5 things to remember about your finances when travelling
How long can you really afford to travel for? It’s a tough question to ask yourself, because ideally you’d constantly be jet-setting around the world and having a great time, but it’s unlikely that you can afford that. Even taking a month off can be a struggle when your income stops but the bills don’t.
That’s why it’s vital you remember exactly what you have to pay for even when you’re not in the country, or staying at your home. Skiing in Whistler will take your mind off those water charges at home, but you still have to pay for power, internet, mobile phone plans, mortgage/rent and council rates.
Figuring out what to include on your travel budget can help to protect your credit score, which helps with securing your future finances. If you miss bill payments or your monthly mortgage repayment, it could go on your credit report and affect your future borrowing power.
Here are five payments you should be aware of when you’re thinking about covering your costs at home while you’re overseas:
1. Accommodation costs
While you’re travelling, you’ll be paying for accommodation everywhere you go. That doesn’t mean your home in New Zealand is free of charge though – you’ll still have to cover rent or mortgage payments for the whole time you’re away.
Work out how many weeks you’re away for, and what that amounts to in rental payments. That total should be added to your travel budget, because it still needs to come out of your account. The same goes for mortgage payments if you’re away for more than a month – you don’t want to fall behind on your mortgage and face defaulting on the loan. That’s not a stress you want to deal with while you’re supposed to be enjoying yourself.
No matter how nice your hotel room is, you still have to pay for your home in New Zealand.
2. Council rates
Every budget needs to include council rates for your home, but the cost might not be front of mind when you’re planning an overseas excursion. Council rates are due at the same time each year, but the notice is sent out early so you can prepare.
If you’re away before the notice is sent out, but you know you’ll be back before the due date, you won’t need to make other arrangements. You should still include your regular rate payment in your travel budget so you have enough in your account when you get back home.
3. Utility bills
When you’re overseas, you won’t be using water or gas, and ideally most of your appliances will be turned off or unplugged. However, you still have to pay the bills. If you don’t pay on time, the default goes on your credit file, and it can affect future lending applications if you don’t appear as a trustworthy borrower.
Organise for a friend or housemate to open the utilities mail while you’re away and let you know how much you owe. Having extra cash set aside for these sorts of payments means you won’t forget to pay the internet and phone bill while you’re climbing Mt Fuji. For an idea about the amount you’re charged for all of your utilities each month, check your budget statements from previous months. This should tell you how much each bill was – add the total of all of your utilities bills to your travel budget.
4. Automatic payments and subscriptions
Subscriptions and automatic payments can be put on hold, but not always for extended periods of time. Your gym membership, for example, might only be suspended for two of the four months you’re overseas, meaning you’ll need to cover two months of that subscription in your travel budget.
The same goes for insurance payments, healthcare plans and magazine subscriptions. Figure out exactly how much you’ll have to pay while you’re away, after suspending what payments you can, and make sure that amount is included in your budget.
Just because you’re away for a long time doesn’t mean your automatic payments stop.
5. Vehicle registration
Your vehicle might be the only way you can get around when at home, but when you’re in another country it’s not relevant, right? Wrong. Your vehicle is registered for use on the roads for a certain period of time, whether you are driving it or not. If your vehicle registration is due to expire while you’re overseas, you won’t be able to legally drive it on the roads when you return until you renew it.
However, it might not be the first thing you think about when you get home, so it’s important that you organise this before you leave. Either leave the registration renewal money somewhere that will remind you to pay for it, or pay in advance and have the new registration waiting for when you get home.
By adding these five common costs to your travel budget, you might find that you can’t really afford to be away for as long, or that you’ll have to save on accommodation or stay away from High Street shopping in Italy. You can still have a great time when you’re away, but you won’t be in financial turmoil when you return to the real world. Plus, if you decide to travel for a shorter period of time, you might not have to include as much in your budget, and you won’t be away from your income for as long, so you will have more spending money.
For more information about how you can properly prepare a budget for when you’re travelling so your credit score is not affected by missing loan repayments, make sure you get in touch with Credit Simple today.
Credit Simple gives all Kiwis free access to their credit score, as well as their detailed credit report. See how your credit score compares by age, gender and community and gain valuable insights into what it all means.All stories by: Credit Simple