Speaker 1: Welcome to How Do They Afford That, The podcast that
Speaker 1: peaks into the financial lives of everyday Australians. I'm Michael Thompson.
Speaker 1: I'm an author and the co hosts of the business
Speaker 1: news podcast Fear and Greed, and I'm joined in the
Speaker 1: studio today as always by Canna Campbell, financial planner and
Speaker 1: founder of Sugar Mum, a TV, the financial literacy platform
Speaker 1: covering YouTube, podcasts, books, Instagram threads, TikTok and more. Did
Speaker 1: you hear that giant pause, that big breath I took
Speaker 1: before I introduced you?
Speaker 2: Just then guess what was going on there?
Speaker 1: I think I actually just think I need a holiday,
Speaker 1: which is conveniently the topic of today's episode. The funny
Speaker 1: thing about holidays, right is the fact that it's something
Speaker 1: that we're supposed to look forward to these but there's
Speaker 1: often so much stress involved in it from a financial
Speaker 1: perspective about saving up for it kind of before you
Speaker 1: get there, and then once you are on holidays, it's
Speaker 1: kind of what can you afford to do? And when
Speaker 1: you get back from a holiday, it's how do you
Speaker 1: pay for everything that you might have splurged on while
Speaker 1: you're away? And so far I've succeeded in making holidays
Speaker 1: sound entirely unappealing. But today we are going to talk
Speaker 1: about basically how to have the holiday that you want,
Speaker 1: how to save for it, how to prepare, how to
Speaker 1: enjoy it when you're actually there, so that you don't
Speaker 1: have this kind of financial worry that's weighing you down
Speaker 1: while you're supposed to be having a good time.
Speaker 2: And like resting and recharging those batteries so that you
Speaker 2: can hit the ground running and make lots of money
Speaker 2: when you get home.
Speaker 1: Yes, I like this. Why do they feel so stressful?
Speaker 1: Why before we've even left? Why are holidays so financially stressful?
Speaker 1: Is just because the cost of everything is getting so expensive.
Speaker 2: I think it's a combination thing. So obviously the money
Speaker 2: you've got, the emotion, and also the expectation that we
Speaker 2: can put on ourselves, you know, about making it a
Speaker 2: great holiday where everyone's happy, no arguments, no fights, you know,
Speaker 2: having a wonderful breakaway from Groundhog Day, building memories. But
Speaker 2: we're also at the same time scared of crap. How
Speaker 2: are you going to afford this? You know? How are
Speaker 2: you not going to come home to heap some dead
Speaker 2: How are you not going to overspend, and you know
Speaker 2: often behind that is there's no clear plan and it's
Speaker 2: the fear of the unknown that I think can create
Speaker 2: a lot of anxiety for each other. And you know,
Speaker 2: we can very easily if we have done our research
Speaker 2: underestimate the costs and then overestimate the damage of that. Oh,
Speaker 2: I'll figure that out when I get home a little
Speaker 2: bit later. Yeah, with that financial repercussion, that is.
Speaker 1: That is the holiday attitude though, right, Like you don't
Speaker 1: want to deal with that while you're away, just go,
Speaker 1: you know what, we'll figure that out later. I don't
Speaker 1: want to get too negative, but let's get the bad
Speaker 1: stuff out of negative. Oh please, I am the most
Speaker 1: positive person that you have ever met. No, that's not true.
Speaker 1: Like the look on your face like you are just
Speaker 1: making up stuff as you go along. The biggest mistake
Speaker 1: that people make when they are planning and saving for
Speaker 1: a holiday, and this is the last of the negativity
Speaker 1: before we get to the positive stuff, is the biggest mistake.
Speaker 1: Is it what you just mentioned kind of underestimating cost.
Speaker 2: Yes, so you know it's at the end of the day.
Speaker 2: I think it's about treating it as a financial afterthought.
Speaker 2: Instead of like a goal or a reward for you know,
Speaker 2: achieving a particular goal, you know, just jumping on and
Speaker 2: booking the flights and accommodation, you know, where you don't
Speaker 2: necessarily have to pay for it upfront and then thinking
Speaker 2: I'll worry about that closer to the time. You know.
