used in the early days to convince her to put this into our budget, because it was, it certainly became our biggest line item in our budget. And I must say, I think she's, she's a firm convert now. But for people out there, you know, that's one thing, I'd say. I don't derive a lot of value out of spending money on material stuff. But on a great experience, you know, that really speaks to my soul. I can't think of a better thing than that, than travel.

Diana Granoux  06:15

I see a lot of that in my travel business. People have - they're spending their hard-earned money, which is after-tax money and disposable income. So, it's a good chunk of their money that they're spending on holidays. And they really have to be convinced. And I think they're convinced for all those reasons that you've just mentioned. 

So, I'm really lucky in my travel business to be able to plan holidays for people. I think it's the best job in the world for someone who likes to travel as much as me. But what I've learned from that, is that every family has its own specific preferences. So, some families, they like to do self-drive holidays, and they do self-catering. Other families - I'm thinking of American honeymooners, specifically - they don't want to drive at all, they want all their logistics arranged for them, and they want to stay in hotels. Really different preferences. 

Just to tell a quick story about this one client that I have. So, I'm very fortunate to have a billionaire client, and he's a dollar billionaire. And I don't think I've ever met such a man before. Or actually, when I worked at Naspers, I did meet Koos Bekker. So, he probably counts as well. But anyway, planning this holiday for this amazing family, it was quite a stressful thing, because the experience has to be flawless. So, you have to choose exactly the right experience. So, when you were talking about experiences, I was really thinking about this, because it has to be absolutely perfect. 

But of course, you don't need to be a billionaire to have a wonderful holiday. Like we spoke about our family holidays at the beginning, when I was a child camping, was just the perfect holiday for me. So, it's not really about the money. There are different holidays for different families and different budgets. 

So, Warren, how should one go about saving for a family holiday?

Warren Ingram  08:07

I think it starts with the family discussion to say what are the most important priorities in our life. And surely, you know, financial discipline is going to be one of those. And I guess if it's a family with kids, then you know education is important, housing and all of those things. And I firmly believe you have to put in the things that make us happy or that keep us motivated to make the trade-offs that we need to make when we're doing any kind of budgeting exercise. And so, I think for a family, you know, that would be the starting point is to say, let's set aside some money on a monthly basis that goes into our holiday fund. Let's decide, you know, what kind of holidays suits us; as you mentioned, everyone has a preference. And then let's start to plan towards that, and let's work towards it.

I think if you start that right at the beginning of your year, whatever your year might be (whether it's a calendar year, a financial year, or a tax year, it doesn't matter), that you work towards that. It makes those trade-offs so much easier when you say, "Well, we can't go eating out as a family every night or every weekend, because remember, we want to go camping in Namibia", for example. That's what makes people excited, it's something that we're working towards, rather than just saying we can't have. 

What you're saying now is we are choosing to do this instead of that, and so that becomes a much more positive experience. And I've seen it quite successfully done with families with children when they get a little bit older, to make the children part of that planning process. It's not just the parents coming up with the ideas all the time and, you know, then being held accountable by their kids who say "No, this is the worst holiday in the world, and how could you bring me here," etc. Because I find that's often quite a source of stress for parents, you know, and I don't understand it always, because I would always think a holiday must be amazing for everybody. But I think if you do it as a collective and you say, well, you know, we can - I know one family, who give one person in the family the veto every year. So, if they're four people in the family, they can decide on something, but the one person gets the veto to say "No, that's definitely not happening". And there are various ways you can do that. 

But I think it should be part of a monthly budget exercise, and it should be something that everyone plans for. And then you set that money aside immediately. And so, you know, you need to know that you're going to live on the rest of the money every month. And that needs to cover all the other things, including your savings and the like. And I think for me, that would be the way I would go, with transparency and engaging everybody in the family when they're old enough to start contributing. They don't necessarily have to make all the decisions. 

But you know, I think, there are probably lots of 11-year old’s that would go back to Disneyland every year. And that's certainly not going to be for everybody. But I think it must be something that you kind of do as a collective, whether it's a couple or all the kids and the parents in the family together.

Diana Granoux  11:07

Yeah, I really like the idea of a joint savings goal, because it's something that the family can do together, as you say. And I liked that idea about the veto. I hadn't heard of that before. Because if you get someone in the family who loves ballet, and someone who loves dirt bikes, it's sometimes difficult to make a compromise with a holiday. But with enough discussion, I think that you can come up with a holiday that everyone likes, and everyone buys into. And if you make it a joint savings goal, and if the kids are a bit older, as you say, you can talk to them about how much will the holiday cost in total, is it cheaper if we go out of season, how long is it going to take us to save up.

