Financial Planning: How To Plan a Vacation on a Budget - Axis Direct
Sep 25, 2019 | Source: AxisDirect-O-Nomics

Plan Your Travel without Stretching Your Finances
The views and opinions expressed are of Mr. Arun Thukral, MD & CEO, Axis Securities.
It seems like every time one log on to Facebook or Instagram, there is a tsunami of pictures from friends traveling the world. Whether they’re backpacking across Europe, sightseeing in Asia, or exploring African jungles, it’s hard to let go of it especially when you are passionate about travel. But, to be able to do all this, one thing ranks high on the checklist – money. Sure, traveling costs money, but there are ways to make it easier on the wallet. If your finances can’t bear the weight of an overgenerous trip right now, finding ways to travel affordably is not as tough as it seems. A little financial planning and research on alternative solutions can help you to go on that dream vacation without any financial stress.
Before you start leafing through brochures or browsing online, first define your travel priorities like experiencing a different culture, learning more about history, or even just taking a few days to relax. Such goals can be accomplished easily within your budget. Once you have defined exactly what you want from your travel, you can focus on how to best achieve it. Here are a few simple steps that can help you to plan your travel budget-friendly.
Decide a budget
Booking travel without any set budget can be risky. In the absence of a budget, you could end up overspending without realizing it. Carefully consider your current financial requirements to arrive at the figure that you can comfortably spend on travel. Try not to compromise on your savings and investments to arrive at this figure. Once you have arrived at a figure, stick to it. Shortlist your travel destinations based on your preference and your budget. A quick online search will show you a number of destinations that you can explore within your budget while satisfying your wanderlust.
Plan in advance
Holiday travel should be planned as far in advance as possible. This gives a window for greater research and better deals. If one has got a flexible schedule, they can save a ton simply by traveling during the off-season. And, as an added bonus, one can benefit from less crowded attractions and have a less stressful overall experience. Tourist seasons are different for different destinations. Traveling during the peak months or during holiday breaks could result in paying more for airfare and accommodations. Planning in advance also gives you time to save more towards the holiday. You can look at below options as well to accumulate enough resources for your travels:
• If you are a travel enthusiast, build a separate travel fund by setting aside a certain sum every month in this fund. Remember, this fund is over and above your savings.
• Start a ‘Travel Recurring Deposit’ account to divert a pre-defined sum towards your travel fund as soon as you receive your salary.
• If you have a specific destination in mind, say watching Northern Lights in Norway, you can plan 3-4 years in advance, giving you ample time to leverage equity and equity products to gather sufficient funds.
• You can invest in debt instruments for the vacation planned within 3 years duration.
Deals & Discounts
By planning a holiday in advance, you can use the time in hand to hunt for deals and discounts. You can save under the following heads by grabbing the best deals:
• Transportation - Keep an eye out for airline ticket deals to your preferred destination for economical travel. Midweek flights are generally less expensive. One can sign up for travel alerts from flight and travel websites to grab such deals. You can opt for converting some of your air miles to get a discount on your airfares
• Stay- Compare the price of your hotel room on online portals to book it at the best rates. Check if the hotel you opt for provides free airport pick up and drop. You can also explore non-traditional accommodations to save on vacation expenses. Explore options like hostels, vacation rentals, etc. Staying in less popular places could be a good option once you have done in-depth research from safety and accessibility perspective.
• Food & excursion - Do thorough research to identify places where you can get the best deals on food and excursions. Join travel forums or seek advice from your friends who have visited your holiday destination for tips. For local sightseeing, avoid renting a car or taxi if the city has a good public transport system. Ask locals about the distance to destinations and the best way to reach there. Buy passes/ reserve before. It is cost effective. Local tours are cheaper at the place and costlier online.
Smart money management
Apart from financial planning, managing your money efficiently can help you to avoid unnecessary expenses. Below are a few simple money management tips:
• Though it is advisable to avoid carrying a huge amount in paper currency, it is important to have your travel money split into different mediums like credit and debit cards, travelers’ cheques and cash to avoid any inconvenience due to any loss or technical glitch.
• When traveling abroad, travel insurance becomes highly crucial as any health-related issues can cost you a lot in foreign land. Travel insurance is a relatively low, upfront cost that could ultimately save a lot of money in case you have to modify or cancel your trip.
• While planning an international holiday, the exchange rate should be given due consideration. Any movement in the exchange rates has an impact on your budget. A smart move would be to go for a prepaid travel card. They offer you the best rates and protect you against fluctuations by letting you lock in the exchange rate before the trip.
• The temptation to use credit cards is high while booking a trip for its ease and benefits like reward points and discounts associated with such transactions. Be mindful of the amount you swipe on your card and ensure timely repayments to avoid penalties.
• It would be advisable to refrain from taking a loan for travel. With some financial planning, you can avoid the need for a loan. In case you do end up going for a personal loan, make it a priority to repay the same as the interest rates tend to be high on such products.
Originally published in DNA Money & Zee Business , Sep'18.
Related Keyword
Financial Planning
Systematic Investment Plan
Equity Market
Investment plans
AxisDirect-O-Nomics