Are you planning to leave home to travel for an extended period? Whether it's a long stay with the grandkids or your gap year tour, preparation is key to having a great time and keeping your life in order at the same time. What financial moves can you make in advance to help avoid problems both now and in the future? Here are a few steps to take.
1. Build Up Savings
For most people, the best way to fund personal travel is to build up a dedicated travel savings beforehand. This may be a long project, and it can be difficult when you have many competing priorities. A financial planner is your best resource to help identify financial goals and figure out how to fund them.
2. Decide How to Pay
Setting aside money is an important step, but how should you withdraw and use it for expenses? Should you use cash, a debit card, credit cards, or other payment options? Using cash or debit cards, for example, can open you up to theft or fraud. It also takes cash away from other, potentially more profitable, uses. However, some people find they overspend with credit cards. This is a personal decision.
3. Prearrange Your Financial Life
While you're gone, your life back home will continue to some extent. There will be bills to pay, money to transfer, investments to make, and income to take in. One of the easiest ways to ensure your bills get paid is to create a fund to prepay them during your absence. In addition, automate as many transactions as possible and arrange with a financial pro to handle some transactions without you.
4. Develop a Backup Plan
What emergencies or contingencies might happen while you're traveling? If you go over budget, where can you take funds from? What if your vehicle breaks down? Or if you forget a bill that needs to be paid? If you don't have an emergency fund and/or sinking funds for unknown and irregular expenses, this is an excellent time to start one.
5. Do Estate Planning
It's not a fun part of travel preparation, but estate planning is important in case something terrible occurs. A departure date is a good deadline to complete at least the basics of estate planning, including end-of-life documents and powers of attorney. It can also help you put your finances in order to better budget for travel — and financial preparation for travel can help facilitate estate planning.
Where to Start
No matter what stage of planning you're in, a financial planning firm can be an ally. They'll work with you to complete all these steps and put you in place to have a great time. Make an appointment today to learn more.