Speaker 2: Not accounting for all those little things like transfers is
Speaker 2: a big one, you know. The food. Like in some countries,
Speaker 2: food's a lot more expensive than it is for what
Speaker 2: we used to For example here, you know, getting around,
Speaker 2: you know, is it a city or a place where
Speaker 2: you get taxis or you can easily access public transport,
Speaker 2: you know, spending money, taxes, visas. You know, all those
Speaker 2: little extras can actually really add up in costs more
Speaker 2: than they're sometimes, the airfare and the accommodation.
Speaker 1: All right, I'll get to a bit of budgeting advice,
Speaker 1: because I want to know how you plan for your
Speaker 1: trips when you go away. We'll do that's in a
Speaker 1: sec I want to know first though, how do we
Speaker 1: actually do it? It was the smartest way to save
Speaker 1: I mean rather than kind of the budgeting side, which
Speaker 1: will come later, But what's the smartest way to save
Speaker 1: for a holiday. Is it setting up a separate account?
Speaker 1: Is it kind of regular allocations all that kind of thing,
Speaker 1: your standard financial goal stuff.
Speaker 2: Right, Yes, so you've answered the your own question perfectly.
Speaker 1: I no longer need you.
Speaker 2: Oh damn, I'll really miss you. No, like, have a
Speaker 2: separate savings account nickname it, you know, our holiday savings.
Speaker 2: And I think that's really important because obviously when you
Speaker 2: log onto your internet banking you see the you what
Speaker 2: a holiday savings account. Not only does it stop you
Speaker 2: from getting confused and accidentally using that money, it also
Speaker 2: is a great reminder as to what you're working towards
Speaker 2: and to get excited a wow, like we've actually got
Speaker 2: like four thousand three we have to all saved up
Speaker 2: for a holiday fund, even though you may not necessarily
Speaker 2: know where you want to go yet, but just I
Speaker 2: think the mental respite and the I guess excite would
Speaker 2: have knowing, Wow, look at that money, we are going
Speaker 2: to go on a holiday. We can get excited about this,
Speaker 2: it's really happening. Regularly contributing to it. But also don't
Speaker 2: forget about the ad hoc contributions as well. You know,
Speaker 2: for example, you might get a bonus or a tax
Speaker 2: refund and you can afford to put it into that
Speaker 2: holiday of savings account, like do that and regularly check
Speaker 2: it and watch it up add up, and that's when
Speaker 2: you can start thinking about where do you want to
Speaker 2: go and what's going to cost and do we have
Speaker 2: enough here? And it means you enjoy the holiday so
Speaker 2: much more knowing it's all been paid for and allocated
Speaker 2: for financially before you like walk out the front door
Speaker 2: or pack that suitcase.
Speaker 1: It would be a good motivation for a little side hustle,
Speaker 1: isn't it, knowing that if you're going to if you're
Speaker 1: going to go to the effort of setting up something
Speaker 1: on the side, that you're going to put every cent
Speaker 1: that you make here into your holiday fund.
Speaker 2: Exactly Like if these things you can sell, you can
Speaker 2: take on some extra work or the weekend, you know,
Speaker 2: monetize like a hobby or something like that, even if
Speaker 2: it helps give you some extra spending money.
Speaker 1: Yes, that's great. Declutter. What fantastic motivation that would be
Speaker 1: to declutter your house, sell all your unwanted stuff, knowing
Speaker 1: that everything that you sell is going to help you
Speaker 1: fund your holiday. It would make those decisions, you know,
Speaker 1: when you're picking up something. Do do I need to
Speaker 1: keep this? Do I not? Or is it going to
Speaker 1: be worth more as a cocktail in Fiji?
Speaker 2: Caravanning around Australia?
Speaker 1: Happy? Yeah? Absolutely? How do you do it? All?
Speaker 2: Right?
Speaker 1: Because I'm fascinated by just the processes that you take,
Speaker 1: because you have a great gift for it's not necessarily
Speaker 1: being frugal, but being able to get great value but
Speaker 1: also not compromise on experiences and things. So I'm curious
Speaker 1: how you plan for a trip, your process?
