The summer holidays provide a welcome respite from the drudge of daily life, but it is also important to remember that they have the potential to cause families to rack up significant debts in a short period of time.

It's better to be careful with your money before you step on the plane than end up paying for your holiday for months afterwards. Ideally, you should be financing the holiday by planning ahead and saving accordingly, said Kurt Kelly, manager of Blanchardstown Credit Union.

"Where this longer-term saving is not possible or where the holiday is impromptu, people need to be careful how they finance the break," he said. "The question people should first ask is 'Can I really afford this holiday' or 'where could I go and for how long on my budget'. There's no point in going on a two-week holiday you can't afford and paying the price for the following year by being financially strapped."

You can also save money by making some smart decisions in a few key areas before you even leave the country.

Travel Insurance

You should always make sure to have some level of insurance cover in place when travelling, regardless of your destination, but it need not cost an arm and a leg. Securing cheap travel insurance is simply a question of shopping around ? if you are booking a package holiday, do not be tempted to take the easy option of purchasing a policy through your travel agent. For a start, this is only going to cover a single trip and if you choose to travel again later in the year, you are going to have to secure another policy again. The best option for anyone planning on going abroad more than once this year - that includes mini-breaks - is to go with an annual multi-trip policy. This will be cheaper than you might expect, said Brian McNelis, director of general services with the Irish Brokers' Association.

"A worldwide annual multi-trip policy with winter sports included for a family of two adults and two children should cost no more than €100," he said. "This will be cheaper if you choose not to include winter sports or would like to restrict cover to Europe only. A couple in their 30s with no children should expect to pay no more than €70 for the same level of cover. Single-trip prices vary depending on length of the trip and destination. Prices tend to start about €10 for a week in Europe for a single person. It's also worthwhile for consumers to do their homework as some policies will allow a discount for private medical insurance."

Price shouldn't be your only concern - make sure that you review the benefits, extensions and exclusions clearly to ensure that you are properly covered in the areas of concern to you. If you are unsure, seek advice from a broker.

Remember that as an Irish resident, you are entitled to receive necessary healthcare through the public system in the member countries of the EU, European Economic Area (Iceland, Norway and Liechtenstein) and Switzerland. To avail of this you must apply for a European Health Insurance Card (EHIC) through your local health office. This should be in place before you leave Ireland (if you don't receive your card in time, a temporary replacement certificate will be issued that will cover you). You will still need some insurance, however, as the EHIC does not cover privately administered healthcare, repatriation costs or additional costs incurred as a result of injury or illness. Absolutely do not visit the US without some sort of insurance in place - the price of medical care there is so extortionate that only the foolhardy would visit without adequate cover.

Volcanic Ash Cloud

The ash cloud may have disappeared for now but bear in mind that it could make an unwelcome return at any moment. The situation with insurance is very uncertain - some providers have paid out to customers on a goodwill basis while others have stuck rigidly to their terms and conditions. No one has yet stepped in to provide cover specifically for volcanic ash-cloud related disruption.

Prepare yourself in advance by knowing your rights should another ash cloud significantly impact on your travel plans. If you are in the EU and only your flight is affected, airlines are obliged to provide passengers who have opted to be rescheduled with food and accommodation for the duration of the delay. Outside the EU, this will very much depend on the willingness of the particular airline to look after its passengers.

Probably the best way to ensure that you aren't financially impacted by the ash cloud is to book a package holiday. This can be either a straight forward package picked from a brochure or a customised package including two of three elements - flights, accommodation or activities. Those who opt to book a package through a travel agent are better positioned than those who go it alone, according to John Shine, director of consumer services with the National Consumer Agency (NCA).

"In the case where a consumer does not get out on the package, then they have the right to a refund or a rescheduled package," he said. "If they are stranded out there and cannot get back, then the operator would have an obligation to look after the consumer on a like-for-like basis. People who are travelling on a dynamic package - where they have booked airfares and accommodation separately - have their flights covered by regulation 261 but for the other elements of the trip, they must rely on the various individual cancellation terms and conditions applied by providers. It really would boil down to the terms and conditions of the particular service providers involved and what, if any, goodwill they are willing to extend to the individual concerned."

Most package operators met their obligations during the prolonged ash cloud crisis earlier this year and the NCA is engaging directly with those who created difficulties for their customers.

Airport Parking Charges

Long term parking charges can increase the cost of your holiday but the hugely competitive market at Dublin Airport has brought prices down considerably in the last few years. Consumers now have a wealth of options to choose from. For example, booking online in advance usually secures significant savings. At the moment, the cheapest spots available are at the Days Hotel in Santry Cross, eight minutes from the airport by shuttle, with charges of €4.45 per day with a four-day minimum applied. Next is Bewley's Hotel park and ride which has spots at €4.50 per day as long as you park for a minimum of 14 days. The cheapest parking unrelated to a hotel or pub is the Dublin Airport Authority's long-term blue car park with charges of €5.50 per day available online only.