Today we have a guest post from Kathryn Rucker, the founder of the personal finance website CashforKat. Take it away Kat...
We are currently experiencing a period of time where many of us are unsure of what our lives will look like a few months down the road. With talks of a recession happening in almost every country due to the recent COVID-19 outbreak, there is much concern over the future of various industries as they attempt to weather the storm.
One thing that we all know for certain is that at some point, our economy will strengthen and we will get back to enjoying the experience of traveling once again. And like many industries that are suffering from this pandemic, the travel industry may be forever changed as we know it.
This shortlist shares tips that I have learned over my last two years of travel to stay financially safe while living abroad.
Enroll in your embassy’s traveler alert program or social pages so that they can keep you updated in the event of an emergency. This is also important because most governments can actually step in and help facilitate payments from your family/friends in the event that you lose all of your things and end up stranded somewhere.
For the UK, the embassy encourages you to follow the social media of the Foreign and Commonwealth Office (FCO) to receive travel updates. For the US, the traveler alert program is called the Smart Traveler Enrolment Program (STEP) and can be found here.
You will also want someone reliable to list as a point of contact for visa on arrival forms, hotels, etc. Ideally, you would want to also give that person a heads up of your general travel plans and perhaps access to some financial information in case you need them to book flights/hotels in the event of an emergency.
Most banks also allow cash deposits that are available instantaneously if made in branch to your account. Check with your bank’s policy beforehand so that you are not caught unaware before your trip!
We’ve all heard about travel insurance but it is amazing how many people take off for a trip without bothering to look into this. The great thing about traveler’s insurance is that it is typically fairly affordable as you are able to purchase by the day/week/month and covers more activities than you would expect.
Whether you are taking a tuk-tuk in Cambodia, going mountain climbing in the Alps, or going on dives with sea turtles in Hawaii, there is a travel insurance policy that covers it.
Many of these plans include some basic medical coverage, but if you are an at-risk individual then you might want to consider a more comprehensive plan. With the current COVID-19 situation, many countries are limiting entry/exit unless you are traveling with medical insurance that covers you for $50,000 plus!
Always double check your medical coverage no matter your age because fortune favours the prepared and you don’t want to see the bank accounts of those who were unprepared!
I can tell you endless stories about accidents and almost accidents I have heard about from the many friends I’ve met at hostels during my 2 years of travel. Do you know what they would all tell you to do? Double-check your travel and medical insurance!
This should go without saying but only think of using a credit card if you have the cash on hand to pay the balance immediately. If you are responsible, these cards can be a great way of protecting your trip. If you are irresponsible, they can destroy your finances for a very long time.
My travel credit card covers me for anything from missing luggage to canceled trips due to illness. This is excellent because they will quickly reimburse me for the cost of anything travel-related like hotels, flights, and activities that were booked through the card if my trip is unexpectedly canceled for a qualifying reason.
The best part? If you are buying your traveling buddies tickets, they are usually covered as well! And you will have peace of mind knowing that should something happen you do not have to worry about the financial burden.
I recommend having at least one debit card and one zero foreign transaction fee OR 0% APR credit card when you are traveling. Many countries prefer cash, but you can significantly minimise your ATM withdrawal fees by putting what you can on the card and saving your cash for when it’s not accepted.
One final perk is that travel cards let you redeem the points you earn for your purchases on more travel. Usually, if you choose to use your points on future trips, you get more value than if you select cashback options. That means your current trip will earn you more trips, which is actually how I’ve been traveling the world for over a year and a half!
If this tip interested you, Millennial Mutiny has another great article on, “Making the Most of Your Money While Travelling Overseas”.
This is a secret that I never came across when I was searching about traveling long term. If you are traveling for more than a few weeks, you should consider getting more than one debit card.
The chances are very high that you will encounter an ATM that doesn’t like your card for some reason or your bank will find something “suspicious” and put a block on your account without a heads up. Even worse so, end up swallowing your card (it does happen!). And when it happens it is almost always inconvenient and confusing as you try to get your card back or active while juggling timezones and out of country customer service numbers.
If an ATM doesn’t like my Chase card, then I am able to pull out my Wells Fargo and vice versa. The same is true for any country you are in, as many banks have agreements with partner banks to reduce fees for visitors.
If you are just traveling for a few weeks, you can probably get by with just a debit card and a credit card. If you are traveling for a few months, it might be a good idea to have one of each at different banks.
For long term travelers, it might be worth it to get a local bank account and just do a one-time wire transfer that will last you several months. This is particularly true for travel to Southeast Asia where foreigners experience $5+ ATM fees whereas locals using an out of network atm get charged less than a dollar!
And never, ever keep your cards all in one place. If that bag gets stolen, then you are in an even worse position than if you never had the backups in the first place! Remember, cards can be quickly canceled but it takes much longer to ship out a replacement. Especially when your permanent mailing address is halfway across the globe.
You should always have an emergency fund in a bank savings account before traveling, but you should also keep a small stash of emergency cash while you are traveling.
While I’m not encouraging keeping thousands of dollars on you while backpacking around the globe, you should definitely have $50-100 (or whatever the local currency equivalent is) that you keep on reserve. This money should not be carried around with you but kept wherever you are staying in a hidden or secure location.
Think of a place where no one else would likely go, which means a hotel safe is probably not your best hiding location. As silly as it is, I recommend tucking your cash in a sock tucked in with your dirty clothes….
Trust me, after traveling for 2 years in over 12 countries I’ve never had any of my personal items stolen. Remember that this is not meant to be spending money, but emergency money. So stash it and forget about it. And always, always, always have enough money to find your way back home!
Kathryn Rucker is the founder of the personal finance website CashforKat. She helps readers improve their financial situation by saving and earning more money. When she is not busy writing articles, Kat likes to spend her free time traveling the globe!