Grenada? With the family? Without breaking the bank? You're having a laugh. Kate Simon isn't!

'Really, Caribbean holidays are about wealthy people being able to say they've been to the Caribbean," said my friend, nursing a rum punch on the balcony of our villa. It sounded rather a glum conclusion to draw on the last night of a two-week holiday in Grenada. But I knew what he meant. You could easily fly into the Caribbean, get a nice tan, have some tacky braids put in your hair, never leave the resort, and fly home with a much lighter wallet, none the wiser about the island you've just visited. But while the Caribbean has a wow factor that's bound to impress, and it's not the kind of place most of us could afford to visit every year, you don't necessarily have to be really well off to go there and you can even do it in some style.

Take the "villa balcony" I just mentioned. Sounds posh. But we hadn't shelled out thousands on an exclusive retreat. The balcony is attached to a two-bedroom, self-catering duplex at the three-star True Blue Bay Resort, one of a clutch of well-appointed, stylishly decorated and affordable options on this island. Our Club Villa came with a well-equipped kitchen, huge sitting room and private plunge pool and had more than enough room for our party of four adults and two young children. At our disposal were two swimming pools, a restaurant, bar, dive school, shop and internet café. A family of four would pay around £38 per person per night to stay there in low season, with breakfast.

In fact, we only stayed at True Blue for a week. Our first seven days were spent along the coast at the Blue Horizons Garden Resort, just five minutes' walk from Grand Anse beach, one of Grenada's finest stretches of sand. It's the three-star sister hotel of the Spice Island Beach Resort, one of the island's few five-star offerings, which sits on the beach and is currently being rebuilt because Hurricane Ivan ripped it apart this time last year.

When Spice Island reopens this winter, Blue Horizons guests will be allowed to use its facilities - the sunloungers, spa and gym - to add a five-star touch to their three-star holiday. But Blue Horizons has its own more than adequate facilities, too: a restaurant, pool, bar and children's playground. The one-bedroom self-catering apartments there are just about big enough for a family of four, if the kids are young, and include a kitchenette and private terrace. They work out at around £18 per head per night in low season.

By far the most stylish choice is the Robinson Crusoe-style Petit Bacaye, which sits alone on the bay of the same name. Simple but elegant, this is barefoot luxury, offering five palm-thatched cottages and two suites, set in a garden behind a pretty beach. Fishermen land their catch on the beach each morning and much of it is cooked in the hotel's restaurant, which is undoubtedly one of the best on the island, serving Caribbean fare cooked by local chefs. There are few facilities, but the English owners, Peter and Julia, are introducing yoga lessons and massage facilities for the new season. Unsurprisingly, the hotel is beginning to feature in the brochures of top-end tour operators, yet a family of four can stay in its two-bedroom apartment, which has a very basic kitchen, from £32 per person per night in low season.

Petit Bacaye is a little more remote than the other two resorts, but you can still hop on a bus at the top of the road and be in the capital St George's in half an hour. Grenada has a good network of minibuses, so there's no real need to hire a car. Plus you'll meet the locals and the kids will love the adventure. And when you do want to go off the beaten track, it won't cost you much to hire a driver for the day, who'll inevitably double as a guide. Besides, the island's mountainous landscape makes for hard driving, compounded by the poor state of most of the tarmac. Grenada may only measure 21 miles by 12, but it takes the best part of the day to tour it by car.

Such considerations can save you money without affecting your enjoyment. But the most important decision is when to go - and this is where you can possibly get more for your money. Our winter is the Caribbean's peak season, so Christmas is prohibitively expensive for the flashpacking family. You'll get clobbered at spring half-term and the Easter holidays. But outside these times, prices cool off. If you're prepared to travel in the summer break - hurricane season - you can pick up some bargains on decent accommodation. But you'll have to snap up flights early because the airlines still cash in on the summertime exodus. Flights can cost more at autumn half-term too, but accommodation will still be cheap then.

And shop around for fares - don't just check out the big household names such as British Airways and Virgin Atlantic. Golden Caribbean, which flies weekly to Grenada (and also to St Kitts and Tobago), offers competitive prices (see our report on page 2). This summer it was possible to upgrade to its Premium Economy class for less than the price of a straight economy seat with some of the big boys, ensuring a few more frills, a comfier seat and a bit more leg room - well worth paying for on a nine-hour flight, especially with children in tow.

Choosing to self-cater rather than stay in a hotel will help keep costs down, too, and give you a much more rounded experience of the island because you will have to leave the resort and talk to islanders. But don't just assume it's all going to be cheap. On Grenada, one of the effects of two hurricanes hitting the island in 12 months has been the devastation of its crops which has forced the island to import most of its food. Hence, prices in the supermarkets are currently on a par with Britain's. In any case, like much of the Caribbean, Grenada is heavily influenced by the US, and the supermarkets are bulging with plastic food, such as "imitation cheese". In contrast, there are lively fish, spice and fruit and vegetable markets in downtown St George's offering a much more enjoyable shopping experience. We picked up a startlingly fresh red snapper big enough for four adults to feast on, for just a few quid.

And stick close to home with drinks, too. If you must have wine, South American is your best bet on price (whatever you do, don't buy a bottle at your hotel). Beer is a better buy: Carib or Red Stripe. And the rum, of course, is good and cheap.

Self-catering can get tiring and you don't want to be tied to the stove cooking lunch when you should be on the beach. Don't think you can't afford to go gourmet; it just depends on your definition of the word. The Caribbean is awash with awful international food and Grenada is no exception. Instead, eat local. Fresh rotis - wraps filled with curried vegetables, goat or chicken - are a delicious, cheap lunch, easily found in the towns or at the beach.In the coastal town of Gouave, local fishermen and restaurateurs have started a new weekly evening event called "Fish Friday", where you can try different fish recipes cooked before your eyes at a row of stalls lining one of the streets.

Then you can splash out on the occasional restaurant meal. The Aquarium at Point Salines has good Caribbean choices - lunch costs about £10 per head. So does La Sagesse Nature Centre in St David's, which charges £17 a head for a meal and return taxi fares. You could even book a babysitter one night and dine at The Beach House Restaurant, another top choice, for around £20 per head. Just don't loiter over nightcaps in the bar: it's much cheaper to hang out on that balcony.


How to get there
Kate Simon travelled to Grenada courtesy of Golden Caribbean (0870 777 6911; www.goldencaribbean. com) and Just Grenada (01373 814214; Return flights on Golden Caribbean cost from £335 in economy and £884 in Excel One. Premium Economy will be available until 12 November, with fares from £500 return, though this service will resume in May 2006.

Where to stay
Until 15 December, Just Grenada offers 14 nights in a deluxe suite at the Blue Horizons Garden Resort for £1,035 for a family of two adults and two children under 14 sharing, including transfers. Until 31 October, a two-bedroom Club Villa at the True Blue Bay Resort costs £2,145, again for four sharing, with transfers and continental breakfast. Also until 15 December, a two-bedroom cottage at Petit Bacaye costs £1,795 for four sharing, with transfers.

Further information
Caribbean Horizons Tours & Services (00 473 444 1555; www.caribbean horizons. com).