How to Manage Finance while Travelling

We had been wanting to write on this topic of managing money during travel, for a long time. Having travelled reasonably far and wide (40+ countries), a lot of people ask us, how to manage finance on the go, what type of savings account we use and tips for making the travel fund last longer. At this point, we will just touch upon the How to manage finance while travelling And leave the second question for another article 😊.

Planning & Budgeting

A plan is required, however incomplete or high level it maybe. It should at the very least have a list of places you are planning to go and for how many days. These two factors have a direct impact on your budget. What we will discuss here is mainly for travels spread over multiple weeks or months, when there are myriad little challenges.

A ball park or high-level budget is also a must unless you have very deep pockets, in which case you would not be reading this article, ha ha ha. 😀

Generally, we found that we could broadly categorize our expenses into three categories, Food, Accommodation and everything else. Each of them is almost one-third of the total budget. Add to that the one-time flight cost, travel insurance and visa fees, which are going to be spent upfront at the time of applying for visa. Of course, it all depends on the individual’s style. To each his/her own, as they say, but you get the drift.

Create pools of funds

Once a budget is made, you need to find those elusive crispy papers that we call money and for that I am sure each of us have our own little means and schemes.
Now to decide how are we going to carry these funds?

Bank Account

• We keep all the travel money as per budget and bit more (for us it is 20% more), in a joint zero balance account (meaning we can use up all the money in the account without incurring charges) and carry a debit card each for that.
• We also carry our individual bank debit cards as backup packed in a secret place. Sometimes it is so secret that I can’t find it when needed, so I let Nisha handle this part. 😀

Foreign Exchange Prepaid Cards (Forex cards)

• Since most countries don’t deal with Indian Rupees, we exchange about 4 weeks’ worth of INR into foreign exchange currency cards secured by password or pin, EUR for Europe and USD for most other places. In fact, our prepaid forex cards could hold money in 10 different currencies at a time. This we found was the easiest way to transact business while on the move as compared to carrying cash. They can be used like a credit card and can be swiped at most POS (point of sales) machines abroad. There are no transaction fees as long as the billing currency is same as the forex in the card. Travel Fore card is called variously as travel money card, multi currency card, world card etc.

• We used two cards each of two different banks. It really takes care of the risk of losing a card. The card replacement process is a nightmare.
• Another advantage of forex cards is that the account can be viewed online and transferring funds to it is a breeze.
• I actually lost one of my forex cards, however we could block the card in time. It still had a lot of money in it but we got the amount transferred back to our savings account. In the process there was a reconversion charge which we had to bear.
• Disadvantage is, if you use it to withdraw cash from an ATM, there are low limits but high charges and we suggest not to use it at ATMs.
• As per the Indian law, the total foreign exchange available for Indian tourists traveling abroad is USD 10,000 per person per year.
• Out of that only USD 2,000 can be in cash, rest must be as  foreign exchange card or traveller’s cheques (ugh!)or or bank drafts (who uses them?) or of course in an Indian bank that can be drawn using credit or ATM card.
• After returning any amount in excess of USD 2,000 per person must be returned to the bank within 90 days.

Credit Cards

• We carried our individual credit cards from two banks.
• We got the spending limit reduced to about INR 50,000 each (Less than USD 1000).
• This was important in order to limit the risk of credit card losses.
• We used the credit cards majorly to book hotels during travel and flights if need be.
• It is always a good idea to select the currency of the credit card (In our case Indian Rupees) in all the online portals. They have the best possible conversion rates and there are no explicit forex commissions. Also, Indian banks charge additional GST on top of the expense now. (earlier it used to be service tax + surcharge + cess and so on…it was a cesspool of sorts).

 

• I confess that I found it the hard way after using my credit card at a restaurant, where I should have used my forex card.
• Having said that, one can easily check the conversion rates by changing the currency and doing a quick math and checking that against published rates.

Cash

• Cash is still the most preferred form of transaction at smaller establishments and probably the only acceptable form at most of these places.
• We exchange a week’s worth of INR into a strong currency before leaving India.
• Generally, one week’s worth lasts more than a month keeping in view the above provisions.
• Before it ran out we would withdraw a month’s worth from a what we need depending on where we are and how much longer will be our stay.
• Most often there is a fixed charge per transaction from the local bank and it makes sense to withdraw a month’s worth. In the backend, we are subject to various commissions and taxes. We find this to be very safe as opposed to carrying cash for the entire period of stay. It is a balance you strike.
• However, if we need urgent cash in a country which is not listed as a strong currency then we just withdraw what we need before moving onto another country.
• It so happened in Bled, Slovenia, the homestay owner did not accept Forex Card (obviously!) and we were short of Euros (forgot to withdraw in Ljubljana). Fortunately, there was one ATM in Bled that was working and the owner took me in his car while Nisha rushed to the bus stop with the luggage as we were short on time as well. Ha Ha Ha. (We were not laughing at that time for sure). Slovenia being a Euro country worked for us as our next few stops were all Euro countries.
• Spread the cash around on your person and in your luggage to reduce the risk of loss. (and of course remember where you kept it too).

 

Tracking Expenses

We use a simple excel sheet full of formulae to help us monitor our expenses. We worry only when we are grossly overboard. That we believe, would take the fun out of travelling. One can’t be too rigid! Over a period of weeks and months it evens out anyway.

Conclusion

• Inform your credit card and debit card bank that you would be using these in a foreign country. You don’t want them to block your suspecting fraud.
• It is easier to plan when you are travelling to one or two countries for a couple of weeks where you have the option of carrying all the amount required in cash.
• For multiple weeks of travel in multiple countries, there is no way to avoid conversion taxes back home. During our #NiVaEuro trip of 100 plus days spanning over 10 countries, the cumulative total of Service Charges and taxes was about EUR50. It is not much in the overall scheme of things but it could have got us the squarest of the meals for the two of us in Europe or many meals back home in India. However, if you compare this against the risk of carrying the whole amount in cash, it is definitely worthwhile.
• The above plan also worked for us during our 100 plus days #NiVaEuro trip.
• If you are stuck with a weak currency, try to convert back to a strong currency before you leave that country, after keeping a few bills as souvenirs.
• Coins have a way of building up out of nowhere! There is not much one can do except try to spend it. Some stores give you the looks when you give them a lot of change, others actually help you get rid of them cheerfully because they are forever short of coins. It takes all types to make this world. At the end of our journey, we had almost 250gms in coins of multiple currencies. Ha Ha Ha 😀

Recommended Reads and Travel Tips:

60 Best Travel Tips.
How to use Transferwise.

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