By: Ramzi Khleif, StashAway MENA’s General Manager
Despite the setbacks of Covid-19, the summer of 2021 has seen many flock for a vacation, whether that be abroad or within their home country. However, amongst the excitement, it can be easy to forget the impact traveling has on personal finances especially during the peak summer season. You don’t need a fortune to travel, but you do need to ensure that you have your personal finances carefully managed during the season.
The award-winning digital wealth manager, StashAway MENA, shares advice on how to manage your finances during this period.
1. Understand your financial situation
Before you imagine yourself staying at that dream hotel which has always been at arm’s reach, you must start your journey by examining your current financial situation, by determining your net worth (Total Assets – Total Liabilities).
Review your savings and ensure you have sufficient funds to book accommodation and flights, making sure you still have a surplus for spending money. If you have any existing liabilities, realistically review your payback plans and when ‘they’ will allow you to start saving for a holiday and to what extent.
Remember to be realistic and analyze when and where you can travel to, and if you will have sufficient funds afterward.
2. Don’t forget your financial goals – priorities!
It’s imperative that you keep your financial goals front of mind and what you need to do to achieve them. If you have any kind of high-interest debt, like a credit card loan, make sure to prioritize the allocation towards that. Also, make sure to build a safety net (6-9 months’ worth of expenses) that will come in handy in uncertain periods.
Managing personal finances is easier than ever before, thanks to smart solutions and digital wealth management services, allowing you to ensure that your savings are working harder for you so you can achieve your financial goals.
3. Planning ahead
Once you understand your financial situation you can begin budgeting for a vacation, but make sure to do this in advance, allowing plenty of time.
Have a goal that your plan will work towards. Within this plan, you should know exactly what amount of savings you need to put aside each month. When it comes to booking, never leave it to the last minute. Airline companies and hotels raise their prices closer to your travel date, so be sure to factor this into your savings plan. Consider buying a packaged deal between flights and hotels to reduce costs.
These aren’t the only costs you will incur. In a COVID world, many travelers will need to take a PCR test before embarking, and often another to return. The cost of a test can vary from country to country, clinic to clinic, and can become quite costly. These factors all need to be taken into consideration in the planning phase.
4. Discover ways to get cash back
Consider subscribing to reward apps or even certain credit cards that can provide you cash back benefits, airline points, and even leisure and food and beverage discounts; but make sure to use them mindfully and moderately. Do your research as many can have fees attached, but always make sure the fees and the benefits work for you and your plans.
5. Budgeting and keeping track
Over the summer, whether you travel abroad or stay at home it tends to be an expensive period. Make sure you are keeping on top of budgets and monitoring your outgoings, so you don’t overspend. There are tools that can help you keep track of your daily expenses with personal finance management (PFMs) solutions such as Wally or Pocket Expense.