Don’t Take a Vacation From Your Budget

There are certain times of the year when people seem to ignore even the basic personal finance rules.  People overspend during the holidays (averaging $1,000 a year for gifts, food and decorations).  The other? Vacations.

The average American spends nearly $4,000 a week for a vacation for two, according to Pacaso, a luxury property broker. That includes nearly $1,000 in travel costs for a domestic vacation; double that for international travel.

Vacation Finance Tips

If you don’t want to end up paying off credit card debt for the next five years after that two-week European vacation, have a plan. Financial experts have some suggestions.

Set a Budget

Set a budget. Determine how much you plan to spend on various aspects of your trip (food, activities, souvenirs). Use budgeting apps to track your expenses in real-time, says Tom Mathews, Certified Financial Educator and author of the new book “Change Your Literacy – Change Your Life.” Bankrate recommends eight travel apps and suggest you pick one depending on your travel style and needs. For example, Expensify lets you easily scan receipts and has a GPS calculator which automatically tracks mileage. PocketGuard is the #1 app for college students and solo travelers, Bankrate says.

Carry Cash

Carry cash. “A savvy traveler knows that it’s always a good idea to bring cash with you on a vacation, regardless of destination,” says Emily Irwin, head of Wells Fargo’s Advice Center. “There are some countries where you’ll be hard-pressed to use a card or other digital payment,” she says. “In Germany and Japan, for example, you’ll want to have Euro and Yen with you since credit cards may not be accepted at some hotels, restaurants, or rail travel.”

Have Emergency Funds

Set aside emergency funds. “Keep an emergency fund accessible in case of unexpected costs. Store it in a separate account or in a secure location,” says Mathews. According to the website CreditDonkey, which compares many financial opportunities including travel reward credit cards, you should consider adding a small ‘unexpected costs’ fund to your budget to avoid any mishaps. Divide your unexpected costs you into a per-day allowance to make sure you’re ready for anything at any time.

Notify Your Bank

Notify Your Bank. Before you travel contact your bank to and let them know your travel plans. This will help you avoid your cards being flagged for unusual activity. Charges overseas many times are flagged by your credit card company.

When you’re away from home, the risk of fraudulent transactions increases

Download your Credit Card App

Download your credit card app. “Pretty much all the credit card issuers today have an app, and that would allow you to monitor transactions in real time,” says Usama Ashraf, President and Chief Financial Officer of Prosper Marketplace. “When you’re away from home, the risk of fraudulent transactions increases, and you want to make sure that you’re on top of any activity that’s happening on your credit card.”

Carry more than One Credit Card

Carry more than one credit card. Carry at least two different credit cards in case on card is compromised or is not accepted. “To the extent there is any fraudulent transactions on your card while you’re away, it’s going to be inconvenient to get a new card quickly,” says Ashraf. “Typically, you won’t be responsible for any of those charges, but you won’t have access to that card until you get a new card issued. So having a backup card is really important.”

Have a Payback Plan When you Return

Have a plan for how you will pay off your credit card expenses after a trip. In an ideal world, you can pay off the entire outstanding balance, says Ashraf. “You’re not incurring interest on that balance. But if you can pay off that entire balance in one shot, then you should consider what is the appropriate time period for you to pay that off?” He says if you can’t pay the balance, one option is taking a personal loan to refinance the outstanding balance, “typically at a lower rate and a fixed term.”

Now Enjoy the Vacay

“Taking these additional steps can provide peace of mind and protect your finances while you enjoy your vacation,” says Smith. “Being proactive about your financial security allows you to focus on creating wonderful memories and enjoying your time away without unnecessary stress. A little preparation beforehand really does go a long way.”

YOUR TURN

Got a money saving vacation tip? Let us know in the comments!

 

Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post and USA TODAY and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America” was released in 2024. He is also author of the book “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com

Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services from AARP makes no claim or promise of any result or success. 
 

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