September 27 – World Tourism Day Special
How to Plan
a Debt-Free Enjoyable Trip!
R.Suresh Kumar, Director, www.fundzavenue.com
Call : +91 9884022122, ARN: 77037
“Dad...
where shall we go on vacation next year?” asked 12-year-old Arun.
“Why are you
thinking about that now? First finish your studies. Get a good job. Once you
start earning money, we can think about travelling!” his father replied.
Grandfather,
who had been listening to their conversation, smiled.
“You don’t
have to wait until you start earning money to travel. You can start investing a
small amount every month for your travel goals right now. As the money grows,
your travel plans can grow bigger too!” he said.
That small
piece of advice changed the way Arun’s family looked at travel.
From the
following year, the family began setting aside a small amount every month
exclusively for travel. Over the years, that savings grew into a substantial
sum. The family began travelling to different states across India and
eventually started travelling abroad as well.
The reason
for this transformation was simple: they stopped looking at travel merely as an
expense and started looking at it as an investment in life.
Tourism Is
Not Just an Expense!
September 27
is observed as World Tourism Day. Travelling to different places, meeting new
people, experiencing different cuisines and cultures, and learning about
history can enrich our lives in many ways.
Many people
invest for their home. They invest for their children’s higher education. They
invest for their retirement.
But how many
people systematically invest with the goal of creating enjoyable experiences
for themselves and their families?
It may not
always be appropriate to spend our entire working life earning money and wait
until retirement to start travelling. It is important to plan trips at
different stages of life, depending on our age, health and family
circumstances.
Create a
Separate “Travel Fund”!
A trip can
require a substantial amount of money at one time. There may be expenses for
flights or train tickets, accommodation, food, local transportation, entry fees
and shopping.
Therefore,
instead of looking for money after deciding on a trip, it is better to build
the required funds in advance.
For example,
suppose you want to take a major family vacation three years from now. You can
estimate the cost today and start building the required amount.
|
Travel
Goal |
Time
Period |
Estimated
Cost Today |
|
What
to Do |
|
Local trip |
1
year |
₹50,000 |
|
Save about ₹4,200 a month |
|
Trip within India |
2
years |
₹1
lakh |
|
Save about ₹4,200 a month |
|
International trip |
3
years |
₹3
lakh |
|
Save about ₹8,300 a month |
These are
only illustrations. The actual amount will depend on the destination, number of
family members, mode of travel and future increase in prices.
Take
Inflation into Account!
A trip that
costs ₹1 lakh today may not be possible for the same ₹1 lakh five or ten years
from now.
The costs of
food, accommodation, transportation and air tickets may increase over time.
Therefore,
we should not ask only, “How much does the trip cost today?” We should also
ask, “How much will I need in the year when I actually travel?”
For example,
suppose a trip costs ₹2 lakh today. If prices increase by an average of 5% a
year, the same trip could cost approximately ₹3.26 lakh after 10 years.
Therefore,
accounting for inflation is essential when planning long-term travel goals.
Which Money
Should You Use for Travel?
Borrowing
money to travel can sometimes affect a family’s long-term financial plans.
In
particular, it is better to avoid funding travel expenses through credit cards
or high-interest personal loans.
Instead,
spending from a travel fund that has been built in advance can provide
considerable peace of mind.
Before
investing specifically for travel, it is important to ensure that basic
financial needs such as an emergency fund, health insurance, life insurance,
children’s education and retirement planning are adequately taken care of.
Short
Term... Long Term... The Investment Should Change!
The most
important factor in choosing an investment is when the money will be needed.
Money that
will be required within the next few months should not generally be exposed to
investments with high volatility.
At the same
time, money required for a major trip five, ten or fifteen years from now can
be built gradually through investments suitable for a long-term goal, such as
equity-oriented mutual funds through the SIP route.
As the
travel goal gets closer, it is important to gradually move the money towards
relatively safer debt-oriented investments so that the accumulated amount is
better protected from market volatility.
Invest Not
Just for Travel... But for Experiences!
The time
spent with children in a new destination, visiting a temple with parents,
exploring a mountain, beach or historical site — these experiences can create
memories that money alone cannot buy.
A family may
spend ₹3 lakh on a trip. Once the trip is over, that ₹3 lakh is no longer in
their bank account.
But the
photographs, memories, time spent together as a family and the experiences
gained by the children can remain with them for many years.
Therefore,
wealth is not merely the money we have in our bank accounts. It also includes
the valuable experiences we create in our lives.
Don’t Keep
Saying, “We’ll Enjoy Life Later”!
Some people
keep postponing travel by saying, “Let me accumulate a little more money...
then we’ll go on a trip.”
But every
stage of life has its own kind of travel and enjoyment.
Travelling
with children when they are young brings one kind of happiness. Travelling
together as a family when they are older offers a different experience.
Travelling with a spouse after retirement can bring another kind of joy.
Therefore,
travel need not be treated as something that can happen only after retirement.
It can be made a part of our overall financial plan throughout life.
Investing
for travel is not simply about accumulating money to spend later.
It is also
one way of answering the question, “Why
am I earning money in the first place?”
Set aside a
small portion of your income regularly for your travel goals. Define the goal
in advance. Take inflation into account. Choose investments according to the
time horizon. As the travel date approaches, gradually shift the money towards
safer investments. And, wherever possible, try to travel without taking on
debt.
Money should
work for us. And what that money creates for us one day should not be merely a
financial amount. It can also create unforgettable experiences.
On this
World Tourism Day, let us make a new commitment:
“Let
us earn... save... invest... and use our money to experience life!”
For more details and Investing
R.Suresh
Kumar, Director, www.fundzavenue.com
Call : +91 9884022122
Mail :fundzavenue@gmail.com
ARN: 77037
Read articles written by Mr. R.Suresh Kumar in Nanayam Vikatan, a leading personal
finance magazine https://bit.ly/4afnSZD
R. Suresh Kumar, runs FundzAvenue, a
firm that offers comprehensive personal finance services such as fixed
deposits, stock market investments, mutual funds, SIFs, tax planning,
financial goal planning, and insurance to individuals and corporate employees.
The company currently serves over 2,000 individual clients.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme
related documents carefully. The past performance of the mutual funds is not
necessarily indicative of future performance of the schemes.
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