Speaker 2: Please, I am a little bit it. So I often
Speaker 2: capitalize on Tom's travel. So Tom travels a lot for work,
Speaker 2: so I will, I guess, piggyback off his travel because
Speaker 2: then obviously a lot of his at least his airfare
Speaker 2: is paid for separately his You know, we can all
Speaker 2: bunker down into his hotel room. And yes there are
Speaker 2: times where we've had all five, like for all five
Speaker 2: verse in one hotel room. So I try and make
Speaker 2: the most of those opportunities because it's a great way
Speaker 2: of seeing a country and being part of Tom's work
Speaker 2: and seeing what he does. So that, but yes, I
Speaker 2: have it. We have a separate savings account that's for
Speaker 2: holiday but also for weekends away as well, because for me,
Speaker 2: that's another form of a holiday and makes the mutually
Speaker 2: sustainable and regular throughout the year as well. And then obviously,
Speaker 2: you know, making sure that you've got that money saved
Speaker 2: up in time. So say, for example, I'm planning a holiday.
Speaker 2: You know, I'd love to go to Bali at the
Speaker 2: end of this year when school holiday breaks. I love
Speaker 2: to do that, you know, going all right, well, this
Speaker 2: is how much we need to budget, This is how
Speaker 2: much we need to be adding on a regular basis
Speaker 2: to get there. But even if I can't, for example,
Speaker 2: afford to put the full amount to get there, just
Speaker 2: by starting the process and then slowly as I can,
Speaker 2: slowly build up that regular savings plan so I get
Speaker 2: as close to that as possible when it comes close
Speaker 2: to that particular date. And things like you know, obviously
Speaker 2: the obvious ones like frequent flyer points, you know, booking
Speaker 2: early and even better, you know, booking the calling the
Speaker 2: hotel directly to ask them if they have a better deal,
Speaker 2: because obviously they're paying commission to a lot of those
Speaker 2: booking websites. Quite often if you call them they'll actually
Speaker 2: give you a better rate as well, which is a
Speaker 2: great little.
Speaker 1: Hack really, so you just go direct.
Speaker 2: Yeah, and you can also there's all the loyalty programs
Speaker 2: like Hilton have one as well, intercontinentally all have these
Speaker 2: you know, great war programs. They'll give you free upgrades
Speaker 2: or you know, like checkouts, or they'll include breakfasts and
Speaker 2: you know, doing researching everything. Like we recently were looking
Speaker 2: at a holiday to go to New Caledonia because Tom
Speaker 2: had to go there for work.
Speaker 1: What a tough job.
Speaker 2: I know, well we didn't, but you know what I was.
Speaker 2: We were researching and we're really struggling because we couldn't
Speaker 2: find the details. And then I happened to see a
Speaker 2: friend who had been to New Caledonia, and I said,
Speaker 2: I was able to ask a whole pile of questions
Speaker 2: and we've got some great clarity. And I came back
Speaker 2: to time and said, okay, I've just found out all
Speaker 2: this stuff. And so we decided, okay, let's maybe let's
Speaker 2: park that for the year after next because of the
Speaker 2: feedback we got. So you know, this is where doing
Speaker 2: your research is really valuable.
Speaker 1: There's some good tips there. I like that idea of
Speaker 1: going straight to the going straight to the accommodation into
Speaker 1: the hotel. Yeah, yeah, yeah, and looking for those deals
Speaker 1: as they come up, the flight deals and all those.
Speaker 2: Groupon as well. You can you look and see what
Speaker 2: you know. For example, if you want to go to
Speaker 2: a day spy or something, they'll have some groupon deals
Speaker 2: in the area that you're traveling to.
Speaker 1: Yeah, and I suppose that the idea is if you've
Speaker 1: got this money that you have set aside, and that
Speaker 1: you are contributing to it as you go, then it
Speaker 1: would mean that you are able to act quickly when
Speaker 1: something does happen like Loo get the airlines all the time,
Speaker 1: big scales, and they start competing with each other, and
Speaker 1: all of a sudden, you can get the flight that
Speaker 1: you've been keeping an eye on for maybe two thirds
Speaker 1: the price of what it was before because there's this competition.
Speaker 1: But if you haven't got the money saved and you're
Speaker 1: not ready to go, then that opportunity might pass you by.
Speaker 2: And that's why people end up getting in credit card
Speaker 2: debt because they go, oh, and that's obviously not advisable
Speaker 2: at all, Okay, And you can't really enjoy a holiday
Speaker 2: knowing you're going to come home to a massive credit
Speaker 2: card debt and you're a financial torture.
