For many people, summer is the ideal season to take a vacation. Whether you want to take a dream trip around the world or simply visit your cousin in a nearby city for a few days, you can benefit from some pre-trip financial planning. Read on for some things to think through before you head out.
How to pay: cash or credit?
There are upsides and downsides to paying for your vacation with cash as opposed to paying with a credit card. The main benefit of using cash is that you’ll be less likely to overspend. If you can clearly see how much you’re spending, you’ll have an easier time sticking to your budget. Plus, you won’t have to pay your trip off little by little long after your vacation has ended.
On the flip side, paying for a trip with a credit card can better protect you if something goes wrong. If you use a credit card to pay for refundable airline tickets, you can apply for a refund if you need to cancel your trip. The airline has to credit to your account within seven days of receiving your application.
You can also use a credit card to guarantee your hotel reservation, which can be useful if you arrive late. The hotel will hold your reservation until midnight instead of canceling it if you don’t arrive by a certain time. Finally, depending on your credit card, you may also enjoy additional perks, such as:
- Travel insurance
- Travel assistance
- Baggage protection
- Accident insurance
- Rewards, mileage or cash-back
Or, consider getting the best of both worlds: Buy your tickets and hotel with your card, and pay for your day-to-day expenses with cash.
Getting your money back when you can’t travel.
Before making travel arrangements, find out what will happen if you have to cancel your trip. In most cases, you’ll pay some penalty if you cancel. For example, many low-fare airline tickets are nonrefundable, but may allow you to rebook your trip. You’ll generally have to pay a fee to do so, and usually have to rebook within a year. Since cancellation policies vary widely, make sure you understand how and when you will be charged if you cancel. Some companies offer optional trip-cancellation insurance that costs about 5% to 7% of the cost of the trip. These policies reimburse you if you’ve paid for a trip and then can’t go due to illness, natural disaster, accident or other reasons out of your control.
Preparing a daily budget.
Have you ever returned from a trip happy because you spent less than you anticipated? If you’re like most travelers, the answer is no. Most people return from trips feeling overextended or even guilty because they spent more money than they wanted to. If you want to avoid this, plan a daily budget before you leave on your trip. This can mean simply deciding how much you want to spend each day, or it can mean breaking down how much you want to spend on certain items on your trip.
Budgeting is particularly important if you’re traveling abroad. You may underestimate how much you’ll spend overseas because food and other items often cost more than you are used to paying in the United States. Exchanging your currency before you go and only taking with you what you have budgeted for that day can help keep you on track. In addition, if you’re on a group tour or have purchased an all-inclusive package, make sure you understand what your tour or package covers and what it doesn’t.
Summertime travel can help you make memories that last a lifetime. But you’ll want to make sure that these memories are fond ones of your experiences, not negative ones of how much money you spent. Planning your vacation finances before you take off can help you enjoy experiences that will be remembered for years to come.