DUBAI 4 June 2018: With the Eid and Summer holidays fast approaching, many in the UAE will get serious about planning their getaways.
Rather than simply planning to spend, it would be wise to spend some time planning instead.
Even if you’ve set money aside in anticipation of your time away, overspending is easy to do without attentively considering options.
Give careful consideration to affordability when planning and be sure to shop around to find alternatives which fit within your budget. Planning and booking early will enable you to take advantage of better deals. Demand spikes and supply decreases will inevitably place upward pressure on pricing (supply of seats on aircraft, and rooms in hotels).
Budget Honestly
Budget honestly in order to avoid dipping into long-term savings or funding your getaway with debt. As vacations are viewed as a temporary escape from real life, do your best to avoid temporarily escaping financial good sense as well. Look at the real costs of what you plan to do when you reach your destination and factor them into the budget.
No one plans to fly to an exotic locale and watch foreign television for five days. If your plans include golf/scuba lessons/kite surfing/etc., price these activities online to get an idea of reasonable costs and include them in your spending plan. When traveling, it’s often the extras which will get you off track quickly.
Funding your activities with long-term savings and debt can provoke long-term consequences. By sacrificing your savings, you’re also sacrificing the growth you would have earned on that money had you left it alone. Using a credit card can be even worse.
Work Out Costs
For example, if you spend $10,000 (not impossible for a family of 4), and your interest rate is 12%; payments of $300 per month will mean the real cost of your trip will be $14,861.19 over the 189 months it will take you to repay the balance.
Working with a qualified financial planner will add value by keeping you on track, and perhaps adding a bit of discipline where temptation would otherwise lead to harmful mistakes.
Note: The author has been working in the UAE for the past four years, providing tailored financial advice to clients of over 20 nationalities.