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Travelling abroad? Here are some tips

How you can make the most of your money.

It has become a lot more expensive to travel abroad and by all estimations it will become ever more expensive as the rand continues to weaken against the major currencies.

A weak rand does not have to keep you away from the holiday of your dreams, and you can save a lot of money by following some easy tips. These tips do not include trying to guess which way the currency will trade on any specific day.

Keep in mind that currency trading is one of the largest financial markets in the world, but with one of the lowest chances of making a success. It remains virtually impossible to guess the way a currency will trade, over the short term, and trying to do so may just take the pleasure out of the entire trip.

With that in mind, here is how you can make the most of your money:

 

  1. Work out what a trip will cost you in today’s money and decide, based on that, if you can afford the trip
  2. Pay for as many of the travel expenses right away, because you stand a better chance of saving money on early flight and accommodation bookings than you do in trying to guess the currency exchange. This eliminates the risks of future unplanned political or financial upheavals that can influence the currency and it mentally commits you to taking the holiday.
  3. If you are planning a holiday well into the future (too far in the future to be able to book for it now), then you should repeat step 1 and then add a currency devaluation cost of 7% per year. In simpler terms, add 7% on the costs that you calculate today for every year or part thereof that you have to wait.
  4. Once you have paid for or set aside your expenses, you should plan for inflation cost. This means if you are travelling to a country where the inflation rate is 4%, then you have to add 4% to your annual cost escalation on top of the costs for currency devaluation. (i.e. 7% + 4% = 11%).

 

With the pre-travel money issues sorted, consider the following tips when you are travelling:

  1. Flying: When flying, try to plan your trip through indirect routes, as they often turn out to be cheaper. Also consider flying to a city’s lesser known airport, instead of the largest and most popular airport. This will keep costs down, as carriers try to attract people to these airports with lower fares.
  2. Consider alternative accommodation such as Youth Hostels and rooms or houses rented out on Airbnb. These can prove to be much more affordable than mainstream hotels.
  3. Try going in the off season. It is often much cheaper in the off season, when venues and restaurants vie for your business.

 

Lastly, do not compare and constantly calculate what you are paying in rands. It will just steal your enjoyment. Once you have committed to the trip and your budget, make sure you enjoy every minute of it!

ADVISOR PROFILE

Wouter Fourie

Ascor® Independent Wealth Managers

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