Travelling to a new country is a thriving experience! However, neglected finances and dealing with financial challenges in a foreign currency conversion can turn your adventure into a disaster. Understanding the impact of forex on your travelling budget and using money management can eliminate irrelevant fees and save you time.
Through this article, we will get an insight into foreign currency’s impact on your travel budgeting and look for your go-to currency exchange solutions, along with money management tips to smoothen your travel experience.
What is the Exchange Rate?
In bookish terms, the Bank of Australia states, ‘An exchange rate is a relative price of one currency expressed in terms of another currency (or group of currencies).’
In layman's language, we can define the Exchange Rate as the value of one currency for conversion into another.
We also know that to make financial transactions feasible in the visiting country, we must convert our money into foreign currency, which attracts foreign exchange rates and regulations.
Things to Keep in Mind Before Making Forex Purchase for Your Travel Money
Going on vacations in other countries is an experience to remember, but if you mess up your holiday budget, it can be chaotic! Here are a few tips that you should keep in mind while making any forex purchases for travel money:
1. Conduct a research exchange rates:
Just like any other purchase, make sure that you do detailed research on the exchange rates for the country you are landing in. Knowing and understanding where foreign currency stands in the market will give you two benefits: getting the most competitive forex rates two and minimising the fees and commissions leviable on the said transactions.
2. Deal with only licensed money exchanges:
Remember that you must deal with the Financial Conduct Authority (FCA), Commodity Futures Trading Commission (CFTC) or similar authorised forex service providers to tighten your money security. These regulations ensure that your provider has sufficient capital, well-maintained client accounts and legitimate customer services to prevent fraud, enhance security and facilitate better transaction experiences for clientele.
3. The right time to exchange money: before flying or after?
While everyone will recommend you exchange money before you fly, in your base country, we will tell you to wait till you compare the rates at the landing country. For example, currencies like the US dollar or Euros can be exchanged easily in any country, online or offline. Before you trade, understand the exchange rate difference in both countries and currency liquidity.
4. You don’t need that much cash!
Strolling around with a huge sum of money is inconvenient and often unsafe as it will keep you at risk of losing your holiday budget in a scam or robbery. To avoid this, you can opt for credit cards with minimal foreign transaction fees or withdraw the currency in small lots. You can also follow the golden rule of 30/70, which states that you can keep 30% of the total budget in cash and the other 70% on forex cards. In both cases, consider the commission, hidden fees and transaction costs.
5. Plan it properly!
Make sure that you don’t leave your forex planning to the last minute. It can result in panic buying at rates available rather than having the advantages of the best rates and deals in the market. Also, a lack of financial planning for travel can make you prone to inflated international card charges.
6. Keep the emergencies in mind:
A well-planned travelling budget includes a separate provision for unforeseen circumstances and emergencies, such as medical or travel delays. Keep the emergency contact details for your bank and card issuers, in case you lose your money or cards. You can also keep a small amount of foreign currency aside from your wallet for absurd situations like robbery.
Where not to exchange currency?
As a traveller, you should focus on acquiring foreign currency at competitive foreign exchange rates and at a lower cost. However, the following are the places that you must avoid to exchange your money:
1. Airports:
The Airport exchange takes advantage of the convenience factor and poor money management of people by charging higher transaction fees and offering less competitive exchange rates.
2. Hotels:
Using the exchange facilities at the hotels is not only convenient but comes with costly premium charges. You should not opt for currency exchange at hotels to avoid higher fees and poor exchange rates.
3. Local vendors:
Exchanging money at unauthorised street vendors can result in a scam or loss as they might charge you unfavourable exchange rates and extra fees.
4. Domestic banks and local ATMs:
Though both are the safest options to exchange money on foreign land, it can often be expensive as the banks charge higher transaction fees for even smaller transactions.
While travelling, you might encounter the question: How can you effectively manage money? And you might have thought about why I need to worry about planning and budgeting through my vacation. Checkout the benefits of managing money while travelling:
1. Lowers the costs:
Planned budgeting of money using simple financial strategies and different tools can eliminate the chances of bad currency exchange rates, international card transaction fees and ATM charges.
2. Better financial security:
A well-planned financial budget includes strategies for preventing theft and fraud, consisting of money belts, anti-theft bags, and SOS for international banking services like card freezing or blocking.
3. You are emergency ready:
Strategic money management also includes planning emergency funds, and having an emergency cash or travel card that can get you out of medical, travel delays or any other sort of emergencies.
4. Better budget controls mean peaceful travel:
Good money management prevents last-minute rush moments! You know where and what amount of money you will spend, ensuring your financial health isn’t gloomy at the end of the trip. You can explore, enjoy and experience your tour with great peace of mind.
Now that you know the benefits of money management while travelling, here are the 5 tips for managing money while travelling to another country.
1. Keep a cap on credit and debit cards:
While credit and debit cards are advisable to avoid any sort of cash scam or robbery, you use credit and debit cards prudently. Look for cards with zero or minimal transaction fees for international transactions. You can also connect with the bank to update the terms of validity and insurance.
2. Use multiple payment methods:
As a wise person once said, don’t keep all your eggs in one basket; a smart traveller never keeps his whole travel budget in one form of payment. You can carry various prepaid travel cards, digital wallets, debit or credit cards and keep a small amount of cash to make your travel more secure and flexible.
3. Keep an eye on your budget.
Travelling to a new place can be alluring often, you might end up getting the items that you won't require which might burn a hole into your budget. To avoid it, you must plan your budget and keep an eye on the daily expenses. For example, you can keep £25 apart to take a ride, in case you miss public transport.
4. Use a local currency:
While roaming around the city, make sure that you carry the local currency or online form of the local currency payment to make payments more feasible and flexible. This will also reduce the cost of the transaction fees or avoid the international charges on the card.
5. Stay updated:
Travel is to relax and have fun, but learn to keep an eye on the current affairs and day-to-day financial news of the host country. It will not only save you from hassles but also conserve your budget from significant currency fluctuations.
Do you need a foreign currency exchange with competitive rates?
To enjoy international travel peacefully, one must find a foreign currency exchange service that is trustable, cost-effective and provides a go-to solution for all your currency needs.
At Currency Solutions, we offer competitive foreign exchange rates in more than 30 currencies so that our clientele can access faster global payments.
Make same-day international transactions
With an international payment network of Currency Solutions, you can send, receive, and exchange money globally faster. They process £1bn of payments every year.
Access 30+ currencies at competitive rates
At Currency Solutions, you can access 30+ currencies including GBP, USD, EUR, AED and more, all at competitive prices, where payments over £3,000 have no fees.
Experience personalised client service
You will have a dedicated account manager at the Currency Solutions, who will target the optimum exchange rate for your cross border transactions and safeguards.
It is not just that Currency Solutions assures bank-beating exchange rates and makes transactions at low-cost money transfers with no hidden costs. Join the 50000+ customers now to seek safe Currency Solutions!
To conclude, a well-planned travelling budget is key to having peace of mind throughout your trip. A better understanding of different exchange rates, the use of different payment methods, and the planning of emergency funds reduce the unnecessary financial burden and stress.
Keeping these travel tips in mind will help you enjoy your trip freely!
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