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    How not to overshoot your holiday budget?

    Apr 30, 2019
    4 mins | Views 8257

    With summer vacations round the corner, are you gearing up with your travel bags to embark on your much awaited holiday? You are probably putting in a lot of time and effort into meticulously planning the itinerary, so you would definitely want to build only great memories and not return with the regret of having overspent on the holiday.

    • Keep in mind that you should not just plan for your travel expenses but also plan in advance to finance it to avoid relying on last minute interest bearing credit card payments and personal loans for funding, which can shoot up your holiday budget.

    • Once you have a holiday budget and the time frame in mind, work backwards to calculate the money you should put away each month.

    • While you may have so far look at mutual funds as a longer term investment option to fund long term goals, they can also be effectively used to fund short term goals such as travel plans.

      • You can opt for systematic investment plans (SIPs) each month in debt funds

      • You can prefer funds which are open-ended and preferably those without an exit load so that you can withdraw your money for your holiday without incurring unnecessary cost.

      • You can even opt for putting away a lump sum or an allocated sum each month into liquid funds. These funds generally carry relatively low risk, are highly liquid and still give you a reasonable return; it could be better than keeping your money lie idle.

    Once you have planned your funding, aim to focus on these tips to keep your holiday spending in budget:

    • Make sure you have a planned itinerary so you can have clarity on likely expenses.

    • Prepare a comprehensive list of all possible expenses – such as airfare, hotel charges, visa charges (if any) local travel, food expenses, travel insurance, tourist entry fees and personal shopping.

    • Estimate and allocate fixed costs such as airfare and hotel charges from your overall holiday budget amount. Broadly allocate amounts to each of the other expense categories listed out. Incorporate a daily allowance – this will help stay in budget on each day of your travel.

    • Revisit your allocation and budget if fixed costs have eventually overshot what you previously estimated.

    • Save money where you can – explore all possible options to limit the higher costs such as airfare and hotel costs. You can balance them out in several ways like opting for hotels for a few days and preferring cheap bed and breakfasts for the balance days.

    • Try to stick to your daily allowance budget. If you are not able to on any day, adjust and re-allocate your subsequent days’ allowance to ensure you stick to your overall budget.

    So armed with these tips, get to planning your holiday and return with only happy memories. Happy holidaying!

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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