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10 Travel Expenses You Should Not Forget To Budget For

10 Travel Expenses You Should Not Forget To Budget For

When you are travelling this summer, sticker shock certainly sets in regardless of the mode of transportation. From gas prices currently in jeopardy of increasing to higher airline fees, you’ll feel the pinch some where. However, what doesn’t help out is that these upfront fees don’t take into consideration the hidden and unexpected costs that come with your trip, domestic or international. Today, we will take a look at 10 travel expenses that you should remember to take into account when planning your travel budget for the summer travel season. We will also factor in some ways you can save on these unexpected costs.

1. Departure Taxes

Departure fees are easy for many individuals to forget including in their travel budget. For many countries, these are fees that are included and unchangeable in your airport ticket. However, for other countries, for example Argentina and Costa Rica, in some cases you’ll have to pay the departure fees the airport. While small for a majority of countries, hovering around $20 – $50, other countries charge a lot more. To stay up-to-date on departure fees from the United States, checkout this website by the US Department of State. Simply search the country and click “Entry, Exit, & Visa Requirements”.

2. Card Fees and Currency Exchange

When traveling abroad, you are likely to encounter foreign transaction fees from your credit card company. You may even find that such a fee is even imposed on debit cards as well. Before you depart, it is always important for you to call your credit card company to allow them to be informed that you will be out of the country.

Credit and debit cards don’t have GPS chips and they are unable to know if you croissant purchase in Paris is your summer vacation or credit card theft. When you call, ask what the foreign transaction fees are.

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Secondly, even when paying cash, ensure that you have a handy currency exchange app on your phone to ensure that you are truly paying a good price for all goods purchased abroad. XE Currency is a great currency conversion app that is updated daily whenever you connect to the Internet.

3. Meals During Travel

Eating is an obvious aspect of your travel budget. However, one addition to your budget that you might not always consider is eating while arriving and departing from your destination. These are costs that add up, especially if you encounter delays or layovers. If you are a family of four, you’ll find that this is a fee you can’t simply hope will organize itself. In an airport, food costs are astronomical.

To alleviate this cost, bring food from home to nosh on during your arrival, and make a short trip to the grocery store in your location you are visiting before heading back home. If you encounter a significant delay, get in touch with your airline for a meal voucher, they are almost always offered when asked in such situations. They want to keep your business, in the end.

4. Cellular Provider Fees

From keeping in contact with your family back home to sharing your vacation adventures on social media, voice and data costs are an aspect of your budget to consider when abroad this summer. Without intervention, your GSM (AT&T and T-Mobile) smartphone will simply connect to the local international provider in the area and you’ll find yourself charged huge fees.

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Before leaving, inform your cellular provider of your travel plans, ask for possible international plan discounts, and if such discounts aren’t available, look into getting an international pay-as-you-go phone while there. WIFI is a great alternative as well, making use of Skype for calling back home. Some Internet cafes and hotels charge to use their WIFI, but this fee is exceedingly cheaper than paying cellular fees.

5. Emergency Expenses

It can be easy to think that the most stressful part of your trip is the flight there and back. However, if you encounter an emergency, you’ll find that the flight was only a breeze. Being on vacation, you find yourself doing more strenuous activities that you don’t normally do every day (from hiking to scuba diving, etc).

This presents itself with unexpected risks of injury. If you find yourself with a major injury, your insurance could help out. However, other emergencies and injuries may require digging into your own pocket for associated fees (sprains, cuts, bruises, etc). Due to how this is an expense that not everyone encounters, look into setting aside your credit card for these expenses, instead of setting aside a specific amount of cash.

6. Visa Costs

Along with departure fees, you’ll possibly find yourself encountering visa fees that depend on the duration of your time in a certain country. Ensure that you have these fees set aside and paid for if you are having an extended trip. In addition, if you find that you have to go to a local embassy to handle these tasks, make sure you factor transportation costs for getting to and from there. A friend of mine currently visiting China had to make three embassy visits before receiving her visa. Sadly, we can’t put a price tag on the stress that task brings on!

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7. Travel Insurance

Regardless of if you are backpacking through Europe or becoming a beach bum this summer, travel insurance is a must for individuals going abroad. You’ll find that purchasing travel insurance through providers like World Nomads offers you not only medical protection, but also assistance for trip cancellations, assistance, interruptions, and delays. In most cases, travel insurance cost under $100 and can protect you with thousands of dollars in coverage.

8. Spontaneous Adventures

If this is your first time abroad, you’ll want to make sure that you have the time of your life. If you are in a country during a national holiday or celebration, you’ll find that activities and adventures appear out of no-where and can be once in a lifetime for you to celebrate in. Make sure to have a form of payment planned for these spontaneous adventures, either in cash with your budget or with your card. You’ll thank yourself in the end.

9. Flight and Baggage Fees

A common occurrence for travellers is that they encounter an amazing deal on a plane ticket, only to find that they are hit with baggage fees. Always ensure that you look at your airlines website before packing, not departure, to see the hidden baggage fees assessed by your airline. If you do this before packing, you can pack accordingly. Having a price tag attached to your overpacking will cause you to pack smartly, not impulsively.

Other flight fees that you might unexpectedly encounter are WIFI costs and food/beverage purchases. Contact your airline before departure to see if WIFI is available on-board and for how much. If it’s a short haul (< 2.5 hour flight), WIFI might not be a necessary cost.

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10. Lodging Fees

Finally, when travelling anywhere, fees associated with lodging can be unexpected for many travellers. Ensure that you have a clear outline of how much you have to pay for lodging. Internet fees, room service costs, open bar, and room service tips are costs that travelers find that they usually ignore when travelling. Make sure you include these possible costs in your budget to prevent sticker shock at the end of your vacation.

By including these fees in your travel budget, you’ll find that you are better prepared for any fees that come along the way. Not only can you combat them, you can save money along the way. Let us know in the comments below how you are saving money this travel season.

Featured photo credit: http://hawaiidads.com/wp-content/uploads/2013/12/family-travel-1.jpg via Hawaii Dads

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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