Every May or June, millions of workers across the Netherlands receive a financial boost that many look forward to all year: the vakantiegeld (holiday pay). It’s a legally required payment equal to 8% of your gross annual salary, accumulated by your employer throughout the year and paid out in a single lump sum — usually between May and June.
On a gross monthly salary of €3,000, that’s roughly €2,880 landing in your account at once. The question is: what’s the smartest thing to do with it?
The most common answer is to spend it on a holiday — and there’s absolutely nothing wrong with that, it’s literally what the money is designed for. But if your summer plans are already funded, or you want part of that lump sum to work harder for you, here are 5 options ranked by long-term financial impact.
First: do you have an emergency fund?
If you don’t yet have 3–6 months of fixed expenses saved in an accessible account, that’s where your vakantiegeld should go — no debate needed. An emergency fund isn’t an investment; it’s basic financial infrastructure. Without it, any unexpected expense (car repairs, health costs, job loss) sends you back to square one.
Already have one? Then read on.
Option 1 — Save it in a high-interest account
If you know you’ll need this money within the next 1–2 years, the best move is parking it somewhere that actually pays you something. Your main Dutch bank probably offers between 0.5% and 1.25% interest. But there are alternatives in the Netherlands offering up to 2.80% — with complete security.
Compare the best options in our guide to the highest interest rates in the Netherlands. If you want to maximise without complications, Raisin gives you access to the best deposits across Europe from a single account — some topping 3% on short terms.
Option 2 — Invest it in ETFs
If you have a 5-year horizon or longer and won’t need this money short-term, investing it in index funds (ETFs) is probably the highest-impact decision you can make for your long-term finances.
€2,880 invested in a global ETF at 8% annually for 20 years grows to roughly €13,400. You don’t need to know anything about markets or pick individual stocks — a global index ETF like the MSCI World does the work on autopilot.
From the Netherlands, you can get started with Trade Republic — zero purchase commissions, automatic investment plans, and 2% interest on uninvested cash. Want to see how your vakantiegeld could grow? Check our compound interest calculator →
Option 3 — Boost your individual pension
This is the most underrated option — especially if you’re self-employed (ZZP’er) or your employer’s pension scheme isn’t generous.
In the Netherlands, you can open an individual pension account (lijfrenterekening) and contributions are tax-deductible. Depending on your tax bracket, the Belastingdienst (Dutch tax authority) returns between 36% and 49% of what you contribute. In practice: if you put €1,000 of your vakantiegeld into a pension account, the government returns up to €490 in your annual tax return.
The most popular platform in the expat community here is Brand New Day — index funds, low costs, and a fully online process. Read our full experience at My Brand New Day account →
Option 4 — Make an extra mortgage repayment
If you have a mortgage, using your vakantiegeld for an extra repayment (extra aflossen) can make sense. You reduce your principal, cut future interest costs, and lower your monthly payments.
But it’s not always the right call. There are specific situations where you’re better off not making extra repayments — when your interest rate is low, when you’d lose the mortgage interest tax deduction, or when that money generates more returns if invested. We break down each scenario in our Netherlands mortgage guide →
Option 5 — Spend it (intentionally)
The vakantiegeld exists for a reason: holidays. If you’ve been looking forward to a trip or a few weeks off with family, spending it on that is completely valid — as long as the rest of your financial situation is in order.
The best financial decisions aren’t the most frugal ones — they’re the most conscious ones. Knowing your emergency fund is covered, something is invested, and you’re giving yourself a real break when you can: that’s a healthy relationship with money.
Not sure where to start?
A simple framework that works for most people:
- No emergency fund yet → put everything there first.
- Emergency fund covered, no investments → split between ETFs and enjoyment.
- Already investing regularly → consider the individual pension for the tax advantage.
- You have a mortgage → read whether extra repayments make sense in your case before deciding.
What are you doing with your vakantiegeld this year? Let us know in the comments 👇
