Tips and Tricks for Safeguarding Your Finances While Traveling Abroad

Whether you’re a seasoned globetrotter or planning your first trip overseas, the thrill of international travel is undeniable. Yet despite its allure, traveling to another country can be overwhelming as you strive to understand the local customs and navigate the nuances of a foreign financial landscape. 

From currency exchange to an unexpected medical emergency, the cost of a vacation abroad can quickly spiral out of control if you’re unprepared. Thus, foresight and careful planning are key when traveling outside the country. 

Fortunately, there are steps you can take before, during, and after your trip to stay within your budget and safeguard your finances against costly setbacks. 

Before Your Trip: Save Money by Planning Ahead 

#1: Create a Robust Yet Flexible Travel Budget

To ensure your overseas adventure isn’t financially burdensome, it’s essential to create a carefully researched, itemized budget. However, you’ll want to make sure your travel budget isn’t too rigid or too vague. 

The key is crafting a budget that’s robust, yet flexible enough to accommodate unplanned expenses. This is important for two reasons.  

First, it’s easy to get swept up in the excitement of your trip and splurge on impromptu excursions or novel souvenirs. A budget is a gentle reminder of your financial boundaries, keeping you on track when you’re tempted to deviate from your spending plan. 

At the same time, building flexibility into your travel budget ensures you’re not unduly restricting yourself. That way if you stumble upon a once-in-a-lifetime experience like a local festival or a reservation at a highly acclaimed restaurant, you can give yourself permission to enjoy it without jeopardizing your financial well-being. 

#2: Research Peak Season Dates & Travel Deals

Every travel locale has its peak times, usually marked by the influx of tourists, escalated prices, and crowded attractions. Conversely, the shoulder or off-peak seasons present an entirely different ambiance. 

By sidestepping the rush of peak tourist seasons, you gift yourself the luxury of experiencing a destination in its more authentic state. But perhaps more importantly, the financial advantages can be significant. 

For example, airfare, accommodations, and travel packages tend to be cheaper in the winter if you’re traveling to Europe, according to Columbus Travel. Meanwhile, prices in South America typically fall in June and August. 

Of course, traveling in the off-season may not be ideal, especially if your activities are weather-dependent. However, if you’re flexible, planning around peak tourist seasons can help you save money on transportation and lodging so you can allocate more to experiences once you arrive. 

#3: Review Exchange Rates

One of the most challenging aspects of planning a trip abroad is understanding and accounting for fluctuating exchange rates. In fact, differences in the exchange rate between when you book your trip and when you travel can significantly impact the overall cost of your getaway. 

While it’s impossible to predict what the exact exchange rate will be during your travel dates, there are ways to prepare so you’re not blindsided by a dramatic change. 

First, stay informed. You can do your best to anticipate major shifts by keeping an eye on reliable news sources or using apps like XE Currency to track trends.

In some cases, you may want to consider pre-loading a prepaid travel card before traveling abroad. These cards allow you to load currencies at a fixed exchange rate, thereby sidestepping the risk of future fluctuations. 

Lastly, don’t rely solely on one method of payment. Funding your trip with a mix of cash, credit cards, and digital payments can provide flexibility when navigating foreign currencies. 

Pre-Departure: Put Financial Safeguards in Place 

#1: Alert Your Bank and Credit Card Companies

Before leaving the country, it’s generally helpful to let your bank and credit card providers know you’ll be traveling abroad. If they suspect fraudulent activity, they may freeze your access to funds, which can lead to additional financial challenges during your trip. 

Also, be sure to review your bank’s fee structures if you plan to withdraw cash overseas. Some banks charge hefty fees for international ATM withdrawals, while others eliminate these fees by offering partnerships with foreign banks. 

#2: Consider Purchasing Travel Insurance

According to data from Old Republic Insurance Group, the likelihood of going to the hospital while traveling abroad is one in 2,000 trips. Meanwhile, the likelihood of needing medical evacuation is one in 4,000 trips. 

Indeed, no one expects to have a medical emergency while traveling abroad. Yet despite the rarity of these events, they do happen. And when they do, the associated expenses can be prohibitive.  

In fact, USA Today recently reported that the average cost of emergency medical transportation to the United States from Europe is between $65,000 and $90,000. From Asia and Australia, it can be as high as $225,000. 

If your health insurance doesn’t cover international medical care or emergency evacuation, you may want to purchase travel insurance as an additional layer of financial protection. While prices vary by policy, you can expect to pay about 5-6% of your overall trip cost, according to an analysis by Forbes Advisor. 

#3: Weigh Your International Calling Plan Options

While you may be tempted to disconnect completely while traveling abroad, the reality is few of us can go without our phones for any real length of time. Fortunately, international calling plans have become much more cost-effective in recent years. 

However, it’s essential to do your homework in advance and plan accordingly to avoid excessive roaming fees. In many cases, it’s cheaper to purchase a temporary international calling plan than to pay for data on an à la carte basis. 

Be sure to check with your provider to understand the options available to you, so you can make an informed decision. 

On the Ground: Practice Awareness

Once the hard work of planning is behind you, you can relax and enjoy yourself when you finally reach your destination. However, vigilance is still key when it comes to saving money and protecting your finances abroad. 

For instance, some merchants try to exploit tourists by providing unfavorable exchange rates. To circumvent this possibility, always choose to pay in local currency—especially if it isn’t a reputable business. Paying in cash may also help you avoid potential overcharges and certain credit card fees.

Furthermore, be sure to research local customs so you know whether tipping and/or bargaining is normal. Understanding these nuances can help ensure you’re not routinely overpaying. 

If you use an ATM while traveling abroad, it’s crucial to check for signs of tampering to avoid a potentially dicey situation. Also, try to use ATMs that dispense smaller denominations, so you don’t have to carry large bills with you.

Lastly, depending on your destination, it may be wise to invest time in understanding the local transportation system. Unlimited day or week passes can be economical and convenient, especially in contrast to taxis and Ubers. Just remember to stay vigilant, as public transport hubs can sometimes be hotspots for petty crimes like pickpocketing, primarily targeting tourists. 

After Your Trip: Review Your Financial Activities 

After a successful trip overseas, your focus may be on unpacking and getting back to your daily routine. However, don’t forget to use this opportunity to review your finances. This will give you a clear picture of your total expenditures and alert you to potential mischarges and fraud while traveling. 

First, track your spending against your budget to evaluate your financial discipline during your trip. Did you stick to your budget? Were there unexpected expenses that you hadn’t accounted for? By analyzing where you overspent and where you saved money, you can gain insights into your financial habits and craft a more accurate budget when traveling in the future. 

In addition, there’s generally a heightened risk of card fraud when traveling abroad. Be sure to scrutinize your statements for suspicious or unauthorized activities, so you can report and address them promptly.

Taking inventory of your finances after a big trip can feel disheartening, but it provides valuable benefits. By thoroughly reviewing your expenses, you can look for opportunities to save money on future trips and ensure your personal information and financial accounts remain secure post-travel. 

Simplicity Wealth Management Can Help

While exploring a new destination is no doubt exhilarating, successfully navigating the financial aspects of traveling abroad is just as vital. By planning ahead, researching travel deals, and safeguarding your finances against unexpected setbacks, you can ensure you have the financial resources to achieve your travel dreams while staying on track toward your longer-term financial goals.  

If you’re ready to begin your financial planning journey or incorporate more travel into your financial plan, Simplicity Wealth Management can help. To learn more about how we help our clients make smart decisions with their money and see if we may be the right fit for your financial planning needs, please schedule a call.