- Date : 09/05/2019
- Read: 5 mins
Ready to spend in Euros for the summer break? Here are some financial planning tips to follow.
Whether it is the historic town of Rome or the city of love, Paris, Europe has something for everyone! As the summer holidays catch up, you might want to take a trip abroad and bask in the pleasant European sun. However, Europe is an expensive continent, especially when the comparison is drawn with the Indian cost of living. So, to make sure your Europe travel right, here are a few tips to ensure a financially accurate plan:
This dream vacation is a financial goal of a kind. For any financial goal whether short-term or long-term, you need to follow a systematic approach. This is where a Systematic Investment Plan or an SIP comes into the picture. You could invest in short-term Mutual Funds. Liquid fund is one such fund which invests in equities, and usually has a lockdown period of less than 90 days. You could put the money you have saved for the trip into a liquid fund, and plan your trip after the lockdown period of the fund is over.
If you are already planning to visit Europe again in the next year or in 2-3 years, you could start an SIP in another short-term mutual fund with a longer lockdown. While short-term mutual funds don’t give the impressive returns of long-term funds, with the right asset allocation your wealth could grow enough for you to achieve your financial goal.
2. Your trip shouldn’t decide the budget, the budget should decide the trip!
Europe isn’t homogenously expensive. Eastern Europe and the Baltic countries are cheaper to explore. On the contrary, countries like Switzerland and Norway rank on top of the list of the most expensive countries in the world. The same budget may give you more days in Hungary than it would in France. So, the best way to travel is to make sure it is in your financial comfort zone. Unless you have your heart set upon a particular country, you could start with picking out the right country which caters to your budget. The budget needs to be decided before you get into the further stages of planning the trip or else the traveller ends up stretching the budget unwisely. As you go along planning, your accommodation, flight dates, and activities too need to be allocated in the pre-decided budget. You should accommodate your trip into your budget, and not the other way round.
Whether you are into the Anne Frank Museum at Amsterdam, or it is the Restaurant on the top floor of Eiffel that has got you excited, be sure to pre-book. The more exclusive an activity is, the more likely it is to get booked faster! While you may be able to score a spot even at the last minute, the last minute deal may leave a dent in your wallet. It is always advised you pre-book your internal flights/trains, your accommodation and the tickets for your interest if they are available online. If nothing else, it saves you a lot of time for sure!
4. Set aside an emergency fund: Europe is currently one of the safest continent to visit. However, travel does come with its own uncertainties and you may need an extra backup to cope with that. For this purpose, you should keep savings equivalent to 30% of the trip’s budget as your emergency fund, which is not to be disturbed unless you’re out of money during the trip. It is also recommended that you diversify your money into different Forex cards/ traveller cheques instead of piling it all in a single place, so that even if you lose one, you wouldn’t be rendered helpless. You should choose a forex trader or a bank which has a quick customer service. That may come in handy at times of need.
5. Travel Insurance: Travel insurance papers are mandatory while applying for the Schengen visa. However, this shouldn’t be treated as a formality but rather a necessity. A good travel insurance scheme covers your accidental/medical expenses, along with any financial loss caused due to theft or damage of your luggage. Some travel insurance companies have even started accommodating flight cancellations into their products. A large part of financial planning is to make sure that there are no unprecedented costs attached to the trip. A sudden mishap could bring a lot of financial strain, and the right travel insurance policy would have you covered when you are far from home.
So, before you pack the bags and get your passport out, get your pen and paper out and jot down the European plan. With strict adherence to these tips, your vacation should be a “no- stress zone” for your family as well as your finances. Have a great journey! Look at these tips to plan a great summer vacation on a shoestring budget.