Wanderlust is in the millennial DNA. Everyone has the idea of their dream vacation. Whether at a water villa in the Maldives or trekking to the top of mountains and giant peaks, we all know where we want to go. The issue, however, lies in the affordability of that dream getaway.
The pandemic has changed the way we look at travel. Many of us do not mind spending a little more to make that dream vacation happen. However, regardless of your style, your journey does require preparation. When you travel, you don’t want to be distracted by money problems. You don’t want to miss a great event or experience because you didn’t plan your finances well. Here is where financial planning comes in.
Why do you need a financial plan to make your dream vacation happen? We have already established that we do not mind spending a little extra to make that dream vacation happen. But, with planning that dream vacation comes added expenses. Travelling on a budget can be tricky and sometimes limiting. Going overboard could mean putting your other financial goals on hold for a while. But, here is where financial planning plays a vital role.
Here are four approaches to planning a vacation:
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- The Budget – Sticking to a pre-planned budget during vacation is a thumb rule. It is important to create a detailed budget for your trip which includes travel and transportation costs, lodging, tips, food, attractions and excursions, and shopping.
- The Time – When planning with friends, it is crucial to understand when everyone can take a break. Focusing on the time could help in deciding your destination! One way to book a good deal is to set Google alerts for flight prices and hotel prices so you would know when it is cheapest. Another way would be to explore places when they are off-season if that is your cup of tea!
- The Destination – One of the biggest spends you could incur, is the travel cost. Travel costs may differ based on the destination, the activities you have planned, and the time/season of travel. Planning a vacation with your family is going to be very different from planning a vacation with your friends. Similarly, planning an international vacation is quite different from planning a domestic vacation. Be it Goa, Shimla, or even the Maldives, a little bit of planning could go a long way!
- Accommodation – Choosing the right place for accommodation is important and could either make or break your budget. Today, there are so many options available to choose from – homestays, Air BNBs, Zostels, etc. apart from hotels of course. There are various sites which offer great deals.
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To gain more insight on how you could make that vacation happen, tune in to our podcast! https://ithought.co.in/making-your-vacation-happen/
Leave-Travel Allowance
Apart from the above, when planning a domestic vacation, it’s beneficial for salaried people to know if they have a leave travel allowance. This means the employer covers the travel expenses of the employee while is on leave. The icing on the cake? Such an allowance is eligible for tax exemption! This exemption is allowed for any employee for two travels taken within a block of four calendar years.
Travel Insurance
I know what you are thinking. Insurance? For travel? Why do I need that? Travel Insurance covers any unforeseen losses that could happen during your trip. A basic policy would cover medical emergencies in international policy, but a more comprehensive one would cover things like trip cancellation, lost luggage, and flight delays, among other things. It is advisable to read the fine print carefully before signing up for any insurance policy. Travel insurance is important, especially when you travel internationally. Missing one flight could throw your plan off the track.
Get Your Currency Right
When travelling abroad, it is always a good idea to carry USD as they are easily accepted in any country. Using a credit card or debit card could be an option, but keep in mind the charges incurred for every transaction.
Many of us do not know that withdrawing cash is always more expensive. When using a credit card to withdraw money, there is something known as a ‘Cash Advance Fee’ which is applied. This fee can vary from 1% to 4% depending on the credit card company. So, now you would need to pay both, currency transactions as well as interest on that cash withdrawal. There is also a foreign currency conversion fee – any purchase that you make on your credit card abroad will be in that currency, but you will settle the bill in INR. One could use this option called DCC (Dynamic Currency Conversion) or could have a service provider convert it from INR to USD. It is always cheaper to do it through the service provider, but many people opt for DCC instead.
Here are a couple of safety tips that could be useful while planning your vacation:
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- While you are travelling, a trivial thing you could do to keep yourself safe is to carry your card details with you so that you can block them if they get stolen at any point.
- If you are going to travel a lot, it would be wise to choose a card that earns you miles or gain access to airport lounges or gets you the best travel deals.
- Always make sure that your card and money are in separate places. Most of us keep both in our wallets. But in the off chance that we get pickpocketed, we could be left stranded in a place without any money.
- For those who are considering an international vacation, instead of using your credit or debit card, you can look at a travel card that is pre-loaded with currency.
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We get it that planning a trip can be stressful if it’s not done in an organized way. To make sure you have a game plan for your vacation, set some time aside to go through each part of the planning process and keep your stress levels in check. Planning in advance for the financial side of your trip can help you make the most of this special time while staying on track for your long-term goals.
Stay tuned for more updates!