Taking a vacation is a highly anticipated change to the normal week. Rather than going to work and maintaining your home as usual, you’re living out of a hotel room or Airbnb, exploring a new city.
Away from your usual routines, it’s easy to make mistakes with your money. To make sure your new environment doesn’t waste your hard-earned cash, make sure you avoid the mistakes below.
Forgoing a Budget
Taking off without setting a budget is an easy way to overspend while on holiday. Even if you’re careful to find cheap flights and accommodations, you might not know your hard spending limits without first making this document.
You also run the risk of making impulsive purchases that eat up cash you need for attractions — or worse, you wind up taking on credit card debt.
To avoid going into the red for the sake of a vacation, figure out what your realistic budget is and build your vacation around it. Choose your activities and meals in advance and track what you spend as you go.
Tapping into Other Savings
Your vacation budget can dry up long before you’re ready to go home. If you can’t bare the thought of packing your bags, you might think about using other savings to prolong the good times abroad.
And why not? Your emergency fund is just sitting there, not being used. You might as well put it towards something fun, like an extra day or two in the sun.
As tempting as this might be, it’s not a good idea. What happens if you come home to find your basement flooded, or your car vandalized, or an unexpected data roaming fine from your trip? You need your emergency fund in case you encounter unexpected expenses after your holiday.
If you still don’t have enough money to handle these emergencies even with savings, you might consider a loan as a backup.
You can research how to try to get access to cash online as soon as you arrive home to your emergency, even if it’s in the middle of the night. Online direct lenders and loan service providers keep their applications open 24/7 just for these situations.
Skipping Travel Insurance
The emergency isn’t always waiting for you at home; sometimes, it follows you to your destination, like when you twist your ankle going up the Spanish Steps.
Seeking prompt medical care from the local authorities is a good idea, but it can cost a lot of money when you’re a visitor — more than your emergency fund and online loan combined.
That’s why travel insurance is so critical for any trip out of your home country. Some policies can cover up to $5 million in medical costs in case you need to be hospitalized.
Using Credit Cards Exclusively
Credit cards can be a convenient shortcut to currency exchanges. With a simple tap or swipe of your card, the local vendor’s POS will take the appropriate cost of their items, and your credit card company will exchange the currency for you.
As usual, convenience has a cost. Not only will you have the pay the difference in exchanges if your money is worth less, but you’ll also have to pay foreign transaction fees. These can add up to pack a wallop.
To save some money, consider keeping cash in the local currency on hand. Just make sure you don’t get this money at the airport or ATMs abroad, where the exchange rates will be highest. Instead, do your exchange in the week before you leave at a bank.
Plan Ahead to Enjoy Your Holiday
A vacation can be hard enough on your finances — don’t make it any harder by forgetting to budget or using emergency savings.
