Over the years, with the rising income and higher spending capacity, there is a significant change in the financial behaviour of people. Previously, people would not actively “PLAN” for a holiday as such. But now, going on an exotic holiday with the family has become an important goal for most.
Like any other goal, going on a holiday requires money and so it is important to take appropriate actions and change the financial plans to have sufficient funds to execute the travel plan.
As going on a holiday is not a cheap affair it requires significant planning especially if the plan to travel abroad with family. As an advisor, it is important to make an investment plan which allows clients to save for such goals throughout the year so that he does not have to fret about all expenses coming together at the time of the holiday.
Here are a few tips on how you can help your clients plan their holidays this summer-
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Help them build a travel fund
One of the best ways to build a holiday fund is to start and SIP every month and corpus accumulated over a few months can be used to meet the holiday expenses. This fund can be specially earmarked as for travelling and you can invest in ultra short-term debt funds or liquid funds, depending on how much time is there before the trip.
The idea is that instead of paying in installments as EMIs after the trip, start planning and save small amounts in advance. Not only will it help cut down unnecessary expenses but also help trim the overall cost as they will save on the interest cost of credit card or loan, which is easily between 12 to 18% per annum. Moreover, SIPs will give a return of 6-7% and build a sufficient corpus to travel.
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Prepare for the unknown with a travel insurance
Travel insurance is a very important component of their holiday planning. Travel insurance should not be viewed as something which would tighten their budget but as a protection to cover unexpected expenses arising in case of any unforeseen event which could lead to cancellation or curtailment of your trip. Comprehensive travel insurance will cover you against the risk associated with travel such as stolen or lost luggage, thefts, delays, cancellations, medical emergencies during the trip, etc.
As your client’s financial advisor you should suggest to them the best travel insurance policy depending on the destination, days of travel and the cover of their policy.
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Forex card over credit card
A forex card comes in very handy when you are planning a trip abroad. A forex card is a prepaid card that will allow them to access foreign currency. Not only will it save them from the hassle of carrying hard cash but it is also inexpensive when compared to a credit card. Explain your client about the costs attached to a credit card as they have to pay foreign currency transaction fees along with the interest charges. Credit cards are one of the most expensive options for payments and should be their last resort when they are travelling.
Moreover, since a forex card is a prepaid card, it will allow them to keep a track of their expenses on the trip.
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Shopping online
Shopping before going on a holiday and even shopping while you are on a holiday can also hamper your holiday planning if you don’t plan. However, shopping online and looking up the best deals and bargains can help with money and also curb impromptu purchases.
CONCLUSION
Systematically planning for your holidays and throughout the year can help relieve the financial stress during and after the trip and make the trip more fulfilling and rewarding.
