I planned ahead – and got a good deal
It’s time to jet-off on holiday – celebrate! – but don’t forget to think about getting currency to use at your destination.
The eZonomics article What is … travel money explains there can be two costs associated with changing money from one currency to another: a fixed commission fee and the actual exchange rate itself.
Moreover, where money is changed matters. The article says holidaymakers will typically get a better deal by shopping around for a good deal in their high street rather than buying last-minute cash in an airport. It is similar to the argument used by economist Tim Harford in his book The Undercover Economist to explain that coffee from kiosks in train stations cost more than from shops in nearby streets because of their location. For bureaux de change in airports the same rationale applies – if you are about to catch a plane, your options are limited.
Vacationing at home – known as the “staycation” – or within the same currency area (such as the Eurozone) will avoid the issue.
Build a holiday fund
Last minute escapes can be great and so can planning ahead. In fact, Psyblog says that studies suggest “we get enormous amount of pleasure from looking forward to good things in the future”, so planning a holiday in advance, and budgeting for it, might boost the enjoyment of a holiday even more.
To budget for a holiday, figure out where you want to holiday and how long for and work out the expected cost (including travel, dining out, accommodation and sightseeing). If travelling somewhere that uses a currency different to your own, build in a margin for currency fluctuations. Consider setting up a dedicated bank account in which to deposit set sums regularly until the savings target is reached. Giving the account a specific name - such as "Scuba diving in the Maldives" - makes the purpose clear and may even encourage you to save more.