Vacations are special for every one of us. We look forward to vacations to get away from our everyday life for recharging our energies and to create memories that last a lifetime. However, often times, it is noticed that when availing vacations, we end up making financial mistakes that prove costly in the long run.
Here are a few tips that we need to keep in mind before planning a vacation to ensure we don’t make costly financial mistakes:
Plan your trip in advance:
‘When’ we plan for our dream vacation is one of the most important criteria from a personal finance angle. Some of the expense heads that form the bulk of our spending during a vacation is Travel & Accommodation. If we plan for a vacation well in advance, both these expenses can be reduced dramatically. It is often noticed that when planned 6-8 months in advance, Air Fares can be 60% cheaper than when we try to buy tickets within weeks from the date of our proposed travel. Similarly, Hotels would be 25-30% cheaper when booked in advance. Also, one should try to check for deals on Hotels before making a booking. Many times, travel companies have a better discounted offering than what we would get from the Hotel directly.
Spend within your means:
When we are on a vacation, usually we are in a relaxed mindset and would not mind spending money which normally we would avoid during our normal life. For example, if there is a problem in a Delux room, we might not think much before upgrading to a Suite Room that would cost us double the money. Similarly, if we do not like the 3 star hotel we are put up at, we might not think much before shifting to a 4 or 5 star hotel. Such decisions would leave us high and dry because they have been taken without giving a proper thought and the implications have not been thought through. It would be prudent to avoid such impulsive behavior while on a vacation to splurge on luxuries which are avoidable.
Adequate travel insurance:
Travelling out of station for vacation has some risk involved in it. It is expensive to face medical emergencies in foreign countries. An adequate travel insurance will help to cover those expenses. Travel insurance would also cover various aspects like Loss of passport, loss of baggage, delay in baggage, personal accident etc. Adequate travel insurance should cover most of the risks involved in international trips.
Avoid using Credit cards:
Vacations should be planned only when we have surplus money which is beyond our emergency fund. Ideally, we should not be borrowing money when we take a vacation. By using a credit card, we are doing exactly that, borrowing money, from the bank. We should remember that the interest rates on credit cards vary from 22-48% depending on the circumstances and the repayment dates. It would be a good decision to avoid using credit cards completely while on a vacation. One other flip side to the usage of credit cards is that we end up spending much more than what we are capable of paying at that point in time. This forces us to cross the budgets that we plan for ourselves. This would also hurt our financial well being in future. So it is prudent to plan a trip with the surplus that we have rather than depending on credit cards.
Conclusion:
A popular saying goes “So much of Who you are, is where you have been”. It is very important to take a vacation because not only it refreshes you to face life with a fresh vigour, but also bring you closer to your loved ones. It opens up new perspectives of life for you to evaluate everyday events and makes you a better person. However, care should be taken to ensure that vacations do not become the point at which we would make major financial mistakes that would hurt our personal finances and impact our ability to achieve our goals.
