While vacationing is an excellent way to de-stress and enjoy your free time, we have heard the experiences of some clients returning from a memorable vacation getaway to meet mounting debt or be harassed by financial difficulties later on in the year. However, if you are aware of the common mistakes that are made when planning and experiencing a vacation, you can apply smart financial principles to ensure that you have the peace of mind while enjoying it and staying within your budget and on track with your financial goals. Remember, you have worked hard and you deserve that rest and relaxation. To achieve this, here are tips to implement when planning your vacation getaway:
1. Prepare a Budget
The first step in having a vacation is to develop a budget or determine how much you can spend on your next trip. This sum can be broken down into the four major expenses: airfare, accommodation, food and activities. To get the most out of your vacation without having huge bills upon returning home, learn to balance your budget with your intended activity. It is important to determine how much you are willing to spend, while also taking into consideration the experience that you would want to remember whether it is in Hawaii, London or the Bahamas.
2. Do Your Research
In order to stay within the budget you have developed, you should plan your next vacation experience at least six months to a year in advance. While planning, you should think about what you would really like to do, experience or see. Would you like to lie on the beach, explore new cultures, go shopping, go on an adventure or just get away for a weekend? Once you have decided, you can begin researching by comparing them with options in other countries, as well as those at home. If you are travelling as a group, some travel organizations offer discounted rates when asked. All-inclusive vacations are also available, with all costs for the vacation booked upfront. Information can be obtained online, at a travel agency, or even from friends who have travelled before to your selected destination. Also, your vacation will be cheaper and easier to save for if you plan it during an off-peak season known as “shoulder season” when accommodations, airfare and car rentals are less expensive and the weather is still reasonably nice. The off-season varies by location, so it is important to research potential destinations to see which places have “shoulder seasons” that match your vacation period.
3. Stay Organized
During your vacation, you need to be as financially organized as possible to prevent serious problems in the event of theft or fraudulent charges. Firstly, you should remove all items from your wallet. All credit cards and sensitive documents that are not needed for the trip should remain at home. It is advised that you do not carry a significant amount of cash. You should call your credit card company in advance and let them know you are travelling. Most credit card companies have increased their fraud verification and may call your home phone to verify unusual transactions. If they cannot contact you, they may deactivate your card. You should also keep a list of important phone numbers for each bank or financial institution you transact with so that you can contact them in case of any problems during your trip. The most prudent thing to do if you are in a dubious town is to check for fraudulent activities by calling customer service daily to ensure that the balance on your credit cards corresponds with your daily receipts.
4. Monitor Expenses
Staying on course with your financial plan means exercising control and being aware of where your money is currently being spent. During your trip, you should keep track of your budget and take a close look at your expenses daily by saving your receipts. This is important so that you can accurately tally your bills, identify where you are overspending and cut down where necessary. Ultimately, it may mean buying dinner at small restaurants in the town rather than the fine dining restaurants at the hotel, or cutting back on purchasing souvenirs.
5. Have an Emergency Fund
There is a very high probability that someone can get ill or injured while on vacation. Not having access to funds in case of an emergency, especially when you are far away from home, can be disastrous. You may not think that your family can afford to set aside funds for emergencies while planning a vacation, particularly one abroad. However, every family that can afford a vacation can afford an emergency fund. With sufficient advance planning and by making small sacrifices, a family can set aside enough funds for emergencies. Having three to six months’ worth of your income in a fund such as the UTC TT Dollar Income Fund, in the event of an emergency, is a great way to be financially prepared.
By following these financial tips, you can navigate through financial hurdles associated with having a vacation. At the end, you would have had a fantastic experience, less stress and worry and probably some money left over for your next trip.
You should consult with a Financial Advisor at the UTC, who can assist you in planning major life decisions and events.