No one wants to travel on pennies. If you’re planning on island hopping in the Mediterranean, road tripping around the USA and Canada, eating your way through Europe or backpacking across Asia or South America, then you’re going to need a healthy holiday fund.
Follow these tips to set a budget, get your savings in order and find the best deals on flights and accommodation.
Work out a realistic budget
It’s incredibly easy to underestimate how much money you will need while you’re travelling. What activities are you going to do? What if you can’t find a hostel bed? What if you DO want to splash out on a fancy hotel one night? If you do end up underestimating your budget, you’ll be stuck dipping into credit cards or hitting up the bank of mum and dad while on the road.
Work out how long you’re going to travel for and what the average costs you’ll incur each day (including spending money!) – basically, do your research!
It’ll be a little uninspiring doing all the calculations now but once you’re out there, you won’t even need to give the things you really want to do a second thought. Make sure to factor in everything you’ll need to pay for from flights and accommodation to your entertainment budget, any new equipment you might need and travel insurance. You’ll also want to leave a contingency fund in case of any unexpected expenses.
Set up a separate holiday bank account
If your holiday money is sitting in your regular bank account, it’s only too easy to spend it. Does “I’ll dip into it and then top it back up later” sound familiar? As soon as you start planning, set up a separate savings account for your trip. Most banks will let you open multiple savings accounts. Find an account with a high interest rate and no fees and automatically transfer money into it each time you get paid.
Studies have shown that people who treat savings as a regular expense, rather than just putting away what they have left at the end of the month, will be more successful. Then you can just sit back and watch it grow.
Save where you can, spend where it counts
When you travel, there are definitely going to be things you want to splash out on – and so you should! These are usually once in a lifetime experiences like trekking with mountain gorillas in Rwanda or diving with humpback whales in Tonga! Don’t let your focus on keeping to a budget make you miss out on these moments. Instead, make savings where you can:
- flying budget airlines
- buying food at supermarkets
- staying in hostels
- planning train or coach
This means you can spend on the things that really count.
Sign up for price alerts
Your airfare is usually one of the biggest holiday expenses so there’s the potential to make some serious savings. Sign up for fare alerts (either directly with the airline or through third party sellers like comparison websites) and be notified when the price of your flight drops. Then you can swoop in and save big!
Play the exchange market
If you’re travelling overseas, you can use the foreign exchange market to make yourself some free money. Keep an eye on exchange rates and buy when the currency is in your favour. Just make sure to factor in the total cost including fees, not just the exchange rate.
Be smart with your funds on the road
Once you’ve saved all that cash, you’ll need to think about the most cost-effective way to take it with you. Using your own bank account at international ATMs may incur big fees, so make sure you check before you withdraw. Look for the ‘international transaction fee’ rate. Loading money onto a FXgo® prepaid travel card locks in your exchange rate and gives you the freedom to use it like a credit card. It’s also a good idea to take some cash in local currencies with you so you aren’t searching for an ATM or exchange as soon as you arrive.
Ready for your adventure?
Note: This article contains general advice only. Readers should seek a trusted professional’s advice on financial matters.