Planning your dream vacation overseas in 2018? Five tips on how to be financially prepared

Early planning of overseas vacation gives you sufficient time to save and accumulate a sizeable fund for managing all your 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, entry cost at tourist spots, passport fees, VISA charges and other miscellaneous expenses.

This will help you figure out how many days you would like to stay based on your estimated budget. Once your have your total budget in place, 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 go 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 short term debt fund or in recurring deposits.

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 US $2000 to spend in a foreign country and the exchange rate at that time was Rs 64/$ so the fund requirement would be Rs 1,28,000. But the rate is likely to fluctuate in six 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.

Book travel and accommodation early

The biggest expenditure on foreign travels are airfares as they require you to pay in lump sum. To avoid facing high airfare rates, make bookings well in advance. It would be wise to book a hotel room with option to pay at the hotel or pay at checkout as it will give you flexibility to make changes in the plan under an 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 plans.

Pick the right spending instrument

You have various options to make payments while travelling abroad like credit cards, international debit cards, pre-paid card, multi-currency cards and cash. Assess each mode and choose the ideal one 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. However, it is important to note that 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.

Therefore, assess the places you are going to and the suitable mode of payment. If a country is more dependent on cash payments, make sure to carry cash so that you do not end up paying a huge amount in conversion fees.

Get travel insurance

When going to an unknown country where you have no contacts 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 mandatory 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.

While going on an overseas vacation, you must keep in mind some important dates such as budget 2018 announcement, financial year closing date i.e. March 31, 2018, which is also the last date to link Aadhaar with various services, last date to file the income tax - July 31, 2018, 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 it to the hilt.

(The writer is CEO of BANKBAZAAR)