So, you mentioned starting saving at the beginning of the year, it could be a 2/3-year plan to go overseas, maybe you want to go overseas with your family for the first time. So:

• Setting the budget
• Figuring out how much it's going to cost
• How long it's going to take you to get there

And I think it's just such a great lesson in general for kids, about budgeting, saving for something, and then when the holiday does come, everyone is very excited about it because everyone has contributed. And you could even get the kids to contribute part of their money - pocket money - or somehow, they could contribute towards the holiday if that's what you want to do in your family. So yeah, I really like that vision of joint savings goals, especially for holidays, which are so important for families. 

Warren Ingram  12:31

And I think that, you know, that's the big lesson I've gathered over the years in talking to people who are successful at setting aside money every month of their lives. It's definitely not something that they do as a way of withholding a benefit or, you know, the sacrifice that they're making. The way they do that successfully is usually "I'm working towards something, I'm saving towards something, I'm compromising for something, or trading-off for something". And they've got a vision of what that is. And it's something that's so crystal clear in their minds. 

I think a holiday, especially if it's not too far away, you know, it's something that everyone can visualise. We're going to go to the coast, or we're going to go camping or we're going to Disneyland. Everyone can look at that online and visualise it and work towards that. And so, I think it's such a positive lesson for life, as you say, and about how to manage money in general. But very specifically, for couples, you know, especially couples that have been together for a short period of time, where one of the parties might not be the best saver or the best budgeter. This becomes a way that they can work together and actually achieve their goals together.

Diana Granoux  13:37

And so, Warren, as the couple in the family are working towards that final goal and they're say putting money aside each month. Where do you recommend they put it, assuming they're going to use it quite soon for the holiday?

Warren Ingram  13:50

Yeah, so it's an important thing. A lot of the time, people are tempted to look for, you know, the best growth possible on their holiday money or their short-term money. And of course, that's a human response. But what we need to understand is the best growth unfortunately comes from things like shares or property or bonds or things that might deliver great returns in good times, and especially over long periods of time. But unfortunately, over short periods of time can actually lose money. And clearly for a holiday, you can't afford to suddenly rock up at the hotel and say, "I'm afraid 30% of my money got wiped out by the recent stock market crash, can I pay you later?" 

So, the answer is that you need to save it in a very high interest earning account and that would usually be a Money Market Account at your bank or maybe a fixed deposit if you can contribute to it on a monthly basis. Something that gives you the most interest but with no stock market or bond market or property market risk. 

And then the other solution, which is a little bit more tricky and requires a bit more discipline from people, is if you've got a mortgage, for example, obviously the rule one is pay off the mortgage and get it done as fast as possible. But that's not always possible to do over a three-year period, you know, you might have a 10-year plan for your mortgage. 

I often tell people, you know, don't be afraid of using your mortgage. If you're disciplined with money, use it as a savings place as well. Because if you owe, you know, let's say your interest on your mortgage cost you 8% a year, and you put extra money in there for your holidays, and you keep clear records and proper records of what you've put in, which is extra, then you can do that as well. But that requires discipline, it requires record keeping. And you can't just use that mortgage and the extra money, as you know, the fund money that you haven't budgeted for, it must be money that you've set aside on purpose for the holiday, which is in addition to the paying off the mortgage much faster than required by the banks.

Diana Granoux  15:45

Which is also why it's quite important to know how much you're going to spend on the holiday. So, you need to have a quite a clear goal in mind at the beginning. So that, as you say, you don't get confused about which money is for what, and the -

Warren Ingram  15:58

Exactly, and - 

Diana Granoux  15:59

Carry on. 

Warren Ingram  15:59

And I think the trick there is the quicker you get to debt-free, you know, the more money you can spend on holidays. And the more you can allocate to your long-term savings, but the more you can allocate to holidays. So, always, you know, the priority must be getting yourself debt free. And then watch the fund increase.

Diana Granoux  16:16

Hmm. Although, having said that, holidays do seem something quite unimportant and frivolous. But as you mentioned, at the start, they contribute a lot to happiness. And it's quite a good starting goal to start working towards as a couple. And as a family. I also consider holidays, very important for my kids and for the family. Because as we said at the beginning, that's where you make memories and you strengthen family bonds. And these are the holidays that you're gonna remember when you're an adult and potentially have children yourself. 

