If you are planning to travel overseas, then there are some financial responsibilities which you need to fulfill before you pack your bags.
It’s the holiday season again and also the time to travel. While some people might be planning to visit their hometown, others may want to travel abroad during this winter break. If you are also planning to travel overseas, then only buying plane tickets and booking hotel rooms in advance as well as preparing the list of places you want to see are not enough. There are some financial responsibilities also which you need to fulfill before you pack your bags.
Here is a quick financial checklist that you must take care of before going on your vacation:
1. Prepare a Travel Budget
It is very important to have a budget in place, especially when you are travelling to a foreign country. You should estimate your expenses such as tickets, hotels, meals, shopping, entertainment and sightseeing expenses and so on, in advance. “When you budget in advance, you can pre-plan and make reservations early, to avail of good travel deals. This will not only help you save a considerable amount of money, but also avoid any last-minute stress,” says Amar Pandit, CFA and Founder & Chief Happiness Officer at HappynessFactory.in.
2. Buy Travel Insurance
There are many unforeseen events that we may encounter while travelling, which could have a serious financial impact. The most significant expense that could crop up is medical emergencies. The medical costs, especially in western countries, are exorbitant. Hence, it is very important to have a comprehensive insurance policy, with a sufficient cover to protect us in case of an emergency.
There are other events that travel insurance covers like, trip cancellation, trip interruption, loss or theft of baggage and so on. These events may never occur, but if they do, one needs to be adequately prepared for the same. In such events, a good travel insurance can protect you from financial damages.
3. Get Your Home Insured
For many people, their home is the largest single asset they own. It is where you start experiencing life. Hence, “it is very important to have a home insurance that will assure that the place will remain safe in spite of what disaster strikes. It will basically help set you up for the unexpected. In fact, you can claim compensation in case the home is damaged by fire, riots, lightning, flood, burglary, earthquake, tsunami, terrorism and storms,” says Brijesh Parnami, Executive Director and CEO, Essel Wealth Services.
4. Explore different modes of Foreign Currency
While travelling overseas, you must be aware of the currency exchange rate between your country and the country of travel, and the various modes available. Based on the travel budget, you must arrange to buy foreign exchange before the trip, at a bank or other registered currency exchange centres. This will avoid you buying currency at expensive rates offered by exchange centres at airports and hotels.
Further, “even though buying hard cash is the traditional way of carrying currency, it can be really risky. Hence, you should check for alternate modes available like debit/credit card, travel card, traveller’s cheque etc. However, in case of credit/debit card, you must make sure that it is internationally accepted. Further, you should be aware of the additional mark up costs, if any, that your local bank will charge you for using the card internationally,” informs Pandit.
5. Buy Forex Card: Forex cards are creating revolution especially among the travellers since they are very cheaper compared to cash. Carrying and exchanging cash is difficult as it is subject to market availability whereas forex cards can be loaded with currency choice. Holding a forex card will help you do a transaction instantly and it has no transaction fee like a credit/debit card.
6. Pay your bills in advance
When you are travelling with your friends and family, the last thing you want to worry about is your bills and late payment fees. Instead of worrying about them, it is better to pay your bills in advance before you leave. This will also help in avoiding late payment charges.
7. Inform your bank about your travel plans
Many banks have monitoring systems that keep a check on unusual or fraudulent activities. So, “if you use your card in a foreign country and your bank is not aware that it is you, it may block your card suspecting fraud or unusual activity in a foreign location. Hence, it is better to notify your bank about your travel plans,” says Pandit.