Save Money on Your Next Vacation: Consider the Currency

Many factors impact the total cost of your vacation.  There is of course airfare, lodging, meals, and entertainment.  However, the currency exchange rate can also dramatically impact the cost of your vacation.

Give preferences to locations with a weaker currency. Not only do you get more money for less of your home currency, but you will spend less along the way.  There is a psychology to spending.  Purchasing items with smaller numbers is always harder than purchasing item with a larger number.  For example, let’s say in Europe you can get a meal for 5.75 Euro.  However, in Australia you can get a meal for 10 Australian dollars.  While both are the exact same cost when you factor the exchange rate it is always easier to spend 5.75 than 10.00.  If two travel destinations have similar things that appeal, always choose the one with the weaker currency. Photo by bradipo.

Once you have made a travel booking begin to track the movement of the currency.  You can get historical rates at Oanda.  I’m not expecting you to be a foreign currency trader, just be aware of the movement.  If you can take advantage of a stronger or weaker currency go ahead and do it.  If you notice the value of your currency getting stronger you might want to lock in the rate by pre-purchasing your currency using a site like XE.  You might miss out on some even lower rates, but the second advantage is that you can budget better when you pre-purchase your currency.  Consider budgeting $100 to do an activity.  The vacation currency goes up 10% and that activity is now $110.  What does that do to your travel budget?  You either cut out an activity or overspend.  When you buy your currency ahead of time you know you will get the same budgeted spending power out of your budget.

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