And also, I think for children's growth and development as well. Their personal growth. Travel is so great for that because it helps them with independence. It can be really transformative because it can really give them such an appreciation for diversity of people, culture, they can learn about conservation, there's so many different benefits beyond just having fun. So, it's definitely a worthwhile goal to save for.

Warren Ingram  17:14

I mean, I think it's one of those things if you're not constrained by being in the poverty cycle, and you've got some discretionary money, it should be right up there with some of the most important priorities for parents. You know, I think - I mean, it sounds funny to say it, but I think there would be a lot less war, you know, there'd be a lot less conflict in general, if people travelled more. The kind of gross ignorance that we see out of places like America at the moment, you know, with the elections that passed recently, and kind of just this conflict between the west and the east and the north and the south. It's amazing how when people travel that just goes away, and we start to realise, you know, we are different, and we do have different cultures, but at our core, we're the same. And I think that that fear of the unknown is often a cause of huge conflict, and I think to remove that, you know, make that unknown known. 

And you're 100% right, I think for anybody, you know, it definitely for kids, it has a huge impact. But even for adults, you know, I really started travelling, probably only at the age of 22/23. And, you know, my view of the world changed dramatically after one trip. Many trips later, my view of the world keeps expanding. And I think just for careers, everything - you know, in business, everything, in relationships. There isn't something that doesn't benefit from seeing different cultures and different parts of the world. So, definitely I think, you know, you should. 

And even if it's not global travel, you know, parents spending quality time with their children away from computer screens, you know, away from the TV, away from the pressures of just day-to-day living. You know, it's hugely important for the family, for the psychology of everybody and then also just for the relationships, you know, those interpersonal relationships. And a family can live off those memories for an entire year, you know, and that gets them through the bad times when they're grumpy with each other, and work and pressure's getting them down, or exams, or whatever it is. And so, I think it's a critical part of growing up if one can afford it.

Diana Granoux  19:09

Absolutely, there's nothing that opens your mind more than travel and experiencing different cultures. So, Warren, any last tips for people who want to save for a holiday, as we're recording this, we are entering the holiday season. So, potentially, this is tips for people to start saving for next year. Anything else you want to add?

Warren Ingram  19:28

Yeah, I think holidays and the money that's needed for holidays unfortunately don't just happen on their own. You know, I can't tell you how many times I chat to friends, people that have the financial means, but you know, they'll say to me by November, you know, gee, we haven't been on holiday this whole year. And you know, that's not even a COVID year, that's just a normal year. 

And the reason is because they just start the year, you know, they get going and they're kind of waking up by June saying, gee, we haven't had a break, we're burned out and you know, what about our budget and what are we going to do? So, I would say you know, if you're heading into the end of your year, that one of the things that you should be putting in your kind of to-do list for the year-end is: 

• What are we going to do next year? 
• How are we going to save for it? 
• Where are we going to go? 

And actually start planning, put it in the diary. Even if you haven't, you know, if you work for someone and you haven't taken leave, put it in the diary anyway. Because that's the commitment that you're making on and actually if it becomes concrete like that, and you commit to it, and you start, then it's amazing how you know, the savings plan kicks into gear, that the actual logistics of getting it done kicks into gear. 

And to me, that would be the biggest thing: don't just expect that it just sort of happens. Or, you know, four days before, you see there's a few public holidays and you might get something. Firstly, you're going to get an expensive holiday. And secondly, you're not going to get your choices because the people like me have planned ahead and we've booked out the nice places already. 

And so, I think it's about that, you know, plan ahead, you can get some great low-cost holidays, you know, with SANParks, for example, but you have to plan. You know, you have to book in advance and all around, you know, the best places are not necessarily the most expensive, but they might be very popular, in which case you have to book. So, plan, save, and don't avoid it if you know if you can afford it. I think it's a really worthwhile experience.

Diana Granoux  21:08

Thanks so much, once again for your time and all your perspectives on the Family Finance Show, Warren.

Warren Ingram  21:15

So, it's my pleasure. I'm looking forward to lots of feedback from people who thank us in the months and years ahead about all the holidays they've been on. 

Diana Granoux  21:21

[Laughs] Yes, thanks Warren.

Diana Granoux  21:32

Thank you for listening. I hope you enjoyed this episode. Make sure you subscribe to the podcast to stay on the journey to improving your family's financial well-being.

Old Mutual  21:50

Thank you for listening to the Family Finance Show with Diana Granoux, proudly brought to you by Old Mutual. The time is now to own your financial future. Visit old mutual.co.za for more great advice articles, free budgeting tools and calculators, or to find a financial adviser. We'll be back next week.