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Holiday Planning

Travel today is not just about exploring new locales and spending quality time with family members, it has become a necessity. The hectic work life warrants a break. Travelling helps destress and rejuvenate. It is fast becoming an essential element in one’s lifestyle and, hence, planning for it in advance can make the traveling experience memorable and economical.

In the past, travelling depended largely on employer provided benefits, such as leave travel allowance (LTA). However, with increasing aspirations and outbound destinations becoming a commonplace, the travel budget has got stretched. Not to forget the adventurous holidays that cost a bit more than the regular ones. Therefore, the significance of planning for holidays in advance as a short-term goal has gained importance. Financial planning would largely include provisioning for all major financial goals such as saving for children’s needs, owning a house and securing the future after retirement. In addition, one should also provide for saving towards holidays as they require a sizeable amount. Else, you might have to dip into either emergency savings or break existing investments earmarked for other purposes to meet the expenses.

HOLIDAY FUNDING

Break-up the budget into conveyance, hotel, food and incidental expenses. Do not forget to allocate a sum towards your shopping expenses. Estimating one’s holiday budget is important as that would determine how much you are to save regularly every month.

With holidays about 12-18 months away, start saving in such a way that a small amount gets diverted each month from your income and doesn’t really pinch the pocket. Obviously, if holidays are far off, you will end up saving more. Estimate the budget amount and start saving in either a bank recurring deposit or in the growth option of debt funds. Recurring deposits may be opened in banks through standing instructions debiting your bank savings account each month electronically. However, if you go for debt funds, do not invest in more than two of them. You may also create a mix of these two schemes as they both are non-volatile in nature. That said, remember, not to take exposure in equities through direct shares or equity mutual funds schemes for this purpose.

AVOID

Do not keep aside holiday savings in low-yielding savings account. Avoid taking personal loans, which come at around 16 per cent interest rates. Traveling on credit card that costs around 36 per cent or more, should be avoided unless you are disciplined enough to pay on time and not revolve credit on the card. Stop spending on luxury and avoid self-indulgence with just few months away from the planned holiday. Extra savings may just make your holidays a better show. A cut here and there in the discretionary expenses may just come handy.

WATCH OUT

No matter if it is an inland travel or the holidays abroad, saving towards them would almost be the same. However, if it is an international travel that you are contemplating, keep the exchange rate fluctuations in the frame while planning to avoid any surprises. The falling Indian rupee may play the spoilsport. The hit could be around 15 per cent of your estimated budget amount. Therefore, provisioning has to be done accordingly. Else, the destination has to be changed.

CONCLUSION

Holidays can be within anyone’s reach and budget irrespective of income levels if planned well in advance. Plan to avoid the credit card hangover. Enjoy your holidays and cherish the moments. Bon voyage.

Next To Come: Acquiring your Home