If you are looking to travel to an overseas destination, then 2018 is the apt year to do it as the value of rupee vs USD has surged to the 64 level, and your foreign travel may cost you much lesser compared to 2017. Although there are certain expenses like VISA fees and travel insurance, for which no cost-cutting can be made, however, if you plan ahead and make some timely financial decisions, you can enjoy your vacation stress-free.
Here are some tips on how to financially be prepared for your overseas vacation in 2018.
1. Start As Early As Possible
Early planning of overseas vacation gives you sufficient time to save and accumulate a sizeable fund for managing all the tour expenses. Firstly, make an estimate of expenses for the entire trip, including every little detail from flight tickets, hotel stays, sightseeing, sports and activities, to entry cost at tourist spots, passport fees, VISA charges and other miscellaneous expenses.
This will help you to figure out how many days you would like to stay based on your estimated budget. Once your have your total budget figured, break the fund requirement into the number of months after which you plan to go abroad. For instance, if your total budget is Rs 2 lakh and you plan to travel after 10 months, then each month you should save Rs 20,000 to get the desired corpus. If you are planning the tour in less than 1 year period, you can also invest in a liquid fund or high interest savings account. If you plan to go after 1 year, then you can invest in balanced funds, short term debt fund or in recurring deposits.
2. Be Alert On Currency Exchange Rates
While making an estimation for fund requirement, you should also take into account the change in foreign exchange rate. For example, if you have estimated that you would require $2000 to spend in a foreign country and the exchange rate at that time was Rs 64/$, the fund requirement would have been Rs 1,28,000. But the rate is likely to fluctuate in 6 months and may rise to Rs 67/$, scaling up the fund requirement to Rs 1,34,000 and therefore you need to make sure you keep some surplus amount at your disposal in such a situation.
3. Book Travel and Accommodation Early
The biggest expenditure on foreign travels are airfares, and require you to pay in lump sum. To avoid facing high airfare rates book travel as early as you can, even 6 months earlier if required. Make hotel accommodations early as well to get the best deals. Try to book a hotel room with option to pay at the hotel or pay at checkout, because it will give you flexibility to make changes in the plan in any emergency. Always compare the hotel deals across various travel portals to get the best deal. You can also check the deal offered by the travel agents for a package if their itinerary matches with your requirement.
4. Pick the Right Spending Instrument
You have various options to make payments while travelling abroad like credit cards, international debit cards, prepaid card, multi-currency cards and cash. Each mode comes with its convenience and asses what is ideal for you based on your travel plan.
Prepaid cards are very easy to use as it is convenient to load money in it and you can get the benefit of discounted exchange rate in comparison to other modes of carrying money. But beware, as every time the prepaid card is used to withdraw cash, it is charged with currency conversion fees or other charges as per the bank’s norms. In case it is swiped at point of sale (POS) counters generally no charges are levied. Similarly international credit or debit card transactions are subject to currency conversion charges at a stipulated rate, which could be around 2.5% to 3.5% of the transaction value.
So, assess the places you are going to and what is the mode most suitable. If a country is more dependent on cash payments, make sure to carry cash so that you do not end up paying a bomb in conversion fees.
5. Get Travel Insurance
When going to an unknown country where you have no contacts to rescue in an emergency situation, travel insurance could be a very important tool to ensure you have financial security. Travel insurance takes care of situations like flight cancellation, change in travel plans, loss of checked in luggage, emergency evacuation in certain condition and support for unexpected medical cost in a foreign land.
Travel insurance is a compulsion if you are visiting Schengen countries and some other western countries, but is often ignored by travellers in countries where it is not mandatory. Make sure you don’t ignore travel insurance no matter where you are travelling. Additionally, you must check the list of risks it covers and its service availability in the country in which you are planning to go for a vacation.
6. Some Final Checklists
While going on an overseas vacation in 2018, you must mind some important dates such as the Budget 2018 announcement, financial year closing date i.e. 31st March 2018 which is also the last date to link Aadhaar with various services, last date to file income tax, i.e. 31st July 2018, and key GSTR filing dates. Ensure that your travel dates do not clash with such important dates.
Plan your dream vacation keeping these tips in mind and enjoy your vacation tension free.
(The writer is CEO at Bankbazaar.com)