Every Friday I publish “Frugal Friday!“, an open-ended series with some of the simple and best ways to really save you money both now and in the future.

So, winter is over and it’s time to start thinking about holidays. Whether it’s a camping trip to Bangor, hiking in the Pyrenees or sitting on a beach in Tunisia, the sad unavoidable fact is – holidays cost money. With the cost of living and financial uncertainty still high and getting higher, the time to start saving is now.

Here are 10 smart tips to make this year’s holiday affordable, whatever your budget.

1. Hunt around for deals to cut costs

Many holiday companies are offering great deals on package holidays and even including extras such as free car hire or  ‘kids travel free’ deals. If you’ve earned enough miles in a frequent flyer programme, use them for air travel instead of paying for your flights to make the overall cost of the holiday less.

2. Don’t be afraid to haggle the price

You can also – despite what we may culturally be accustomed to - haggle with your tour operator to get a better deal, or get them to throw in free upgrades such as a dedicated taxi from the airport to your hotel rather than a group taxi. Click the link to see my 6 tips for getting your own way when haggling.

3. Consider what it is you actually want

If money is tight this year, consider changing the type of holiday you go on. If you usually stay in a hotel, why not try self-catering? If a villa is your usual ‘home-from-home’, try a caravan or chalet instead. Camping is fun and usually the cheapest option. Holidays in the UK outside of mainstream accommodation are often cheaper than travelling over the channel or flying to far-off destinations, particularly in the school holidays. If all you want is to relax, it doesn’t really matter if it is Los Angeles or Littlehampton.

4. Make a plan and set a savings target

Once you’ve decided on your holiday, create a budget so you know how much you need to save. Find out what it will cost for travel, accommodation, meals, car hire, petrol, activities and spending money. Add those costs up to get a savings target and then add another 2% for contingencies.

5. Open another bank account

Keep your holiday funds totally separate from your normal money environment and savings. This way, you will be less tempted to dip into them for general spending or emergencies (that’s what you emergency fund is for).  Try to pick an account that has no fees and earns interest. Make sure it is one that will let you take out your cash when you need it without too much hassle – an account managed online would be a good choice.

6. Make it happen automatically

Put funds into your holiday savings account on a regular basis, so you’re on track to hit your target. Set up a direct debit or standing order depending on the account type so you don’t even have to think about it.

7. Make use of unexpected cash

If the rest of your saving goals are on target but the holiday fund takes lowest precedence due to the financial climate, consider increasing your holiday savings by putting any extra cash into your holiday account. Tax refunds, work bonuses, car boot sale proceeds, money generated from online auctions – every little bit helps!

8. Don’t put it on credit

While I’d advocate paying for your holiday on a credit card to take advantage of the Section 75 Protection it affords, make sure to pay it off in full when the bill comes in by using the money put aside already in your holiday savings account. If your family holiday costs £3,000 then paying credit card interest on it at 14% or considerably worse will quickly make the holiday a misery when you come back as worse case scenario you’ll still be paying it off when next year comes around!

9. Beware of excess baggage charges

Be careful what you buy on holiday as you will probably end up having to pay an excess baggage charge to take it back with you. Most airlines only offer 20kgs free for economy class passengers at most, which quickly disappears with just normal luggage. Start throwing in nic-nacs, bottles of olive oil and other heavy items and those kilograms will soon be draining the last of your holiday cash.

10. Take requests, don’t impulse buy

We’ve all been there. “Look at this! Isn’t that beautiful? I bet Aunt Betty would love it”. Multiply that by 10 relatives and 15 friends and you’ve filled another suitcase with souvenirs that only 3 of them will actually appreciate. By all means take requests for items to be brought back but don’t impulse buy things that nobody really wants. You’ll waste spending money, and probably fall foul of the excess baggage charges, too.

Got a tip? Share yours in the comments!

Deciding between an ISA and a Regular Savings Account – what should you do?

When comparing an ISA and a regular savings account there is one main benefit that an ISA can offer you and that benefit is that you don’t pay any tax on the interest that you earn!

But how does this work in practice?

The best regular saving accounts available offer the highest rates of interest. If you were basing your decision entirely on the interest rate on offer then a regular savings account may appear to offer a better value than an ISA. However, as with all non-ISA accounts, the interest you earn will be taxed. If you were to save your money in an ISA account the interest would be tax free.

Although the headline interest rate on an ISA may be lower than a standard savings account – because it is tax free – you still get to make more money overall.

