17-June-2016 written by : FSI-Team
Summer holidays are sheer bliss. Everyone looks forward to taking a break during summer and why not! Since childhood, the summer break means no more sticking nose in books and scratching brains for homework. It practically spells into lazy mornings, catching up on old friends & new, going for movies, learn something new, travelling and holidaying with family. It is also the perfect time to overdo your budget. Yes! We may not realise it in the excitement but often after the holidays are over when we sit down to go over the expenses, the bitter truth sets in.
It is natural for a “holidaygoer” to go overboard with expenses. It is often said, “Save every dime, while you can”. But does this mean that you must give up on your holiday aspirations? No, as long as you plan your finances wisely and in advance you can live your dream of vacationing. Here is what you can do.
Budgeting is of critical essence. Do a reality check of your affordability, look for locations that fall within your means, start planning for your vacation in advance, if you plan to fund your vacation with a loan then review your credit score (it reflects on your credit report) and plan to improve it if it is below par (a CIBIL score of 750 is considered worthy of loans).
Try to save on your vacation as well, like take a train instead of a plane to reach your destination. Be prepared for unforeseen expenses such as a medical emergency, lost baggage etc by investing in international travel insurance policies and stay free of such worries.
Holiday because you want to relax, take time out for friends & family, de-stress, indulge in a hobby and not to blow your trumpet. Taking a holiday to later flaunt your adventures in your social circle, although you cannot afford to pay for it can land you in a debt soup which will be much worse to deal with. So don’t be a show-off and plan for things that your family will value much more that is your time and presence.
Credit cards are convenient to handle and have universal applicability. With a credit card, cash does not change hands in reality at point of sale rather it is a virtual transfer of money and due to that most people lose sight of the amount of money spent on the card. At least not until the next credit card bill comes knocking on their doors. That can be most disastrous to anyone’s credit score. Frequent dine outs, pampering yourself with avoidable shopping pleasures, too much of spa and beauty indulgence, movies and other entertainments can build a huge bill. You don’t want that. So, before you step out to party all night with friends again, make sure you have planned on how you intend to make good the expenses.
Try to give your summer holidays a new meaning by doing something for the society and environment, like plant more trees or spend quality time with your family at home.. These little steps will help you stay financially grounded and free of monetary worries. If you are still not contended and feel you haven’t been able to do enough then ask yourself, “would I want my family to have an expensive vacation and deal with the financial turbulence thereafter or would I rather make the most of this time and ensure we make several happy memories by staying in each other’s company?”
You are just back from an awesome holiday. And then the overspent bills turn it in an awful experience and you start regretting making that trip. Don’t let that happen to you. You must of course make such trips but only with meticulous planning. Follow your budget that you have prepared in advance. Before, you take a personal loan to fund such a trip make sure you have a plan on how to repay it. Don’t depend on a probable deal that you will click post the vacation to pay for your advances. What if that deal falls through? You will be left in the lurch to arrange for funds. Most people when stranded financially, to meet such commitments end up taking another loan to pay off existing. This could be the beginning of a vicious debt trap. Thus what’s best is not to give in to any such temptation. Once the expected funds have arrived only then go ahead in taking advances against it or funding your own trip. It’s always okay to plan for vacation next year.
So you have made investments that you expect to grow so that you can fund your own vacation. Don’t be delusional about them. Constantly keep reviewing your investments to make sure they are working according to your plan. If they are underperforming your expectations, then make amends, seek expert advice and save more to make up for the shortage.
Also, when you are on a vacation then make sure you keep a track of your expenses. Every night before you hit bed, list down all the expenses and see what’s left of your budget to spend. You will be able to avoid a load of financial stress by staying on top of your bills.
Credit rules the transactional world. Any rejections to your loan applications before you set upon your holiday can sour your plans. To avoid that make sure your CIBIL report is unblemished and unpaid bills are settled as per dues. Start planning atleast six months in advance. This is so because if the your credit score is not upto mark to be eligible for further credit then you can work upon improving your score just before you apply for loan or credit card.
Your summer holidays should only be made of happy memories that you will always cherish. Soak up that sun on an exotic beach or chill out atop a mountain, whatever be your dream holiday don’t let your financial woes come in the way. In the absence of thorough planning, your holiday dreams can go awry and leave you grappling for breath under a pile of surmounting bills. Stay on top of your bills by being realistic about your affordability, recalibrate your investment plans regularly, budget your holidays and follow it, make sure your credit cards are not blocked and your camera battery is charged!
Time to let your hair down and relax because you know you are financially sorted.