8 Tips To Control Vacation Spending

While taking a vacation is an excellent way to de-stress and enjoy your free time, it may lead to accumulating unnecessary debt or financial difficulties later on. However, if you apply smart financial principles when planning your vacation, you can ensure that you have the peace of mind to enjoy it while staying within your budget. There are essentially eight simple tips that you can follow to control your vacation spending.

1. Develop a Budget

The first step in having a vacation that is within your control is to develop a budget or determine how much you can spend on your next trip. This sum can be broken down into sections such as airfare, accommodation, food and recreation, the four major expenses on a trip. To get the most out of your vacation without having huge bills upon returning home, learn to strike a balance between sticking to a budget and making the most of your vacation. 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 as you may only be in Sydney, Hawaii or London once.

2. Save For Your Vacation

After you have developed your budget, it is also important that you craft a savings plan for your next vacation. Most people are lured into using bank loans or credit cards to fund their trips, which results in more spending than anticipated as they borrow more than they may really need, not to mention the extra that is spent on the interest expense for the loan. You should instead calculate an amount that you can afford to set aside from each paycheck to put toward your vacation and then put this into a dedicated savings account. This can even be made easier through an automatic salary deduction. Ultimately, using your dedicated savings to pay for your vacation can save you up to 10% of the cost of the overall vacation.

3. Do Your Research

In order to stay within the budget you have developed, you should plan your next vacation experience at least a year in advance. In your 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 to do the research by comparing options in other countries as well as 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 the costs for the vacation booked in upfront. Information is available online or you can consult a travel agent or even friends who have traveled to your selected destination before.

4. Time Your Vacation Wisely

Your vacation will be cheaper and easier to save for if you plan it during an off-peak time of year known as “shoulder season” when accommodations, airfare and car rentals are less expensive, but the weather is still reasonably nice. The off-season varies by location, so do some research on potential destinations and see which places have “shoulder seasons” that match up with the times you can take your vacation.

5. Make a Daily Schedule

When you have decided on when, where and how you would like to go, the next step is to plan out your trip. This step is very important as it will help you to stay on budget when you get there. Spend some time online researching the area and its attractions before you leave. Check out restaurant reviews, local food markets for making your own meals, transportation options and any activities available. If you have a list of your top picks, and you know the comparative costs, you can make smart decisions about what to spend your money on when you get there. Try to assess what the costs will be daily on your trip, including basic costs such as food and transport as well as other incidental costs such as tips, snacks, parking fees or tours, etc. Ultimately, it is much easier to stay on budget if you can estimate most of your costs up front.

6. Control Your Cash

Local currency is necessary for many vacation spots as you will need it for paying transport fares, tipping and shopping at local areas. Local merchants generally accept US dollars around the world, however the merchant may use a conversion rate that is in their favor and you end up paying more for the item you purchased. To prevent this issue, check the currency conversion rates in the country to which you are traveling before arriving and try to change some of the currency before you leave. However, you should not convert a large amount of your cash as you may not use all. If you do run out of cash while abroad, you can try using an automated teller machine (ATM) affiliated with a major bank, where you get your withdrawal in the local currency and the charges are much lower. If you intend to use your credit card abroad, be sure to confirm your credit card’s rates before leaving home. You may be charged a standard 1% for the currency conversion, as well as an additional 1-2% service fee. Many travelers find it best to save credit cards for large purchases, such as hotel rooms.

7. Beware of Hidden Fees

Hotel Fees – Several hotels offer Internet connections in your room and offer to hold your bags if you need to check out before it is time to head to the airport, but most will charge you a fee for these services. Other amenities, such as the bottle of water on the dresser or the newspaper delivered to your door may seem free but will actually be charged to you on your final bill even if you did not ask for them.

Rental Car Fees – If you are quoted a per-day fee for a rental car, it may seem like a bargain, but you should ask for a quote that includes all fees, taxes and surcharges to assess the true cost upfront. Late return fees can also go as high as a full additional day of fees for a one-hour late return. Filling up the gas tank on your own is usually cheaper than letting the rental car company do it for you.

Airline Fees – Although you may have saved significantly on your airfare through chartered flights or bargain airfare, you should note that you may be expected to pay for other expenses. If you book by phone rather than on the airline website, you will often be charged for the privilege of talking to an airline representative. You may also be charged for checking more than one bag, snacks or a meal on the plane. Being aware of additional fees upfront can help you stay on course by either budgeting for them or opting out of the service completely.

8. Do Not Buy Souvenirs

Usually friends and family members expect you to return home bearing trinkets from your destination. Don’t. This is an outdated and expensive custom that can make you run over your budget while you run through your list of aunts and nephews. The most meaningful souvenirs are often not snow globes or T-shirts, but items that tell the true story of your trip, such as a Carnival head piece, an unusual stone from a great location or a few pieces of local currency. Edible items also make wonderful, inexpensive gifts that will allow your lucky recipients to share your experience better. If you must buy something, make it something you will actually appreciate or use when you get home.

If you have disposable income, affording a vacation and controlling the amount that you spend is simply a matter of planning. Financial Planning for a vacation simply starts with setting up a dedicated savings account, determining the budget, planning the experience and taking a closer look at your expenses while on your trip. It is also important to remember to save your receipts so that you can accurately tally your bills, which can also help in planning future vacations. At the end, you would have had a wonderful experience, less stress and worry and probably some money left over for your next trip.

You can speak to a Financial Advisor at the UTC to develop a comprehensive budget suitable for you.