Making dream holidays your financial goal
Personal finance is not just about cutting expenses. Whenever someone suggests saving and investing, you assume cuts in expenses. It is our mind that plays tricks on us. Yes, you have to curb your urges to spend. However, that does not mean you should stop spending and living your life. Your knowledge of personal finance can help you manage your money so that you get more out of that.
Holidays are an essential aspect of our lives. A typical family plans for holidays when children have summer or winter breaks. If you are into financial planning and have an advisor, you are already saving for that dream destination holiday. A professional advisor can help you plan your savings and investments to provide for your annual holidays comfortably every year.
Your holiday bucket can start with a small saving every month. Putting aside a monthly sum to pay for future holidays will ease the burden of sudden expenses. For short-term needs, your savings should be allocated to assets with a higher debt or fixed income component and lower equity exposure.
For anything over a year, you must put it in an equity-linked fund. There is no minimum or maximum limit to the amount in this kitty. Your money can go a long way in making your holiday memorable. You can adjust your comfort level and convenience based on your ability to save and invest.
Planning early and saving money
If you can plan your holidays, you can manage your finances well. Your most considerable expense is related to travel. Your airfare, train journey fare, and hotel cost can increase as you get closer to your proposed travel date.
It is a good idea to book in advance if you know your dates of travel and destination. That way, you would save substantially as airlines and hotels offer early bird incentives. The money saved can be used for incidental expenses, shopping or convenience.
Planning early is an absolute must if you are travelling abroad. When you earn in rupees and spend in US dollars or other heavyweight currencies, every rupee saved is every rupee earned.
There are several ways you can make early reservations to your favourite destination and avoid the last-minute rush. For example, travelling to any European destination, you may want to be close to the city centre to explore the place easily. Planning early helps you pick the right place to stay.
When travelling around India, you may want to book at least your air tickets in advance. You may consider buying a time-share holiday subscription if holidays are on your plan each year. However, it is only for those with surplus cash or a steady income. Those with income uncertainty or erratic schedules should refrain from falling for the marketing machinery of time-share holidays.
There is a cost you pay upfront to get the membership, and then there is a recurring annual maintenance charge you have to pay that increases with inflation. If you can cross that monetary hurdle, your time-share holiday can give you access to some excellent properties in India and abroad. It is not just about access. It is also about saving money if you travel with your family.
Renting a one-bedroom or a two-bedroom apartment is cheaper than booking multiple hotel rooms. It is also useful when you are planning your holiday early. You are unlikely to get a reservation at the last minute unless you are a high-value subscriber to that service.
Your holidays are your time for your family and friends. You can permanently save and invest better to provide for your dream holidays at exotic locations. Just like any other financial goal, make holidays with your family each year a financial goal. ‘
Allocate a portion of your monthly income to that expenditure. The fundamental principle is to invest regularly. If you do that, you can regularly holiday without straining your finances. Money cannot buy you happiness. However, when you spend your hard-earned money, you want more value. That is not possible if you do not plan early. Your knowledge of personal finance can help you structure a better holiday.
Rajas Kelkar
(The author is editor-in-chief at www.moneyminute.in)