Speaker 1: Well, speaking of enjoying the holiday, we're going to take
Speaker 1: a quick break. And on the other side, it is
Speaker 1: what to do while you are away, how to actually
Speaker 1: enjoy the holiday without this nagging feeling that you are
Speaker 1: building up debt that you're going to have to deal
Speaker 1: with when you get home. Back in a moment, can
Speaker 1: we are talking about having a great holiday on a budget.
Speaker 1: It doesn't even need to necessarily be on a tight budget.
Speaker 1: It just it is about not lowing money that you
Speaker 1: don't have, right, that's kind of the nature of a budget.
Speaker 1: Right when you're away, How do you do it without
Speaker 1: constantly worrying about money? How do you just spend? Do
Speaker 1: you set yourself like a daily spend. I know that
Speaker 1: you do a lot of research, but there's going to
Speaker 1: be a lot of things that come up as you're going.
Speaker 1: Do you have a certain amount that you allocate per day?
Speaker 2: So the goal is obviously to have fun and to
Speaker 2: you know, let your head down and treasure the opportunity
Speaker 2: and the moment and the memories together. But it's also
Speaker 2: you've got to keep a wise financial hat on. So
Speaker 2: I would normally allocate a certain amount of money per day,
Speaker 2: you know, as a family unit, but keep it, keep
Speaker 2: a buffer there, but keep it fluid. So there'd be
Speaker 2: days where we'll spend more than our allocated cap. Then
Speaker 2: we know the next to kind of maybe go to
Speaker 2: a different restaurant or maybe pick a slightly more budget
Speaker 2: friendly activity to help balance it out.
Speaker 1: See, this is where I think people will come unstuck
Speaker 1: because that requires a lot of discipline that.
Speaker 2: If you've done your research, is not to dip it
Speaker 2: at all, because you know, you know, well, we can't
Speaker 2: go jet skiing every day like you know, yeah, and
Speaker 2: also allow some time for rest and recovery as well,
Speaker 2: where it's watching a movie in the hotel room and
Speaker 2: maybe ordering room services of going out to another restaurant
Speaker 2: or you know, having a day sitting by the beach
Speaker 2: or the pool instead of you know, doing going island
Speaker 2: hopping or whatever whatever it may be, or shopping or
Speaker 2: you know.
Speaker 1: What about then pre paying as much as you can
Speaker 1: for while you are actually awake, because we know that obviously,
Speaker 1: pay your flights and advance and chances today you pay
Speaker 1: for your accommodation, your hotel or something in advance. But
Speaker 1: are there other things that you can book and pay
Speaker 1: so that you're not dealing with those expenses while you're
Speaker 1: actually on holidays.
Speaker 2: Absolutely, you can book and prepay so many things like transfers,
Speaker 2: even activities, particularly if you're using great things like you know,
Speaker 2: group on, so you can book and pay for so
Speaker 2: much you know upfront, you know, especially with like hotels,
Speaker 2: you could include your breakfast or you know, lunches and dinners,
Speaker 2: like so many things these days can be you know, included.
Speaker 2: And you think about like hotels like Club Med. Do
Speaker 2: you ever go go to Club Met as a child. No, Oh,
Speaker 2: it was all inclusive. You got beats for money, and
Speaker 2: so your only money you would spend would be your own,
Speaker 2: like you basically hand over say twenty dollars and get
Speaker 2: these bees that you wear as necklaces, and you would
Speaker 2: they were to pay for extra things that won't included.
Speaker 2: So you know, obviously breakfast, lunch and dinner and all
Speaker 2: the sort of most of the activities were included. And
Speaker 2: so literally, thy families love Club Med. You everything's done
Speaker 2: and this you would only pay for something extra, like
Speaker 2: you want to go and get a massage, or you
Speaker 2: want to go and like away from the hotel and
Speaker 2: do something completely separate. But it's got kids club which
Speaker 2: is all inclusive. So yes, there is most things you
Speaker 2: can actually or prepay.
