It’s that time of the year when you seek respite from the scorching heat and conjure up images of spending lazy afternoons under palm trees on the beach or trekking up your favourite mountain.
Anil Rego, CEO, Founder of Right Horizons, gives an insight into how to save for your summer vacation
Summer usually heralds the beginning of a lot of fun things for Indian families. Kids complete their academic year and look forward to go on a vacation with the entire family while parents make elaborate holiday plans to switch off from work and spend time with their children. Some people prefer adventure holidays while others would rather laze around the sunny beaches. You may even ask every member of the family to vote on what type of holiday they want and then zero in on a place that is according to everybody’s liking. If you are in the mood to spend some me time, minus the spouse and kids, you should book a ‘sitter’ – ask either your spouse, parents or friends to take care of the children while you are away. This leaves you free to plan a holiday according to your mood – be it a girls’ holiday out, or a quiet spa retreat.
Plan it well
You should keep several factors in mind while planning your holiday. After you decide the destination, calculate the holiday budget. A budget, in general, helps you control your spending habits and ensures that the monthly expenses are lower than the monthly income. A similar budget can be prepared for a holiday as well, which includes all categories of expenses you expect on the holiday. Start by reviewing your income, expenses and loan obligations and set aside money for emergency expenses. It’s advisable to prepare this budget before you plan for your holiday, so that you know how much you need to save for the vacation. Put away money into a savings account in advance on a monthly basis. Also ensure that you don’t withdraw from investments that are meant for other life goals.
Set money for budget
Depending on the time remaining for the holiday, you can act accordingly. If the time is short, then transfer the money into a dedicated savings account and do not touch it until the holiday. If you have planned several months in advance, then put the money into debt funds or fixed deposits, so that you not only have your holiday cash, but also earn some interest on it while planning the trip. However, it’s not advisable to invest this money in equities, unless you are planning years in advance as it’s a risky proposition. It’s a good idea to book your tickets well in advance, as prices can increase closer to the travel date and this ‘upfront’ expense needs to be budgeted for. Apart from this, other major expenses such as hotel accommodation and food, can be saved for (in a dedicated savings account) as most hotels permit you to book without an advance but with a credit card number instead. Some online sites give you the option to book with a token advance and pay the rest to the hotel directly.
Insure your travel
Keep in mind that you need to take travel insurance before you travel (this can be done easily online on the portals of most insurance companies). There are various types of coverage to insure oneself against the risk faced as a traveller. You can purchase this from insurance companies, travel agents, tour operators, rental companies or even travel assistance companies. The coverage, cost and terms
vary widely depending upon the policy purchased.
Factors to keep in mind while purchasing travel insurance
A. Trip cancellation insurance: This protects you from the risk of cancellation of trip due to unforeseen events, such as the financial failure of the airline or travel agency, bad weather, illness or death.
B. Temporary health policies: This provides short-term supplemental health insurance coverage. This type of coverage may be helpful while travelling abroad, since some health insurance providers don’t have coverage for overseas travel and any kind of treatment, in most places, can cost you a fortune.
C. Baggage insurance: This reimburses you if your personal belongings are lost, stolen or damaged in travel.
D. Accidental death and dismemberment (AD&D) insurance: This compensates you in the event of an accident and if you end up being disabled or it compensates your beneficiary if you die in an accident.
Travel safe and sound
Another important aspect to note is that there’s a danger of theft when one travels. To ensure peace of mind, it’s advisable to photocopy your driver’s license and passports and keep the originals in the hotel’s safe while abroad, as this is your only identity proof and it’s difficult to replace if lost/ stolen. Ensure that you have some money put aside for shopping accounted for in the budget. Also, keep in mind that while buying souvenirs or gifts, avoid the exotic gift shops and head to local supermarkets as they sell these items at a much lower price than gift shops.
