With the end of the working year just around the corner, many South Africans are already wistfully dreaming about the holiday period that is on its way. Whether it’s lazy days at the beach, adventures in the Drakensberg, or carefree nights at the club, almost everyone looks forward to taking time off work and spending it with friends and family at this time of the year.
It’s also true, however, that those holidays are getting more and more difficult to afford for many of us. The petrol bill alone might put some inland South Africans off from making the long trip to the coast, opting for somewhere closer and more affordable. For others, the rising cost of living might mean camping instead of renting out a guesthouse or like most of us, opting for longer term holiday planning and savings.
For those of us looking to plan for family holidays a few years into the future, perhaps combining the approach of saving with innovation and technology could help you. What if opting to stay local these holidays and continue saving for an out of country trip in the future meant that you did not have to compromise on your next holiday? And what if, over time, it could help you afford the trip of a lifetime?
Beyond one percent
Of course, most of us know that we should be saving for our holidays. And according to traditional financial wisdom, we shouldn’t have to put that much away every month either. Experts recommend putting away around one percent of your monthly salary for holiday gifts and travel.
Thing is, even if you’re organised enough to do that, you probably won’t get that far just by putting aside that amount of money every month. For example, let’s say you earn R30 000 a month – not a small salary for many. If you put aside just one percent of your salary every month, you’ll end up with R3 600 at the end of the year. That’s barely enough for fuel for a long road trip, nevermind enough for a return plane ticket between Cape Town and Durban. Of course, that doesn’t take interest rates into account, but a typical savings account won’t get you much further than R3 700.
I’m not saying that you shouldn’t save for holidays – future you will be incredibly grateful to past you if don’t have to fork out that airfare or fuel bill from your already-stretched December salary. However, if you want to ensure that you are giving yourself the best holiday possible, you should consider alternative savings vehicles.
Bitcoin your way to the beach
You could, for example, put at least some of your holiday savings into Bitcoin. While it’s important to acknowledge that cryptocurrency hasn’t had the best year, it was previously the best-performing asset of the decade. Between 2011 and 2021, it saw annualised returns in excess of 230%. It would be foolhardy to write off that kind of asset based on a few tough months. It’s also worth noting that it has stabilised over the past few months, something which can’t be said for many fiat currencies.
That being said, it is important to take into account that Bitcoin is currently a highly volatile asset. This means that it is best to view Bitcoin as a long term investment. Five years ago (November 2017) Bitcoin was trading at ~$6500 per coin. In November 2022, despite the very large pullback from the high of $60 000, it is trading at $19 300. That translates to a gain of ~200% over a 5 year period, despite the volatility of two bull markets in between.
Buying Bitcoin is also increasingly simple, meaning you don’t need large amounts of money to use it as a savings and investment mechanism. In fact, with an app like upnup you can buy Bitcoin simply by ‘rounding up’ your spending on necessities like groceries and fuel or by setting a specific amount each month.
It’s an approach that takes saving out of the realm of your bank and all the associations that come with it. It also means that you could potentially see much bigger returns on your savings efforts than you otherwise would with conventional mechanisms.
I’m not saying that you’ll be able to suddenly swap your holiday in Ballito for one in St Tropez – we’re not in the midst of the heady days of the early 2010s after all. But you may just be able to save towards enjoying more during your trip thanks to investing ahead of time.
Bigger holidays and better saving habits
And if you do eventually want to take that trip of a lifetime, you can always take a longer-term approach to saving. It’s an approach which encourages you to hold onto your savings for multiple years at a time and can help foster saving habits that will benefit you later in life.
It’s also worth remembering that accumulating weekly is the easiest way of taking advantage of price dips and gains. It gives you the ability to achieve an average purchase price rather than worrying about which day is the best day to buy all your Bitcoin.
Sensible saving needn’t be boring
Ultimately, holidays should be something we look forward to, rather than another anxiety point in our already stressful lives. Sensible saving habits can go a long way toward ensuring that’s the case. It is, however, also important to remember that saving no longer has to exist within the confines of traditional banking mechanisms.
Thanks to technological advances and innovation, there are exciting new saving and investment vehicles out there waiting for consumers to embrace.