The end of the year marks the start of the holiday season for many Aussie travellers. With the Christmas break just around the corner, many of us are itching to get away to explore new places or simply looking to unwind next to a pool with a drink in hand. There’s no disputing that travel is a top priority for many Australians, with more than 6.3 million Aussies taking short stay overseas holidays throughout the year.i
The wellbeing benefits of taking a holiday are also undeniable, with 84% of Aussies using their getaway to relax and recharge, and 63% of holidaymakers saying their time away helped improve their health.ii Not only does travelling boost our happiness and satisfaction, it also helps us take our mind off stressful situations and the daily grind of everyday life.
Despite the fact that travelling can help improve our health and wellbeing, it understandably takes a toll on our back pocket. While the value and experiences of taking a holiday usually far outweigh the cost of it, research has found that many Aussie jetsetters fail to plan financially for their escapades, and potentially open themselves up to a world of fees that could otherwise be avoided with some forethought.
To ensure you make the most of your next trip, and dodge the sting of unnecessary costs, find out what you need to consider before, during and after your next holiday.
Before your trip
Nearly a third of Aussie jetsetters fail to save ahead for their holiday and don’t create a budget for their travels.iii Considering the amount of spending that happens while on holiday, not only would setting a budget help make your trip more relaxing, it would also reduce the risk of returning home to a mountain of bills and unplanned expenses.
All too often we underestimate just how quickly costs can stack up – especially when we’re in carefree holiday-mode. So it’s important you figure out how long you want to travel for, and then create an appropriate travel budget and daily spending allowance that not only you can afford, but are also prepared to stick to.
If you don’t have a good grasp of your financial situation before you depart for your travels, your finances are more likely to unravel while you’re on the road.
Planning for the unexpected
Most people are aware of the obvious costs associated with travel. They’re your plane tickets, nightly accommodation, daily food and drink budget, transport costs, and excursion expenses such as tour guides, cooking classes and ski passes.
But it is often one of the most important costs that we fail to plan for – travel insurance. One in four holidaymakers don’t take up cover when travelling overseas, and half don’t spend money on insurance when travelling in Australia.iii
Aussies are happy to spend hundreds on flights, food, and accommodation, but many aren’t taking steps to protect themselves and their valuables while they’re away. Travel insurance can help safeguard your finances from a myriad of different events like travel delays, lost luggage, medical emergencies, and illness, injury, or death of you, a traveling companion or a family member. In fact, a quarter of all Aussie travellers experienced a loss on their most recent overseas trip that would be covered by most travel insurance policies.iv
For those of you who relish an adrenaline hit, it’s especially important you choose the right cover that can let your sense of adventure run wild on your holiday. Many travel insurance policies offer cover for a range of different adventure activities like water sports, bungee jumping, mountain biking, abseiling, rafting and the list goes on and on.
If you do decide to take out insurance before your trip, you should ensure it’s appropriate for your needs and not simply the minimum amount of cover you’ve found online, or on the other hand, extensive cover that you don’t really need. If you’re confused by all of the options available to you, and uncertain what cover is appropriate for your needs, you can get in touch with us here for help finding the right fit.
During your trip
Once you’ve stepped off the plane, boarded the cruise ship, or unpacked your bags from the boot of your car, you’re immediately transported into holiday-mode. It’s easy to forget about budgets and plans and everything that reminds you about the realities of your everyday life when you’re in this mindset.
And we wholeheartedly agree that you should be switching off from everything back home and making the most of your trip. However, when you have your moments of downtime, check in to see how you’re tracking with your daily allowance and whether you may need to curb some of your spending for a day or two. For longer trips away, it’s very easy to blow out your budget by buying gifts for all of your family and friends, having a few extra rooftop cocktails, or forking out for a slightly plusher hotel room. All of this can quickly add up, and could potentially cut your trip short.
Mind those creeping costs
Research has found that Australians have overspent by more than $900 million on international travel.v Some of this spend would no doubt be attributed to unexpected costs that creep up on us suddenly and add up quickly. For instance, foreign transaction fees and withdrawing money out of overseas ATMs can be expensive (AU$5 a withdrawal is not uncommon), so it’s important you research which debit and credit cards are best for long-term travel.
It’s also important you keep track of currency exchange rates so you can ensure you’re paying an appropriate price for all the goods and services you purchase abroad. You may like to download a currency conversion app on your phone, like XE Currency, which tracks and updates exchange rates on a daily basis.
Another creeping cost to watch out for is mobile provider fees. You should be mindful of the number of calls and texts you make, and data you use while overseas, as these costs could all add up to one exorbitant fee. Before departing for your trip, you should look into mobile travel plans available to you, or you may opt for an international pre-paid SIM card.
After your trip
Once you’ve returned home from your travels, you’re likely to look back on the different activities you experienced, and destinations you traversed, and ponder which locations you would like to explore further (or avoid entirely) on your next escapade.
This is also the time to review your spending, check if you remained in budget, and pay any outstanding credit card bills you may have incurred while away. You should make note of what worked well with your budget and what didn’t, so you are well equipped to make adjustments for your next trip.
Hopefully you didn’t encounter any unfortunate events while you were away, but if you did experience an insurable event while on your trip, and took out insurance before your holiday, you’ll want to make sure you lodge a claim with your insurer. Almost a quarter of Australians experienced an insurable event on their most recent overseas trip, but surprisingly, only 54% of those who experienced an insurable event actually claimed on their travel insurance.iv The most common types of travel insurance claims are for injury/illness, lost or damaged property, and cancellations.
While travelling provides an excellent opportunity to see the world and unleash your inner explorer, it’s important to remember that planning ahead of time can save you from a world of (financial) hurt when you finally return home. It may also mean that you can afford to start planning your next trip sooner than you expected, and set off globetrotting once more!
i Australian Bureau of Statistics, 2019. 3401.0 – Overseas Arrivals and Departures, Australia, Aug 2019. Retrieved from https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3401.0Feature%20Article2Aug%202019?opendocument&tabname=Summary&prodno=3401.0&issue=Aug%202019&num=&view=
ii TravelOnline Australia, 2019. Australian Holidays Infographic & Stats 2019. Retrieved from https://www.travelonline.com/news/infographic-australian-holiday-stats-2019
iii Suncorp, 2019. Cost of Travel Report. Retrieved from https://www.suncorpgroup.com.au/news/news/travel-insurance-australia
iv Insurance Council of Australia, 2016. Survey of Australians’ Travel Insurance Behaviour. Retrieved from https://smartraveller.gov.au/guide/all-travellers/insurance/Documents/survey-travel-insurance-behaviour-web.pdf
v Commonwealth Bank, 2016. Aussies are Overspending on Holidays by $900 Million, Commbank Research Reveals. Retrieved from https://www.commbank.com.au/guidance/newsroom/Aussies-overspend-by-900M-on-holidays-201612.html
The information and any advice in this article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement.