This post explores how to avoid money disasters while traveling.
Most of us would like to have copious amounts of money to spend on trips and vacations. Think about it for a moment. You are in a far away land, one you have wanted to visit for the longest time ever. And, you are able to spend with the most pleasing abandon. Doesn’t sound nice?
Yes, it is all good. Well, more than good.
However, here on Planet Earth, a lot of us travel with limited resources. Even though the word “limited” is subject to who you are and what you do for a living, there is something universal about our resources: we want to make the most out of them.
In other words, we want our money to go a long way and buy us things that matter.
During my travels, I have done a lot of stupid money related mistakes. It hurts every time I have to pay a mysterious fee or end up being overcharged for a service because I didn’t do my homework beforehand. And, I do not want to think about the times I have cried because all the ATMs in town decided to boycott me.
The good news is that I have learned from all those mistakes, sometimes the hard way, and feel like I take care of my money in a better way as a consequence.
I will keep making mistakes, that is a given. The more I travel, the more I learn. In the meanwhile, here are the techniques I use to avoid money disasters while traveling.
- Budget, budget, budget!
Extremes do not tend to work well. I do not want to be a travel scrooge but I do not want to return home with massive amounts of credit card debt. Based on research, I set up a daily expenditure limit. I do not obsess since I like to leave room for spontaneity. However, being over budget by 300 bucks on my first two days of travel can be a red flag.
Not having a general idea of how much you are spending can make a huge dent in your wallet. I do not believe travel has to take us to a hard financial situation
- Have an emergency fund
For each trip, make sure you put some money into a pot labeled “emergency.” Things happen and you have to be prepared. You may need to spend money on clothing, shoes or medicines. Plus, what if you learn about a “must do” activity that didn’t come up in your research?
- Know the currency exchange rate
I have noticed a considerable amount of people do not care about currency exchange rates when those rates are in their favor. For example, people go to Mexico and do not mind paying 90 pesos for a bottle of Coke. They assume that is the cheapest Coke they have bought in their lives because Mexico is a “cheap” country. Sorry baby but you just spent $5 or $6 on something that should cost a fifth of that.
Before leaving home, check the currency exchange rates for the country you are visiting. Use a calculator (if needed) to check how much you are paying (unless you want to be taken advantage of).
- No fee credit and debit cards
Banking related topics can get complicated fast. I am not going to go into details but keep in mind your bank (or the bank that owns your credit cards) can charge 3 or 4 fees when you are buying goods or services on a foreign currency.
Do your research and take abroad a card that charges no fees.
- Banks that do not charge fees
In the same way, you want to make sure the bank you are using on a foreign country does not charge banking fees. The most common example is taking money out from an ATM machine. Do you really want to pay to take out cash? I do not think so.
Before departing for your trip, check what banks do not charge fees.
- Have a backup plan
This is a simple one. Travel with two credit and two debit cards. If something happens to one, you can rely on the other one. A good idea is to use your no fee credit and debit cards as your primary travel cards and have the other cards where a fee is involved as a backup. I do not like to pay banking fees but, hey, sometimes you need to get cash on your hands.
- Divide monetary resources
Do not walk around with all your cash and cards. Go out with some and leave the others securely stored on your accommodation.
- Pickpockets are the real deal
Since we are talking about dividing monetary resources, let me mention one thing. Professional pickpockets and scammers congregate in areas with lots of pedestrian traffic. They know what they are doing and they will get you if you are not prepared.
Ladies, travel with a purse that is difficult to rip from your body (I like crossbody bags). Maintain the purse in front of you all the time. Gentleman, keep your money in a front pocket that is protected with a button or zipper. Plus, be alert when you are surrounded by a lot of people.
- Find reputable money exchange operations
With all the technological and banking advances available to travels, I do not rely on money exchange service providers. I go for the best exchange rate and I do not think they provide it. If you need to use one of these services, please find a reputable one (ask around or research). There is a lot of dishonesty in this industry.
- Keep proof of your money exchange transaction
Just in case, keep the receipt you are given when you exchange money. This will work on your favor in the rare case there is something wrong with the money given to you (it is fake or something like that).
- Bring your passport to change money
Do not forget to bring your passport if you want to exchange money. A decent agency will deny your request if you do not have your passport with you.
- Do not agree to buy a good or service without knowing how much it costs
Quick story. A friend of mine once ate some shellfish from a local vendor while we were at the Dominican Republic. He was shocked when the vendor charged him $70. Things got a little bit messy and he ended up paying. Moral of the story, please, please, do not consume a good or service without knowing the price.
- Look at the expiration date of your debit and credit cards
A month before a trip, you should look at the expiration date of your cards. In that way, you can get a new one if necessarily.
- Take into consideration holds
This one can be a real money disaster. For example, let’s say you rent a car and the agency places a $900 hold in your card. They will release it once you return the car in good condition. The problem is that you were counting with that amount of credit on your card to pay for your accommodation. Now you are in trouble if you do not have a backup plan. Once again, this is when research can save you. I have heard of agencies that want to place hold as high as $3k.
- Add a travel notice to credit and debit accounts
Banks have started to combat identity theft and fraud in a very aggressive way. In general, they will deny transactions that are non-compatible with your spending habits. To avoid having a transaction denied in a foreign destination, add a travel notice to your accounts. Nowadays, you can do this by phone or online. Do not forget to include in-transit destinations too.
There are several banks that do not require travel alerts anymore. They will send you a text message and/or e-mail if they notice a strange transaction. Once you respond confirming the transaction, things should be fine. However, make sure you respond to the message in a reasonable time.
- Take a look at your bill
When you get your bill at a restaurant, check it line by line to make sure there are no errors or hidden fees. If you have questions, ask. You have no idea how many overcharges I have seen during my travels
- Do not assume you can get cash backs
Don’t you love the idea of buying something in a store and being able to get some cash at the same time. Well, do not assume this practice is common in a country you are visiting. Check before leaving home.
- Cash is still king in some places
Ahh, not sure why but cash is the ultimate currency medium in a lot of countries. Therefore, you need to be prepared to pay with it (shocking if you like me do not get to see cash in weeks, direct deposit rocks!). Do not be fooled. This is not a practice exclusive of third world countries. Places in Central and Eastern Europe run on cash.
- Make sure you have enough cash for the weekend
In some countries, the banking industry does not provide services during the weekends. On top of that, banks have ATMs secured in a closed area. If for some reason your ATM card does not open the closed area, well, you are out of luck (and will have to wait till Monday to get money). This happened to me in a small town in Brazil. I have been ready for the weekend after that.
- Have small bills in the local currency
Take out money from the ATM in a way that you end up with small bills. For example, if you need 200, take out 220. It sucks when nobody wants to accept a large bill.
- Make sure the bills are not broken, dirty or marked
ATMs tend to dispense bills in a good condition. If you notice bills in less than optimal condition, enter the bank and ask for better bills. Tons of businesses in Central and South America do not take broken, dirty or marked bills (yes, they check each bill).
- Do not use public Wi-Fi for banking transactions
Please be careful with this one. In theory, anybody can see what you are doing on a public network. Somebody can steal the password used to access your online banking area and use it to wipe your account. Hotel networks may be unsecure too.
- Have somebody who can wire you money
For a case of extreme failure, have in mind who can help you out with some money.
There you have it! These are some of the things I have learned along the way.
I hope you find these suggestions useful and actionable. Furthermore, I hope you can use your hard-earned money on things that affect your life in a positive way (not on a horrible money disaster!).
Do you agree with the suggestions on how to avoid money disasters while traveling? Is there something you can add?
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