Going abroad? Don't trip over unexpected expenses

A trip abroad with family is a good investment. But wise financial planning will help save and also protect from possible fraud possibilities.

Assuming you are travelling to a foreign land with your family, it is of utmost importance that one takes care of money matters as seriously, as one would have planned the schedule of the foreign sojourn. Before heading overseas, travellers end up spending enough and more time planning what to see and do, but they often overlook financial planning involved with the trip, until it's gets a tad too late.

It is relevant and interesting to narrate my recent personal experience – though we had done advance planning for 3 months for our summer vacation to Spain, we still underestimated foreign exchange fluctuations. The entire family, wife and my kids, 15 year old son and 7 year old daughter were all excited. Tour planning comes naturally to my wife and she invested time in making the hotel and tourist site reservations at optimal booking amounts. However, by the time we made the trip, the Euro v/s the INR had strengthened by 4-5%. That threw our overall holiday budget out-of-gear by the same proportion and made us curtail our other budgets including shopping.

Having benefited from the advantages of prudent financial planning, I thought it is important that I narrate how one could plan for finances during their foreign tours. Planning a holiday, especially in a foreign country, on personal loans and even credit cards is not a wise option. You end up paying huge interest on the personal loan and your credit card limit gets utilised even before you start on your tour. The cardinal principle of prudent financial planning is to only spend from those liquid assets which have not been earmarked towards any financial goals such as children's education and / or our retirement.

Although the ideal form of payment depends on your travel destination and spending habits, it's a good idea to carry a variety of payment methods such as cash, debit cards and credit cards.

If you are planning to use international credit or debit card while on travel, do inform your bank and let them know the country you are visiting, so that they don't freeze your accounts when they see any unusual charge.

While we may already possess international credit or debit card, its usage must be avoided in flea markets or at ATMs in alleys where card skimming is a danger. One of the best options to consider is possess ready currency in diverse denominations, which can used for conveyance / street food / flea market shopping / tipping. Debit card / credit card are another option but must be used prudently and one must remain watchful for any extra charges / fees on ATM usage / point-of-sale terminal.

Prior to traveling abroad, you should familiarize yourself with foreign currency and exchange rates to understand the value of the currency. Several online apps will help find out the latest exchange rates. Typically, on converting foreign currency overseas, you should be ready to bear a foreign exchange fees per encashment.

Avoid multiple currency conversions while you are abroad. Make sure that you carry suitable amount of foreign currency in-hand for your local travel, street shopping and tipping etc. It is advisable to change your money in your own country as the fluctuation of selling and buying in exchange rates varies on a range from 2-3 % for major currencies such as US dollar, euro and pound. But in the case of currencies such as Australian dollar or Swiss franc, the difference could be as great as 5-6%. Changing money at currency exchanges at the airport will involve an additional charge of administrative fees, which adds up to the cost.

Another thing to be avoided is unplanned shopping and that too in haste. Every major brand has an outlet in India today and the price advantage here is significant. Despite this, if you still get tempted, be aware that all airlines have limitations on baggage. So shop, keeping in mind that excess baggage payment can cause a dent.

If you exceed the weight limit prescribed by your carrier, you will have to pay for excess baggage charges. Generally it is charged per kilogram based on 1% of the total ticket charge of the class which you have travelled, in certain cases a few airlines charge you over $65 or more per per kilogram for your excess baggage weighed at the check in counter.

Therefore, it is important for you to be aware of the limitations on baggage permitted by your airline.

Buying online overseas travel insurance, depending on individual requirement is a must. While emergencies may just dawn on us, uninvited, being prepared adequately to face any crisis or calamity would help us manoeuvre through our predicament. Medical treatment overseas can be a huge drain on one's financial resources. So buying travel insurance prior to the trip is highly recommended.

For any international travel, it is obvious for you to carry your passport, at the same time you would require other documents depending up on the country you would visit. For example, if you are travelling to certain countries, you may need a certain special permit which requires police registration. In case you plan to drive, make sure that you have an international driving licence. You should carefully store Visas, accommodation confirmation letter, supporting travel documents, additional personal identification proofs etc., in case something happens to your passport.

In conclusion, financial planning for and during any foreign tour increases your peace of mind during the trip and allows you to best enjoy the break.

The writer is head, CBG, DBS Bank India