Going on holiday should be a time to unwind, relax and be happy. But not planning for such holiday can ruin your time off and end up being very expensive.
Missed flights and non refundable hotel nights when you get a change of plans are costly indeed, but even if everything goes smoothly, have you budgeted for the true cost of a holiday?
One of my friends went on a cruise that initially cost $279 per person, a price that he reduced even further, to $199 after a credit card rebate and a boat credit was taken into account.
But then, with all the expenses to get there, park, drink and have fun on board, explore the locations the boat stopped at, tips, etc. he ended up paying $641 per person!
Over three times what he paid for initially. If you aren’t ready for that, you can end up charging your card and paying for your holiday over many months, with interest on top.
And like any purchase on credit, paying for something you’ve already enjoyed is not pleasant. It can spoil the memory of a holiday. So let’s make sure you have everything covered.
Before the holiday
Before you go on holiday, you will have a series of extra expenses related to your trip. They can include:
- All the add-ons they sell you these days when you book a flight or a holiday: cancelation insurance, baggage fees, priority boarding, extra leg room…
- Buying a guidebook to study your destination
- Seeing a doctor to get malaria medication, a rabies shot, or other medicine prescriptions
- Getting a new passport
- Buying a new piece of luggage, sunscreen and adequate clothing (for the heat or the cold)
- Replacing your hiking gear, shoes, buying a tent or a mosquito net
- Going on a freshener diving course, so you can dive directly when you get there,
You haven’t even left home, yet you are already dozens, if not hundreds of dollars out. Because holidays are a recurring even, you should be budgeting for them every year. Booking a summer trip in September will allow you to enjoy the early bird pricing, but also to pay for these extras as you go. You can ask your parents to give you the guidebook for Christmas, or a new sleeping bag. Setting aside a little bit of money every month will be easier than having to face all these expenses at once. With more time ahead, you also have the opportunity to look for deals online, such as long term parking at the airport. Because expenses will keep piling around the core holiday.
During the holiday
During the holiday, you will also need quite a bit of cash to cover all the little things that were not part of your “all inclusive” package. Typical expenses include:
- Taxi or bus to go to the airport (you might budget for a bus before realizing it’s a red eye flight and there are none)
- Kennel for your pet
- Extra activities
- Credit card foreign transaction fees
- Postcards and stamps
- Roaming fees
Most of these you can’t really skip, because after all you are on holiday, and not being able to leave to hotel to explore would be pretty dull. But if you save ahead of time, you can at least try to pay cash for everything. During the year, if the dollar gets pretty strong, you can exchange your currency for the one in place at your holiday destination. That will guarantee you no surprises about the rate, although it is always sort of a gamble and the rate might be better over there when you bring your dollars.
You can also get a credit card that won’t charge you foreign transaction fees (Charles Schwab does it for example), and avoid carrying too much cash on you. Avoid roaming fees like the plague and use the hotel’s wifi to Skype home. T-mobile also offers free data and texts in 140 countries, and calls are just $0.20/minute.
Plan ahead and decide which activities you really want to do. One or two big ticket outings during the week, paired with lazy days by the pool and walks around the city should be plenty. How much will that cost? Pay in advance if you can, or bring just the right amount of cash to avoid temptation.
There is a fine balance between having fun on a holiday and overspending just because that is your modus operandi to relieve the stress of a year spent working hard. Holidays are mostly a time to enjoy being with your friends or around family, and there is no obligation to spend tons of money to have fun. If you decide to splurge however, make sure you can afford it.
About the author: This is a guest post from Pauline of InvestmentZen.com. Pauline left the 9-5 seven years ago to live life on her own terms, and is currently based in sunny Guatemala.