BLOG: Vacation Planning
Four years ago, I wrote about “Sharpening The Saw” (click here to read it). For many people, July and August are a great time to sharpen the saw in the form of vacations, and financial planning goes hand in hand with vacation planning. We Financial Advisors are planners by nature and, with the risk of putting some realism on your vacation plans, here are some tips to help add peace of mind to your vacation.
Budget. Planning a vacation starts with an honest evaluation of how much you can afford. I’m not saying be cheap, mind you. For me, if I can’t afford to stay somewhere that’s at least as nice as my house I prefer not to go. But when you decide to take a vacation, be sure you’re not stretching your finances to try and pay for things you simply can’t afford.
Emergency Liquidity. Emergencies can happen while you travel. With that in mind, you should plan to keep a healthy amount of accessible funds available – and designate someone who can access it – in case of medical issues, canceled flights or family emergencies. Pay particular attention to “someone who can access it.” You can have a significant amount of emergency funds available, but if no one has the legal authority to use it to help you, it’s useless. Even a temporary Power of Attorney while you travel can be very helpful in this situation.
Paying Your Bills. Be sure that your bills are paid before you go or are at least set up for automatic BillPay. You don’t want to come home to a decreased credit score simply because you went on vacation.
Protect Your Home. If your home will be empty while you’re away, you should consider pausing your mail, setting lights on timers, securing your valuables, and confirming that all of your insurance coverage is in place.
In addition, if no one will be home while you’re away, I recommend refraining from posting vacation pictures and updates on social media until you return home. You don’t want to alert the public that your house is empty.
Card Security. From a financial security standpoint, using a credit card is the preferred method of payments while traveling. Credit cards give you a measure of protection that cash and debit cards don’t. However, there are some things you need to do to prepare for your trip.
First, be sure to notify banks and credit card companies that you’ll be traveling. This is particularly important if you’re traveling abroad, since you don’t want the company to freeze your card if you try to use it in a foreign country and they assume your card was stolen.
Next, consider having a backup card in case one card is declined or stolen.
Finally, if your credit card company and/or bank allow you to receive text message alerts for transactions made on your card, sign up for them. You’ll know instantly if an unauthorized person is using your card. (This tip should be used all the time, not just for travel.)
Foreign travel. If you’re traveling abroad, you should consider enrolling in the Smart Traveler Enrollment Program (STEP) with the US State Department. STEP is a free service that allows U.S. citizens and nationals to enroll their trip abroad so the Department of State can quickly contact them in case of emergency. The benefits include updates about health, weather, safety, and security for your destination, and can it help the embassy or consulate near you to contact you if there's an emergency like a natural disaster, civil unrest, or a family emergency.
Travel Insurance and Medical Coverage. For more extensive trips, especially international trips, you should research travel insurance. Things like trip cancellations, interruptions, medical costs and, in extreme cases, evacuation costs can be ridiculously expensive. Many people assume their regular health insurance plan will cover everything, but that’s not always the case. Be sure to confirm what your plan will and will not cover while you’re away.
Enjoy your trip — you’ve earned it. Use the information above as a simple checklist so you can relax without a nagging “what if” in the back of your mind. Come back refreshed knowing you took care of the financial items so the only thing you need to worry about is how many souvenirs you can fit in your suitcase.
Enjoy!
Joe