Planning for a long holiday? Rarely is the decision to go on a holiday impulsive. Most people start planning for holidays a month or two in advance.
If one's holidays can be planned, then the finances required for the holiday ought to be planned too. This should lessen the anxiety associated with holiday costs.
Typically, evading financial planning for your holidays could mean spending more on the holiday. The actual costs may even be more than what could have been afforded.
As a result, one may be paying credit card bills for the previous holiday, even as it is time for the next one.
In this context, a financial plan for your holidays is as important as planning the rest of the itinerary.
Initial planning
Travel fares have become much cheaper today. People no longer shy away from taking more than just the annual holiday.
However, travel is one aspect of the trip. Others such as lodging, boarding, eating, shopping for memorabilia and gifts will invariably increase your holiday budget.
The first step would begin with determining the total budgeted cost of your holiday and putting it down in writing.
This figure should be the amount the individual wishes to spend in the context of his personal finance.
Once these figures are put on paper, and it seems too high, one could adjust. Also, one needs to take into account his personal debt and the kitty in his emergency fund.
If it is low, then one either needs to take a low-budget holiday that year or, in dire situations, drop the plan totally.
Still going ahead? The total cost can be broken into components like travel, lodging and shopping. Special expense limits may be assigned per family member.
While on a holiday, avoid the temptation to shop with a credit card. Especially, when the item costs beyond the budget worked out by you.
If a particular item cannot be afforded, it is better to look for something less expensive. Using credit cards while on an international trip will mean paying in foreign currency (depending on the exchange rate at the time of usage) and a mark up charge of almost three per cent for the conversion.
The second
step is to gauge the resources available for the holiday based on its time horizon. The deficit, if any, will have to be worked out and has to be broken into a monthly saving pattern.