Australians love to travel. Whether it is the trip of a lifetime, a gap year in Europe, or a quick trip to Asia to soak up some sun, it seems like travel is in our DNA, and it’s something Australians have a global reputation for. Over the last few years, Australians have enjoyed a relatively strong Australian Dollar, and this has made travel even more accessible for many of us, but in January 2019, our dollar hit its lowest point in a decade; so, what does this mean for our travel plans?
Of course, a declining Australian Dollar will impact your travel budget, but there are ways to maximise your travel funds, even when the currency market is against you. Here are my top tips for making the most of your money on overseas trips:
The Aussie Dollar is still strong against some currencies, and there are destinations where you can still get bang for your buck in 2019. Places that may be worth considering include Argentina, Brazil, Turkey, Czech Republic, and Iceland. While some of these may not be your top-of-mind holiday destinations, they can offer a unique holiday experience while stretching your dollar a little further. It is important to remember, however, that currencies can fluctuate, so it’s worth planning ahead.
Keep an eye on the exchange rate
If you want to make the most of your money on your next trip, it’s critical to do your research and understand the exchange rates. Currency fluctuations can be hard to predict but if you see a spike, it might be a good time to buy. While the fluctuations can seem small, when you’re changing a decent amount, it might just add that extra night out or another buy on a shopping trip.
Know the fees and risks involved
There are many currency exchange strategies out there, from planning ahead and buying currency at the best available rate and preloading currency cards, through to winging it and going to an ATM at your destination. There is no blanket rule on the best way to exchange your cash, and it really varies from location to location, but it’s important to know the fees and risks involved.
Using a local ATM to withdraw money can offer an attractive exchange rate on the surface, but it can also attract exorbitant fees – which you may be hit with twice, once from the local institution and again from your bank, so looking into these fees in advance is important.
Currency cards can be a good secure option, but they can also attract significant fees, particularly when it comes to withdrawing any leftover funds after your holiday. Make sure you read the terms and conditions closely, so you know what you’re signing up for.
In some locations, local currency conversion at your destination can be a worthwhile option too, but it’s also important to remember that where money is involved, tourist scams often follow. There are many sites out there that will give you the low-down on the local scams at your destination, so take the time to read this advice to avoid getting stung.
Diversity is king
Keeping all your money in cash isn’t a great strategy security wise, as a loss or theft could turn your holiday south pretty quickly. You also don’t want to end up with a pile of local currency at the end of your trip. Conversely, not all economies are set up for widespread card payments, particularly if you are shopping in regional areas or at markets.
Plan to have some of your funds on your chosen cards and keep some local currency on hand too. And make sure you aren’t making regular trips to local ATMs; those fees can really add up. Having a strategy in mind for the amount you’ll need for each type of activity can help.
Put your credit card away
Ok, this one is more about general budgeting than currency exchange but racking up credit card debt on your holidays can leave you in hot water financially. Only use your credit card when it is the only method available, you have the funds to pay it off straight away, and you are aware of the conversion fees your card provider will charge.
When it comes to your vacation, it is possible to travel within your means and make the most of your holiday funds, it just takes some research and planning.
At Apt, we believe a financial strategy that enables you to live for today while planning for tomorrow is the best way to go, so you can have that holiday without sacrificing your long-term goals. As with any financial decision, getting professional advice that will help you budget for your trip and maximise your funds will pay off in the long run.
General Advice warning
The information provided in this blog does not constitute ﬁnancial product advice. The information is of a general nature only and does not take into account your individual objectives, ﬁnancial situation or needs. It should not be used, relied upon, or treated as a substitute for speciﬁc professional advice. Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.