This month, my money mood has been squarely fixed on travel.
Travel for leisure, rest and relaxation, that is.

It’s summer and from school kids to grown-ups we are all booking tickets, planning itineraries, packing bags and getting ready to explore the next destination. Travel they say feeds the soul; I agree. But also remember, that kind of feeding costs money. It’s always wiser to budget, but sticking to a budget is not everyone’s cup of tea. Coming back to the soul feeding though, to really feel connected to where you are travelling, to the place, people and the life there, you must travel with your heart and not your wallet.

This kind of talk almost feels contradictory; are we talking about feeding the soul or watching your wallet? How can you reconcile the two aspects? The issue is that usually, for most of us, there is a limited pot of money and within that, a defined allocation to travel. Then how do we balance our desire to explore with. Our financial limitations? The answer for a lot of the younger population seems to be taking a loan.

However, loans are a double-edged sword; they elevate you with immediate gratification and then dump you with hefty payments which can become an unbearable burden in future. Taking a spending loan or a loan solely with the purpose of consuming, like in a vacation, is perhaps the trickiest personal finance slope to be on. You are not generating any additional income with the help of this loan, which means you are simply spending more than you earn and can afford. At some stage you will have to cut back on your lifestyle somewhere to pay it off. If you think taking another loan to repay this one is an answer, well
soon you will be suffocating under the weight of multiple loans, monstrous in their accumulated size to allow you any freedom in life.

Then what should you do? How can you travel on a budget and yet travel with your heart?

It’s not hard to do.

Whenever you think about money or try to strategise with spending money, be it for travel or otherwise, always think of the big picture. Big picture: what is your foremost objective with this planned leisure travel? Is it a break from the chaotic work life of the city, is it to take your family for a fun vacation, is it both maybe? Or is it to discover a new place, a new culture, a new people and experience their lifestyle?

Understand the purpose of your travel and lock into it. If it’s a break to relax, you must spend on a comfortable journey ie. premiumThis is the amount you pay for keeping an insurance policy active. Usually paid in a lump sum at the start of the policy term or annually through the term, it includes all the charges and levies by the insurance... More airline tickets and stay, but maybe slow down on the multiple museum tickets and local tours as those can take away from pure relaxation. If you are looking to discover the history of a place, how you travel and stay – premiumThis is the amount you pay for keeping an insurance policy active. Usually paid in a lump sum at the start of the policy term or annually through the term, it includes all the charges and levies by the insurance... More or not – may not be of concern, focus on getting as many local tours and museum entries as you can. Balance out your expenses in a way that suits your travel mood. Instead of going for a set, recommended itinerary, work yourself or with your travel agent on customizing your experience.
Walk a lot when you travel, is the advice an elderly Swiss gentleman gave me recently. Well, walking is the best way to explore the new world you land in each time you plan a break; you save money and keep fit. But not all destinations and climates will allows the pleasure of walking, the alternative can be cycling, taking the local transport or even planning in such a way that your accommodation is close to most of the activities you plan to cover.

There will be times when you are buying souvenirs or spending on a meal or shopping in the local high street and you may get anxious thinking you are spilling over the budget. Hold on, remember big picture. How much over board are you? If the excess spend is within a 5%- 10% range of your travel budget and your overall travel budget is within 2%-5% of your net wealth, you are fine to shoot above the budgeted amount. If you have taken a loan to travel, well, you better not be getting into a further overdraft territory because that loan comes at a cost.

Unpopular opinion, but, going over budget needs to be disciplined too. Using your credit card to spend overseas is now fast becoming the most convenient and reasonable way to do it, but it’s a mixed blessing because it lets you go over budget without any immediate penalty. The penalty kicks in only after you have maxed out your card and over spent.

Disciplined spenders can keep a budget figure in mind and keep a margin of going slightly over budget. If the overall figure is in your head, you are unlikely to over spend even on a credit card which affords despite it allowing you a higher spending limit. If you are not a disciplined spender, then please carry currency as per your overall budget. It’ll help you remain within the range of spending you desire.

Either way, focus on planning your vacation well and include those experiences which bring you and your family (if you aren’t a solo traveler) true joy. Don’t over fill your days, leave some time for reflection and spontaneity (this often costs less too). Use the local transport wherever you are, it’s really the best way to see a place. Give yourself a treat at the end of the vacation if you indeed have underutilized your budget.

Remember, this is me talking, who just had a great vacation but did go about 10% over budget. Despite that the overall holiday spend including the shopping wasn’t more than 2% of our family’s net worth. The details fall in place if you define and focus on the big picture.
Have a happy summer!