Speaker 1: What about the big blowout category? So I know that
Speaker 1: I said I wouldn't be negative kind of what are
Speaker 1: the things that I should be watching out for the
Speaker 1: things that are going to cost more? Okay, it just
Speaker 1: occurred to me foreign currency and exchange rates and getting
Speaker 1: hammered by international conversion charges and things on you. So
Speaker 1: you are using a credit card or something in another country.
Speaker 1: How do you navigate those kinds of things because those
Speaker 1: can add up very very quickly.
Speaker 2: And it's also there are so many different deals going on,
Speaker 2: different ways of doing it, and also you need to
Speaker 2: pick away that's easy for you to manage if you've
Speaker 2: got like five different cards, or you know, you're converting
Speaker 2: cash at one place and another place like you can
Speaker 2: get missy so you know, whatever, just keeps it easy
Speaker 2: to actually monitor and review is wise. And obviously you
Speaker 2: want to be careful for the exchange rate, do your research,
Speaker 2: you know, get prices from different people, and obviously you
Speaker 2: need to look at your credit card company or your
Speaker 2: bank to see what they're actually charging in the conversion rate,
Speaker 2: and it really does vary, So you want to sort
Speaker 2: of spend time working in best time before you go
Speaker 2: so that you know, actually, the smartest way for me
Speaker 2: to pay for things on this trip is with my
Speaker 2: credit card or with it with cash, because that you'll
Speaker 2: get a better deal. But obviously, keeping in mind things
Speaker 2: like travel insurance, you might have an element of safety
Speaker 2: even if it does cost you a little bit more
Speaker 2: that you've got that insurance.
Speaker 1: Oh yeah, it's you are very bold taking an international
Speaker 1: trip without travel insurance. Oh my goodness, considering the amount
Speaker 1: that it costs you, which is not that much compared
Speaker 1: to potentially the cost of the trip, and just if
Speaker 1: things go wrong, the cost can just go out of control.
Speaker 2: Right?
Speaker 1: Can I give you a tip that is from not
Speaker 1: from me, It's from my colleague on Fear and Greed,
Speaker 1: Sean Alma, who.
Speaker 2: Does loves the travel. He lies on holiday.
Speaker 1: He always he is always traveling around the world and
Speaker 1: recording the show from all kinds of exotic places. But
Speaker 1: he's also an economist by training as well, and he's
Speaker 1: done a lot of work on kind of currencies and things,
Speaker 1: and so we've talked about on the podcast, how do
Speaker 1: you get the best How do you time it? How
Speaker 1: do you get the best conversion so that you're actually
Speaker 1: getting the best bang for your buck if you're going
Speaker 1: to the US or you're going somewhere else in the world.
Speaker 1: And he basically says, it's that hard. It is it
Speaker 1: is impossible to time. You take the same approach as
Speaker 1: if you are investing in a dollar cost average approach,
Speaker 1: and he goes that that over a kind of six
Speaker 1: months leading up to the trip, if you want to
Speaker 1: have kind of five or six thousand dollars for instance,
Speaker 1: or five or six hundred dollars or whatever it is
Speaker 1: in spending money while you're while you're away converting it,
Speaker 1: you do one thousand dollars a month, and you will
Speaker 1: you'll win some, you'll lose some, and they will It
Speaker 1: will average out in the end. But you do run
Speaker 1: into problems if you leave it so the very last
Speaker 1: minute and you're doing it all at the airport on
Speaker 1: the way out of the country or something like that,
Speaker 1: then you are stung. Yeah, you are exposed, and you
Speaker 1: might have caught the dollar on a bad day.
Speaker 2: And also some places don't like cash as well. Yeah,
Speaker 2: you know, like it's quite incredible. Like a lot of
Speaker 2: places are cash cash lists.
Speaker 1: So okay, so say you've been on holidays, doesn't it
Speaker 1: can be anywhere. Could have been at the Gold Coast
Speaker 1: for a week, You could have been overseas somewhere for
Speaker 1: three months. How do you avoid coming home to a
Speaker 1: financial hangover? Is it just by holiday and within your means?