Regular Savings Accounts (in this respect I mean ‘you have to put money in every month’) have catchy interest rates, but there are plenty of other catches. You have to put money into the account regularly, which may not always be possible. You cannot put in a lump sum to start with either and the maximum amount you can deposit each year is also kept relatively low. Interest is often only paid after the full 12 months and it’s not always easy to withdraw your money from regular savings accounts; with some accounts you must give a few months notice, and with others you can’t withdraw your money during the first 12 months at all.

Generally, an ISA comes with no such restrictions. See my A Guide To: Individual Savings Accounts for more information on particular points to note about ISAs.

If you do not like the idea of having your money locked away then you might find it easier to open a cash ISA account. Cash ISAs are tax-free, which makes them an attractive option to many people. Although you can get some regular saver cash ISAs amongst other types of Cash ISA, most are easy access meaning you can transfer money out whenever you need it.

Like regular savings accounts you can still only deposit a fixed amount per year, but the two main advantages are that you can add the same amount each year and you can do it as a lump sum if you find it easier, so you benefit from the interest on the whole lot for a full year. Also, unlike regular savings accounts the money isn’t transferred to an account with a worse interest rate after a year, although you should keep an eye on rates to make sure yours is still competitive.

Overall easy access or regular savings accounts are like easy access cash ISAs, except you pay tax. The interest rates are similar to ISAs, which means after tax you do in fact lose out.

The number of reasons to invest in a cash ISA rather than a regular savings account are growing all the time. Currently most adults save up to £7,200 in ISAs every year. The whole amount can be invested in a stocks and shares ISA or you could split it and put up to £3,600 in a cash ISA. In October 2009 everybody aged 50 or over was allowed a higher annual limit of £10,200, of which up to half can be saved as cash. In order to take advantage of this, you will need to be 50 on or before April 5 this year, to benefit in the current year. On April the 6th 2010 this is set to change; the limit will be increased to the same amount for everybody, regardless of age.

Interest rates are up and down in the current financial climate which means that some savers could benefit from changing who they bank with. Changing account providers for an ISA account is not quite as easy as switching a standard savings account as once the money is taken out of the account, the holder loses all the tax benefits they would have had. This can be prevented by insuring that your old provider and new provider pass on all the information about your account history.

It is worth comparing providers before deciding to open a Cash ISA as the (remember: tax free!) interest rate can make a dramatic difference to the amount you save.

My friends have so far looked at me sideways when I have explained that I plan on moving my money around every year, chasing the very best savings rates. They consider doing so an extreme waste of time as “the banks only screw you over anyway” and that a few percentage points make zero difference.

A few percentage points make ALL the difference. For a little bit of effort (generally about 2 hours a year), you can earn hundreds or thousands of pounds worth of extra interest, than if you left your money in the same place on an institutions Standard Variable savings account.

Don’t believe me? Let me show you. For the sake of argument, let us say I have £10,000 to save, and I am looking to put it in an account somewhere and let it build over time.

My Barclays Tracker Saver account pays 0.10% interest on balances over £50. It calculates daily and compounds monthly. After 12 months in those conditions, my savings would have grown by just £10. The bank has paid me just £10 to lend them my £10,000 for the entire year.

Daylight robbery.

Let’s open a new account with ING Direct instead. At the time of writing, they are guaranteeing new customers 3.20% under similar conditions otherwise to barclays, i.e. compounding monthly. For my £10,000 they will pay me £324.74 in interest. That is much better. But now my introductory offer has expired, I’ve dropped onto their Standard Variable saving rate of 0.50%. If I don’t move my money, how will it fair next year?

If I am lazy (and the bank hopes so), next year they will pay me just £51.74 in interest.

More than 6 times less than they paid last year.

Instead, when my introductory offer ran out with ING I moved my money to another introductory offer paying (for the sake of argument) 4%. Remember I have £10,324.74 to move courtesy of the 3.2% interest from ING last year, so I move that sum to a new Halifax account.

12 months later I now have £10,745.39. And after another move the next year that paid 4.5%, I have £11,239.03!

In 3 years the amount of savings I had has grown by £1,239.03 because of 2 hours work opening a new account and closing an old one each year. By the time you’ve run out of places to consider opening an account as a new customer, ING Direct have forgotten about you and you qualify as a new customer again.

If I had not chased the good rates and left it languishing in my original Barclays account, I’d have earned a paltry £30.04 over those 3 years. If I had not moved it out of ING when the first introductory offer ended, I’d have earned £103.74 in total.

By chasing the higher rate and moving my money every year, I would end up with £1,239.03 in interest alone.

If you have more to save then your returns will be even better.

Banks are relying on you being complacent with your money in the longer term. You can beat them at their own game with just a few hours work each year. Is rate chasing worth the time and effort annually? In my opinion you’re mad not to. It’s free money for minimal work on your part.

Are you a chaser,or is it all just a waste of time in your view?