Should you book a holiday or save the cash for later?

This column is brought to you in association with Almary Green. Photo: Almary Green (Image: Archant)

'Goodness,' exclaimed the young lady confirming my address details, 'we're a third of the way through February already. Still, better than January. The month with 203 days.'

What a great way to describe the year's opening month. January always drags – more so if it's 'dry' or includes any other opportunity to don sackcloth and ashes – which is why we're inclined to start checking out the summer holiday situation.

Our collective seasonal enthusiasm for blue skies and sunshine is reinforced by: a) Britain's miserable winter weather, b) enticing, on- and offline marketing featuring dazzlingly beautiful locations where dappled sunshine dances softly on an azure-coloured sea, c) Price: in most instances, a modest deposit can secure your break and d) Yes, the weather again, which generally deteriorates in direct proportion to the increased frequency at which you yearn great dollops of vitamin D.

Holidays have become an essential part of our lives, yet you don't need to spend thousands to enjoy yourself. Buying a holiday might be an exercise that promises fun and relaxation, but it's just another purchase, like buying a bag of potatoes.

Granted, reserving a holiday is a more joyful experience than acquiring a loaf of bread, but there's no need to overdo it, particularly if you're a member of the much-derided millennial generation.

People born between 1983-98 have not been dealt an over-generous hand. Not only are they lumbered with debts accumulated during their student years, they also face the very real prospect of considerably longer working lives than their parents; their wait to buy a first home will be much lengthier and probably require assistance from BOMAD (The Bank of Mum and Dad), and then there's the additional body blow, namely the strong probability that by the time they retire, there'll be no state pension.

Considering these bleak prospects, I understand why every millennial in the land must have thought about emigrating to Australia or Canada, never mind booking a holiday, but bear with...

An American friend (the longer-term situation for millennials Stateside is just as desperate as it is here), recently sent me a link to her local newspaper featuring details of six financial mistakes millennials should try and avoid. They include failing to save as much as they can, having children without taking account of the associated expense and 'succumbing to lifestyle creep,' a characteristic with which we're all familiar.

Essentially, lifestyle creep, best described as part aspiration mixed with a smidgeon of impatience, can be enormously detrimental to millennials, particularly when they realise they have considerably more disposable income than they're used to. This can often prompt a prolonged bout of conspicuous consumption: out goes the second-hand car they've had since they were students; crashing on a friend's floor is superseded by an overwhelming preference for a hotel bed, while the battered furniture that makes their flat look like a student house is jettisoned in favour of something much fancier.

Then there's the holiday, a one-off intangible expense many millennials are lured into incurring at precisely the point in their lives when they should be using any extra income to increase savings, be it for a more tangible asset such as a house or, dare I say it, a pension.

Yes, the conclusions above are unpalatable, especially in mid-February, but the single most important fact of financial life is that things are going to be much tougher for millennials than they were for their parents. As the Treasury confirmed last month, the cash with which it plans to pay pensions will run out by 2038.

This article isn't designed to alarm or to come across as some kind of know-it-all character. Far from it. Regular readers will recall I recently outlined the biggest financial mistake of my 20-something years when I stupidly cashed in a company pension and can't even recall what I blew the money on, a seriously dim thing to do.

Instead, it would be useful to know what other financial mistakes you, dear reader, believe millennials can avoid. Drop me a line (sharksmedia@hotmail.co.uk) with your 'Top 3 financial sins' and I'll feature the best, most helpful suggestions in a forthcoming article.

Meanwhile, if you're booking a holiday, try and avoid making it an expensive one.

The week in numbers

£35

Average spent by men on buying a Valentine's Day gift for their significant other. A whopping 9% of blokes spend more than £75. Women spend an average of £20 on their Valentine, though a third spend less than a tenner.

9%

Of blokes spend more than £75. Women spend an average of £20 on their Valentine, though a third spend less than a tenner.

25-34

Millennials seem to get blamed for everything nowadays, but they're the most generous age group when it comes to giving on 14th February. Both males and females aged between 25-34 spend an average of £33 on each other.

27%

The gift most likely to please the woman in your life is a weekend away. Research suggests that 27% of females put 'short break' at the top of their Valentine's Day wishlist, followed by spa treatment (15%) and jewellery (13%). Underwear is the gift of choice of just 1% of women.

21%

Taking no notice of the short holiday / spa / jewellery rating, men tend to stick with the tried-and-tested show of love. 21% of them buy flowers for their other half, with red roses being the most popular purchase.

22%

A survey of 7,000 people found that 22% of females felt that 14th February was the perfect time for their significant other to propose. However, just 14% of men agreed. Most blokes believe that Christmas Eve is the best time to go down on one knee and propose marriage.

Peter Sharkey read economics at the University of Bristol. He worked as an accountant on three continents and has been a company director and investor for more than 30 years, building and selling three different companies.