If you plan wisely, you can explore the world without burning a hole in your pocket.
Touring the world is an irresistible passion everyone has, but affordability is the key. If you plan wisely, you can explore the world without burning a hole in your pocket.
The biggest risk a foreign traveller has to face is the shortage of money during the overseas stay. It can happen anytime due to extraneous reasons like currency fluctuations and it has the potential to derail everything: from travel plans to daily spends. A careful, advance planning can effectively address this issue and make one’s journey stress-free and joyful.
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Study your destination:
As part of your trip budget, the first and foremost thing to do is to understand the economy of your destination and its currency. Calculate its current exchange rate with your domestic currency using apps or online tools. You can also analyse how the exchange rate has varied in the past against major foreign currencies. That will give you a fair understanding about the local currency, and how much money one has to reserve for the trip. More importantly, the destination should have a peaceful law and order situation as political unrest or a coup will suddenly de-stabilize the currency and the economy.
Prepare realistic budget:
On the basis of your homework, prepare a tentative budget and allocate sufficient money to essential expenditures such as airfare, road travel plans, food, accommodation, gifts etc. You must keep an emergency fund, too, to meet unforeseen circumstances. But try to limit the spending within the budget contours.
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Currency advantage:
If your domestic currency is strong, more foreign money will reach your hand. It means you can spend more during your overseas stay. If your currency is weak, you will get only less foreign currency, forcing you to be frugal during the foreign travel. However, there is no absolute strength or weakness. A currency may be strong against some foreign currencies but weak against others. It varies from country to country. Carrying US dollars as a backup currency can indeed be a smart choice when traveling, especially to regions where local currency exchange might be challenging. Many places around the world accept US dollars for transactions, and exchange houses or banks are often available for converting them into local currency if needed.
Exchange rate trends:
Much ahead of the departure date, watch the exchange rate movements. Choose the advantageous time. The exchange rate changes over time. It depends upon the domestic country’s foreign exchange reserves, the balance of payment system and global tensions. If it is advantageous, buy the foreign currency in advance and lock in the rate. Or else, if possible, wait until it improves. If any regional conflict or trade war or embargo is ensuing, do not wait for it to happen. Buy as early as possible.
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Card payments:
Another effective tool for payments during foreign travel is prepaid travel cards. It helps you avoid the risk of carrying a bulk amount of foreign currency. If your travel destinations have no merchant-banking networks or payment infrastructure to use such cards, better carry cash. Other payment tools such as debit cards, credit cards and mobile valets can also be used. But each mode has to be considered on the basis of its features like payment security and transaction cost. You should compare them and choose the best that suits your goals.
New payment gateways:
For fund transfers and remittance payments, UPI-enabled system is now operational in many countries like Singapore, Malaysia, UAE, France, Nepal, UK, Mauritius, Sri Lanka. Indian citizens can use this option for payments while visiting these countries.
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Rely on banking partners:
If you are planning to use banking channels abroad, use your domestic bank’s foreign partner’s network. And that too sparingly. Because other banks charge higher fees for transactions in a foreign land. Avoid airport currency exchanges as they offer unattractive rates and charge higher fees.
Finally, while packing your bag, a major item that has to be included is travel insurance. You can have comprehensive coverage for your overseas stay, which will protect you from unexpected financial losses and troubles that arise from accidents, medical treatment, emergency hospitalization and loss of luggage, including valuable documents like passports.
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Remember: a good groundwork will certainly lessen the weight of your travel bag. So, using these tips, get off to a very good start next time.
