How to plan effectively for a vacation?

The best way to rejuvenate yourself after a relentless busy work schedule is to go on a holiday. But most times, despite our efforts, we end up dropping the idea because of our finances. 

Here's what you can do to plan effectively to take that break you think you deserve --

Plan in advance:

Start planning your vacation well in advance, and create a separate fund for it. You do this, and half the battle is won. Let’s understand this: 

Create a Traveling Fund: Whether you are planning a short holiday, say within a year, or a good long vacation abroad within three years, then there are a couple of options -- You can you can opt for a mutual funds SIP in equity funds for the long-term plan. For the shorter period, a debt or liquid fund and a bank recurring deposit can be considered. 

If you're expecting any form of annual payments, like, variable pay or bonuses, then you can set it aside to fund your vacation.  

LTA Benefit: If your organisation gives you LTA benefit i.e Leave Travelling Allowance, go through the rules thoroughly to understand the slabs that apply to you. You can use LTA to optimise tax benefits on your travel. But remember, LTA is only applicable for travel in India and not abroad.

Say no to borrowing: Never borrow funds to go on a vacation. Do not break into your emergency fund to pay for a holiday or take personal loans. Do not even bank on credit cards to fuel your expenses on a holiday, which is the usual practice. If you're travelling abroad, foreign exchange is an additional cost, which needs to be considered. Plan, save, make a budget, and follow it strictly.

Find good deals online: Make sure to keep an eye out on online portals like MakeMyTrip.com, Yatra.com, or for bulk/ group deals, if you don't mind travelling like that, from SOTC, Thomas Cook, and so on. 

These groups can offer a good deal because they buy flight tickets and book hotel rooms way in advance for an entire year, so they can offer the services at a nominal cost. 

Smart Tip: On several occasions, you may find that the overall flight cost for the to and fro journey is turning out to be equivalent or more than the overall package that the travel agencies are offering, which includes hotel stay, food expenses, and so on. 

Take for example, a flight ticket to Bali, Singapore, or Thailand (from Mumbai) may set you back by Rs 30,000 to 50,000 for a round trip. The same money may get you an overall three nights/ four days package (for example) for the aforementioned companies. It is a buyer’s market, make the most of it. 

Categorise your Expenses:

Commuting / Local Travel 
Hotel and Food expenses 
Approximate expenses for entry fees at various sightseeing locations
Shopping , any other purchases (can cut down these funds, do not compromise on food and staying arrangement)
If you are travelling abroad, the cost of visa, and currency exchange
Take proper travel insurance, which is a must
Keep some emergency fund available for contingencies

Make your own checklist and key tips: Make a proper checklist, which will help cut your last minute rush for anything. 

Make a list of all the essentials :-

Make a list of the financial instruments -- cash,  debit and credit cards (loaded with the division of amount)

Make arrangements for Foreign currency: You can also carry travel currency cards issued by any commercial scheduled bank. 

If you're going to travel with your own vehicle, then never forget to carry the driver's licence, vehicle insurance, PUC, RC book, or smart card.

Follow these tips for a (financial) stress-free vacation. 

The author is a Chartered Accountant and the Chief Gardener & Founder Director of Money Plant Consulting, a leading Tax & Investment Planning Advisory Service Provider. He also runs a personal finance blog called “Mango Investor” aka AAM Niveshak at www.mangoinvestor.com . Readers are invited to send their feedback to rishabhparakh@moneyplantconsulting.net