June 27, 2026
·Moneycho Editorial
Holiday Pay, Spent Smart: 5 Options Your Future Self Will Thank You For
Every year in May or June, a significant amount lands in your account: your holiday pay (vakantiegeld). In 2026, the average Dutch employee receives around €2,900 gross in holiday allowance, which comes to roughly €2,200 to €2,500 net depending on your tax bracket.
For many people this is the largest single payment they receive all year. And that is exactly where the risk lies: research from Nibud (the Dutch national budget advice institute) shows that 40% of Dutch workers spend their holiday pay in full within six weeks, often without consciously thinking about it. A short trip, some new clothes, the car at the garage — and it is gone.
That is not necessarily wrong. But there are choices that structurally improve your financial position without giving up all the enjoyment of today. Here are five options your future self will genuinely be grateful for.
How Is Holiday Pay Calculated?
By law, you receive at least 8% of your gross annual salary as holiday allowance. This accrues monthly and is usually paid out in one lump sum at the end of May or start of June. You pay income tax on it, just like on your regular salary.
A worked example:
- Gross annual salary: €48,000 (modal income in 2026)
- Gross holiday pay: €3,556 (8% of annual wage excluding holiday pay)
- Net holiday pay: approximately €2,400 to €2,600
Tip: Use the Budget Calculator to work out how to divide this amount across your financial goals.
Option 1: Top Up Your Emergency Fund
Why: A financial buffer protects you from unexpected setbacks: a broken washing machine, a dental bill, or a period without work. Without a buffer you are forced to borrow, which makes your financial situation worse.
How much do you need? Nibud recommends a minimum emergency fund of two to three months' net salary. On a net monthly salary of €2,800 that means €5,600 to €8,400.
What to do:
- Calculate the gap between your current buffer and your target amount
- Transfer the required portion of your holiday pay immediately to a separate savings account
- Choose an account with no withdrawal fees but some friction (no debit card attached)
The effect: Financial peace of mind. People with an adequate buffer experience significantly less financial stress and make better decisions about money.
Who it is for: Anyone with less than three months' net salary saved as a buffer. This is priority number one, before investing or making extra loan repayments.
Tip: Use the Savings Goal Calculator to calculate how quickly you can build your emergency fund.
Option 2: Pay Off Expensive Debt
Why: Every euro you pay in interest is a euro not working for you. High-interest debt costs you money structurally. A credit card can charge 14% interest per year. No investment reliably compensates for that.
The maths is simple:
- Credit card debt of €2,000 at 14% interest = €280 per year in interest
- That is money you are literally throwing away
- Paying it off gives you a guaranteed "return" of 14%
What to do:
- List all your debts sorted by interest rate, highest first
- Use your holiday pay to pay off or significantly reduce the most expensive debt
- Pay the minimum on everything else, then direct all freed-up cash flow at the next debt
The effect: Lower monthly obligations, less stress, and a faster route to financial freedom.
Who it is for: Anyone with debt above 5% interest. Always pay down debt before investing.
Tip: Compare the avalanche and snowball methods with the Debt Payoff Calculator and see exactly how much interest you save.
Option 3: Start Investing
Why: Savings rates in the Netherlands are trending back toward zero while inflation keeps eroding your purchasing power. In 2026, most major banks offer between 1.5% and 2.5% on savings accounts, while inflation hovers around 3%. You are losing money in real terms by saving alone.
Broad index funds (ETFs) have historically delivered average returns of 7–8% per year over periods of 15+ years.
What to do:
- Only invest money you will not need for at least 10 years
- Choose a globally diversified index fund (such as an MSCI All Country World ETF)
- Set up a monthly automatic investment plan with a low-cost broker
- Use part of your holiday pay as an initial lump-sum contribution
A worked example:
- You invest €1,500 of your holiday pay
- You add €100 per month after that
- At an average 7% return per year, after 20 years you have approximately €55,000
- Of which €25,500 is contributions and €29,500 is compound growth
The effect: You make your money work for you. Compound interest does the heavy lifting, but only if you start early.
Who it is for: Anyone who has a full emergency fund, no expensive debt, and an investment horizon of at least 10 years.
Warning: Investing involves risk. You can lose your initial investment. Never invest money you might need in the short term.
Tip: Calculate the effect of compound interest on your starting amount with the Compound Interest Calculator.
Option 4: Invest in Yourself
Why: The best investment is one that structurally increases your earning capacity. A course, certification, or qualification can raise your salary by thousands of euros per year, and that return keeps compounding as long as you work.
Concrete examples:
- A professional certification in your field (€500 to €2,000)
- An online course in data analysis, project management, or digital marketing (€200 to €800)
- A language course that improves your international employability
- Books and masterclasses from experts in your industry
The calculation:
- A certification costs you €1,200
- It leads to a salary increase of €200 per month
- ROI: you recover the investment in 6 months
- After that it is pure profit, every year
The effect: Higher income, more career options, and a skill set that does not depend on market returns or interest rates.
Who it is for: Anyone with 10+ years of working life ahead who sees a concrete path to translating new skills into more income. Especially powerful once you already have a full buffer and no expensive debt.
Option 5: Make Extra Mortgage Repayments
Why: Your mortgage is probably your largest debt. Every extra repayment reduces the amount on which you pay interest, creating a cascade effect over the remaining term. In the Netherlands you can repay up to 10% of the original mortgage amount each year without penalty.
A worked example:
- Mortgage: €250,000 at 4% interest, 25 years remaining
- Extra repayment: €2,000 of your holiday pay
- Saving over the remaining term: approximately €3,200 in interest
- Term shortened by roughly 4 months
When it makes sense:
- Your mortgage rate is higher than what you could earn net from investing
- You prefer certainty over potentially higher returns
- You want to be mortgage-free sooner
When it makes less sense:
- Your mortgage rate is low (below 2.5%) and you have a long investment horizon
- You do not yet have a full emergency fund
- You are claiming mortgage interest deduction (hypotheekrenteaftrek) that reduces your effective rate
The effect: Lower monthly costs, less total interest paid, and an earlier mortgage-free date.
Who it is for: Homeowners with a mortgage rate above 3.5% who already have a buffer and no expensive debt.
Tip: Calculate the effect of extra repayments on your total interest costs with the Mortgage Calculator.
The Ideal Split: A Framework
You do not have to choose just one option. The power is in dividing the money. Here is a framework based on your financial situation:
Situation A: No emergency fund and debt
- 70% toward topping up your emergency fund
- 30% toward paying off the most expensive debt
Situation B: Buffer in place but still debt
- 80% toward debt repayment (highest interest first)
- 20% toward investing in yourself
Situation C: Buffer in place and debt-free
- 50% toward investing (ETF lump sum or top-up)
- 30% toward investing in yourself
- 20% guilt-free spending
Situation D: Mortgage and want to pay it down faster
- 60% toward extra mortgage repayment
- 25% toward investing
- 15% guilt-free spending
The most important thing: always keep a small portion for something enjoyable. Being completely austere with money is neither sustainable nor necessary.
The Biggest Mistake: Doing Nothing
The worst option is leaving your holiday pay in your current account without a plan. Without a destination it gradually disappears on small, unconscious purchases. Make a decision within 48 hours of receiving it and act on it. Automate wherever possible.
Your future self does not need to thank you for perfection. One conscious decision per year is enough to be in a fundamentally different financial position ten years from now.
Summary
| Option | Suitable when | Expected effect |
|---|---|---|
| Top up emergency fund | Buffer less than 3 months' net salary | Financial peace of mind and protection |
| Pay off debt | Debt above 5% interest | Guaranteed return, lower monthly costs |
| Invest in ETFs | Buffer full, 10+ year horizon | Wealth building through compound interest |
| Invest in yourself | Can structurally raise earning capacity | Higher income, lifelong return |
| Extra mortgage repayment | Rate above 3.5%, buffer in place | Less interest, mortgage-free sooner |