TomorrowMakers

Plans for funding the family’s first international trip

Fund your first foreign holiday as a family

Foreign holidays can be found on the wish list of most families. Families that travel the world frequently are all too familiar with the entire process. However, if you are about to embark on your first international family trip, you may need to be mindful of various things. 

One of the things in foreign holiday planning is deciding how you fund the vacation.

Also Read: How to travel like a boss on a budget

How to Fund your Family’s First Foreign Holiday?

If there is still some time left to embark on the holiday, the best funding idea would be to create a sinking fund. Sinking funds are created for specific purposes, with regular savings deposited towards such funds. So, for a travel plan in December that could cost you Rs 3 lakhs, you can save Rs 25,000 per month in a separate sinking fund. This could be a savings bank account, a short-term FD or a liquid fund. 

However, if there is not much time left for the vacation, and you don’t want to dent your savings on your holiday expenses, here’s what you can do.

Take a personal loan – Personal loan is an unsecured loan that can be used for any purpose that you deem fit. It is relatively easy to get a personal loan approved, and the documentation and processing time are minimal. Once the loan is approved, the loan amount is transferred to your account. You can repay the loan in easy EMI mode over a predetermined period. The interest rate is lower than the credit card interest rate. However, there is an interest cost involved when you use a personal loan. 

Financing the holiday through a travel agent – Many tour operators offer “travel now pay later” schemes. These instalments are approved by the travel agents with minimal paperwork and almost no formalities. This is convenient if you are getting the entire vacation, or a large part of it booked as a travel package through the operator. Do keep in mind that the credit charges here may be higher than what a bank loan would cost you. After all the operator is only allowing credit out of the money borrowed from banks or financial institutions.

Also Read: 3 tips to travel the world saving smartly

Credit cards – Overseas holiday expenses are unlikely to be a small amount. The credit card should be used for this purpose only if you or the family members can pay it off in one go. Paying credit card dues over multiple billing cycles can result in high-interest rates. A 30-40% interest rate per annum on credit card dues is not unheard of. Besides, using your card at an overseas location will attract currency conversion and handling fees which can be around 3% of the transaction value. 

Also Read: Make the most of your credit card. 6 tips to be a successful cardholder

However, you can use credit cards to your advantage through reward points and air miles. If you swipe smart and utilise the various promotions and offers, you can accumulate a lot of benefits from your credit card. If you are planning to use your credit card for your foreign travel, check if your accumulated air miles help you lower the travel expenses. Choose the fund option wisely and ensure that you and your loved ones have a great family vacation this time around.

Source:

https://economictimes.indiatimes.com/wealth/spend/how-to-fund-your-first-foreign-holiday-as-a-family/articleshow/95778826.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

https://www.moneycontrol.com/news/trends/travel-trends/best-ways-to-finance-your-big-indian-family-holiday-9697621.html