Who does not love to travel right? With every long weekend, we are setting aside plans to make that trip happen. While you are checking off places you want to visit you must also set up the funds aside for it. Yes- Travel is a goal that you must set and save for and not just your regular monthly expenses.
In our conversations with many clients, we have observed that one major reason for a messed up monthly budget is our favourite TRAVEL. No plans are put in place for this but random expenses on the credit cards are made. This leads to erratic monthly spending and eventual savings.
Instead, do the following to ensure travel is fun with experience and expenses both.
1. Budget and Goal Setting for your Travels.
Set a realistic travel budget and have that money in advance. An idea that appeals to many is to maintain a dedicated separate account for the same, with automatic fund transfers in the form of SIP. You can set this budget in a liquid fund or a short terms debt mutual fund. This money should be more accessible and could also earn a bit for you. Please do not do equity for travel goals. You need it whenever you want to travel right? This will ensure that the necessities of daily life would not eat into your vacation money and ensure that the Insta stories bring back fond memories rather than financial guilt.
2. Get a Travel Insurance
Many people tend to ignore travel insurance as they do not like to spend on it. Are we okay to live on the edge rather than pay a few thousand to travel stress-free? It can be an expensive lesson to learn in case something unfortunate happens (Let's not forget what COVID-19 has taught us)
3. Balance your trips and plan ahead
You know all the long weekends that are coming up. Plan your dates and money too. Sit and decide that this is what is our travel budget and allocate it across various holidays in the year. If INR 3 lakhs is what you want to spend in a year on travel then it should be a mix of some local cheaper holidays, staycations, 1 longer holiday within the budget. If we go in without planning, we will never know how much you are spending and will end up taking loans.
4. Go against the trend!
Everyone is travelling! Everyone is using their long holidays to go to the same location - however, if your organisation allows, we suggest you work through the long weekends and take an off the following week/month - everything will be cheaper and less crowded.
For example - Go to Andaman in January (after new year), Go to Himachal in August (after summer break).
But do ensure you speak to your employer beforehand so that you are not taking unpaid leaves. The unpaid leave amount will get added to your travel budget cost. Do not ignore it. You don't want to receive only 70% of your salary the following month after your travels.
Some ways to avoid major expenses
- Instagram travel is beautiful but know what you can afford. Stick to your budget.
- On a 5-day trip, you could stay for 3 days at a budget hotel and then for 2 days at a nicer property to enjoy the place and relax.
- Book for your travels using smart cards which will help you earn points and also offer you discounts.
- Spread your expenses across 2 - 3 months for a longer vacation so it is not coming all in one go. And use the money from your travel goal for your travel expenses.
- We all cannot have it all. So if you love to travel, maybe shopping and other expenses can take a back seat. I have the same winter jacket which I have been using for the past 5 years across 8 destinations. (choose your priority). Also, you can always borrow some one-time things from friends and family.
Wealth Cafe Advice
Do ask yourself what you are travelling for. Pictures? Experience? Running away from things back home? Or taking a break. You do not have to look your best and spend 1000 of rupees every day on a vacation to enjoy it. (well mostly not).
Also, remembering the actual trip will fade away in memories in a flash. Planning and anticipating your trip rather than actually taking it may make you happier. At least, this is true as per the study published in the 'Journal of Applied Research in Quality of Life. Another study at Cornell University also reaches a similar conclusion - When we plan for a life experience like a big trip, it creates a lot of happiness.
So as we approach the long weekend of the year i.e October, November & December - We hope you enjoy your travels and also start budgeting for it beforehand.