Hello Readers!
Vacations are a time to relax, enjoy, and spend quality time with your loved ones, however at the time when we plan our finances, we often miss to set a budget for our vacations, that often disbalance our normal financial plan, when we go on a vacation.
Many people, who don’t preplan a budget for their vacations, often depend on loans or their credit cards, when they go on vacations, swiping plastic or rack up loans to fund their getaways, is considered an easy way to meet their vacation needs by most of the people, but they should always remember, they have to pay back the credit card amount or loan amount to bank, that too with interest.
Well, it is far better to save and spend rather than accumulate debt to fund your desires. Vacations are also necessary, at least once a year, and people do need to get financially prepared for that, this can be done only when you preplan a budget for your vacation. Here are some guidelines that will help you to prepare financially for your vacations:
- Budgeting for travel: This is the best way through which you can save for your short travel, you only have to include a travel budget in your monthly financial plan. Suppose you are planning for a short trip of 6-7 days to Darjeeling, in the coming summer of 2020. You first need to calculate your total expense for the vacation to Darjeeling, like food and lodging expenses, shopping expenses and more. Consider your total expenses, calculates up to Rs 30,000. You have 5-6 months in your hand. If you save at least Rs 6000 per month, other than your monthly expenditures, you can easily save for your vacation to Darjeeling. Well, adding an extra budget (Vacation Budget) to your monthly financial plan, may be daunting, but not much difficult to achieve, you can do that by reducing your avoidable expenses. Remember your vacation budget can help you avoid, taking any kind of loan or debt on you.
- Remember the 50-30-20 rule: The very famous 50-30-20 rule, one should always remember, where 50% of your total earning goes towards meeting necessities like utilities, groceries, debt repayment, or home rent, 30% should be invested to achieve your financial goals, and 20% should be saved, ensure your travel budget fits into the overall limit of 20 percent, along with your expenses including those on dine-outs and movies. If needed, cut on unnecessary entertainment expenses to cover up the travel budget.
- Hunt for bargains: Plan your vacation early, decide your destination, then book your hotels and tickets. It is always, good to book the hotels, flight or train tickets, early, this won’t only help you to be tension free, rather you can get the tickets at a low price. You can consider traveling during off-seasons, this is the best time to attain the benefits of discounts and freebies.
- Invest in Liquid Funds: Well, leaving the money in your savings account can be an option, but this also means the money might get used for other expenses, better put it at a place where it is out of sight, yet accessible at short notice. For this, you can invest your in Liquid Funds, since the goal is very short term (usually 6-12 months), and you can also return good benefits. You can also consider your investment in Ultra short-term debt funds, they can be considered an ideal option to save for your vacation finances, as there is no exit load. Also, the investments are subject to low volatility, making it suitable for short-term needs.
The above guidelines can help you save a good amount to fulfill your vacation desires. So next time when you plan for your vacation, do remember these guidelines, it will help you avoid the addition of extra expenses to your normal financial budget, and won’t disbalance it.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).