Get financially fit for your next holiday

With some light starting to emerge at the end of the tunnel in the form of planned vaccine rollouts, many South Africans are searching for travel destinations. Financial Adviser Ernest Zamisa offers would-be holiday goers financially-friendly holiday planning advice for the future.

Although Statistics South Africa reported a decline of 72.9% in overall income generated in the tourism industry for January 2021, prominent local bookings agency LekkeSlaap actually noted a significant increase in local bookings in the months that followed.

You know what this means? South Africans are seeing the light at the end of the pandemic tunnel and are ready to pack their bags, gather their family together and finally head off on a well-deserved staycation.

The big COVID-19 third wave, which had been predicted to hit South Africa in the weeks after long Easter weekend and school holidays, has seen an increase in the rate of new infections. But there are predictions that with the winter season on the horizon we may need to reconsider our immediate travel plans.

While the pandemic and the associated lockdown and travel restrictions are giving us time to save and budget appropriately for our next holiday, we still need to remain cautious.

Yet, an economy still reeling from the impact of the ‘new normal’, the cost of embarking on this much-needed getaway should be taken into account - as the additional, often overlooked holiday expenses tend to take many holiday-goers by surprise. Financial Adviser at Momentum, Ernest Zamisa says that the solution, as with all financial endeavours, lies in the planning. “You want to relax on holiday, and not worry about the financial toll it is taking on you.

“Holidays are somewhat expensive, there’s no getting around it. However, coming home with a maxed-out credit card that takes the next year to pay off can really spoil the whole experience. But with proper planning, the expense can be mitigated and budgeted for, with the right foresight and discipline.”

He adds that we can draw lessons from challenges like COVID-19, such as the importance of proper budgeting and saving for future rainy days. “With a little advanced planning, you can come home from your holiday debt-free and with nothing but great memories,” he says.

Zamisa provides a few essential financial planning tips to integrate into your holiday planning:

Understand all costs involved and budget accordingly

For Zamisa, when it comes to any financial planning, it pays to be realistic about what you are going to spend at every turn. “A holiday is filled with expenses. It’s not just travel, accommodation and sightseeing. There are many small costs that can rack up quickly and it’s those unforeseen expenses that need to be accounted for in your holiday planning.”

Zamisa advises creating an exhaustive list of all the potential expenses. This should include line items like fuel, tolls, food (including meals and all pit stops along the way), emergency medical funds, travel insurance, entertainment, shopping, entry fees for sightseeing and other local attractions as well as souvenirs, gifting and shopping expenses that may come up.

Start planning way in advance

Of course, sometimes we can’t predict when we will require that much-needed break, but we can guarantee that we are going to need a holiday sometime in the next year. With the economy and personal financial situations being what they are, it is prudent to start planning your 2021 spring/summer getaway now.

If you do that, Zamisa says you will have a veritable buffet of accommodation options at more affordable rates. Not only that, but flights are going to be as reasonable as they will ever be.

He adds, “If you can, set up a separate savings account and start putting a aside set amount each payday. Before booking, crunch the numbers and work out if the trip you have planned is affordable. And don’t forget to factor in travel insurance for peace of mind.”

Cash in on your rewards programme

In these financially frugal times, Zamisa says it is prudent for all would-be travellers to tap into every financial avenue they can and then squeeze that sponge for all its worth. “If you are part of a rewards programme and you have accumulated points to spare, perhaps your upcoming holiday is the perfect place to cash in,” says Zamisa.

Momentum Multiply premier members, for example, can get up to 30% off flights through their airline partners as well as car rental. If that cost comes to say R10,000 then by simply tapping into their rewards programme this will result in a savings of R3,000.

“Take advantage of the benefits your rewards programme offers you, which will help you save money on your holiday.”

Pay off your credit card debt

While it may sound counterintuitive to save cash by spending money, Zamisa says most people simply don’t realise how much credit card repayments are crippling their month-on-month budget. “The quicker you can pay off your credit card, the more money you will free up to save for your holiday.”

Over time, Zamisa says a slimmer debt load loosens the belt on your discretionary budget, freeing up more funds for luxuries like vacations – even if it simply allows you to dip into your credit card again without sweating too much.

Zamisa concludes, “Don’t over step your boundaries. If you can, rather wait and save instead of going deeper into debt. A holiday is nice, but it should not ruin your long-term financial goals. You always need to keep your journey to success in mind. When the holidays are over, and you’ve gained all the perspective you need, you can speak to your financial adviser about your new plans.”

ENDS