Speaker 2: Yes, but also it's regularly checking in to make sure
Speaker 2: you haven't blown all your money within the first three
Speaker 2: days of holiday. That's why I like to have that
Speaker 2: allocation of X amount of dollars per day, you know,
Speaker 2: give or take, you know, to obviously have some experience
Speaker 2: to day, some cheap days, but and doing all the
Speaker 2: research so that you've you've factored in everything and you've
Speaker 2: done your research just to watch the savviest way to
Speaker 2: get around. I mean, we went to Japan a couple
Speaker 2: of years ago, and you know, being a family with
Speaker 2: three young children and things like prams and just stuff,
Speaker 2: all the stuff you carry, Like, our instinct was to
Speaker 2: get into a taxi or an uber in Tokyo. That
Speaker 2: was extraordinarily expensive. I think we paid like two hundred
Speaker 2: dollars just to get to our hotel. But once we
Speaker 2: quickly figured it out and figured out the train system.
Speaker 2: It was then brilliant, Beau. We could jump on the
Speaker 2: trains and get everywhere we needed to. So you're just
Speaker 2: doing your research, having a daily buffer, but checking in
Speaker 2: to make sure you're on track, you're not blowing out.
Speaker 2: And you know, even if it means rounding up how
Speaker 2: much you think you're going to need to allow for
Speaker 2: those amazing opportunities where you can you know, upgrade certain
Speaker 2: tickets or certain activities to make the most of it,
Speaker 2: you know, keep it real.
Speaker 1: Yeah, and keep an eye like just the idea of
Speaker 1: keeping an eye out for those good deals and having
Speaker 1: the money set aside in advance before you even know
Speaker 1: necessarily what your holiday is going to be. I really
Speaker 1: like that idea because then when you do see something
Speaker 1: come up that you can jump on it, and knowing
Speaker 1: that you are not going to a credit card, you
Speaker 1: are actually going to the money that you have saved.
Speaker 1: Give us something positive to finish on, because I think
Speaker 1: I tainted everything earlier with a whole lot of negativity,
Speaker 1: toxic negativity in the in the studio. Bit of good
Speaker 1: advice for anyone who wants to really enjoy their holiday.
Speaker 2: I think, spend time thinking about what you really want
Speaker 2: out of a holiday. You know, do you want a
Speaker 2: holiday that's an adrenaline rush, you know with sports activities
Speaker 2: and you know, like someone like skiing or skydbbing, or
Speaker 2: you know, something like snowboarding, or do you want something
Speaker 2: like do you feel like you need something it's a
Speaker 2: lot more soulful, like a lot of slower pace, like
Speaker 2: sitting by you know, in a beautiful country town, you know,
Speaker 2: a coastal town where you can actually have slow mornings
Speaker 2: and read a book by the beach and you know,
Speaker 2: have an afternoon nap and you know, a healthy dinner,
Speaker 2: or perhaps you want to go on like a retreat
Speaker 2: like a yoga retreat or a meditation retreat. Like think
Speaker 2: about what you actually really need that's going to fill
Speaker 2: your carp and give you the like the right amount
Speaker 2: of I guess return on an investment until your next holiday.
Speaker 1: Yeah, no, good call? Okay. If anyone wants more information
Speaker 1: from you, holiday tips when you go away, when you
Speaker 1: do go on these trips with sometimes peggybacking off Thom's work,
Speaker 1: do you share videos and share tips and things from.
Speaker 2: We recently went to China, so I'm putting together a
Speaker 2: real as to what we did in China, which is
Speaker 2: I'd never been to China before really and it was
Speaker 2: found so many great things. It was so kid friendly
Speaker 2: as well.
Speaker 1: That is awesome. Okay, well, and we can find that
Speaker 1: on Instagram Sugar Mama TV.
Speaker 2: I'm putting it together, but I will make sure I
Speaker 2: publish it soon. Then I've got pressure from you.
Speaker 1: And when that does go live, when it drops, amazing
Speaker 1: the right lingos. It's published, it's published, that's on Instagram,
Speaker 1: Sugar Mama TV. Correct wonderful and you can hear me
Speaker 1: every day with Sean aylmor on Fear and Greed business News.
Speaker 1: You can use. Thank you for listening to how do
Speaker 1: they afford that? Remember please hit follow on the podcast
Speaker 1: and send somebody else a link to this episode if
Speaker 1: you think that they are in need of a holiday
Speaker 1: and potentially in need of doing it in a budget
Speaker 1: friendly manner, and spread the word about how do they
Speaker 1: afford that? Thank you for your company. Join us again
Speaker 1: next week