Are you financially ready to make that trip abroad?3 min read . Updated: 01 Dec 2018, 12:03 PM IST
A short-term planned expenditure goal should always be followed up with a planned investment
Mumbai: Planning to catch the latest glimpse of Roger Federer at Wimbledon next year? Or are you one of those who would rather save up for a good game at the FIFA World Cup. Whichever bracket you fall into, a short-term planned expenditure goal should always be followed up with a planned investment.
Although not everyone falls in line with this advice and are going the spendthrift way. For instance, New Jersey based Hardik Patel, 27, a store manager at 7 Eleven, paid his expenses for this year’s FIFA World Cup through his credit card and borrowed a little from his friends. “My travel expense was around ₹ 67,000 ($1,000), FIFA tickets for two were around ₹ 47,570 ($710) and accommodation was around ₹ 13,400 ($200)," said Patel, who travel with his friend. Patel had planned to go for the live telecast of the matches two months prior to the tournament and because of his unplanned expenditure, he had to cut down on a lot of necessary expenses such as commute, gym and eating out, to pay off his credit card bills, friends.
Patel is not alone. Many tend to make impromptu decisions which then can impact you financially after you come back from your holiday. In another scenario, Bengaluru-based Nikhil Narayanan, 34, creative director at an advertising agency, “broke the bank" to watch the FIFA World Cup this year. “I had not taken vacation for around three years. Hence, in the run-up to the world cup, I had some money in my account," said Narayanan, adding that he did not have to save for the tournament separately. “It was more of an impromptu plan; funding the travel, tickets and stay was not an issue but managing expenses after returning from FIFA was a little problematic as I did break the bank," Narayanan added. Narayanan ended up spending around ₹ 2.5 lakh for the entire trip, including tickets for travel, the match cost and accommodation.
There are some who get lucky and are able to club work and vacation which can reduce the cost to a certain extend. For Canberra-based Prajyot Borker, 35, a consultant at SAP, it was all about timing. “I went to the French open. It happened to be during my office trip. I was lucky with the timing and happened to be there," said Borker. He usually opts for local Australia sporting events as a family so that he can cut cost on local trips. Also planning in advance helps with ticket and accommodation, he adds.
How should you plan?
Going on a holiday to watch a sports tournament is something many Indians are planning. Not many have it as a short term investment goal. “In fact it is a new phenomenon that has come up in the last two to three years, said Pawan Kumar Agarwal, founder at New Delhi-based Investguru.in, an online personal financial advisory firm. Down payment of property that is to be done within a year, event-based vacations, annual commitments such as club memberships can be other examples of short term investment goals, said Agarwal. Apart from these buying an iPhone and gifts for dear ones are also coming up as short term goals, said Sharad Singh, founder at Invetza.com, an online investment advisory platform. “Then there are thematic goals specific to events like travelling for Premier league, Cricket World Cup 2019, Graduation Party and likewise," said Singh. If you have any such goals lined up for next year, firstly make a plan of the cost structure. For any short term goal up to two years, ultra short term and short term debt funds will be suitable, said Agarwal. For recurring short-term goals, you can look at ultra-short term fund as there is no exit load, Agarwal added. Apart from short term funds, arbitrage and liquid funds are top picks among planners. “They (liquid, ultra short term and arbitrage funds) carry low risk. As the investment horizon increases, investors can afford to take risk and add equity to their portfolio," said Singh.
It is fun to have an impromptu plan but not at the expense of your daily needs. “Making impromptu plans is just a bad habit signalling that one can lose out on a substantial chunk of good financial plan," said Anup Bhaiya, founder of Money Honey Financial Services Pvt. Ltd.
Remember that your travel plans is not the only thing that is happening in your life. You also need to have enough money to take care of your daily expenses and other financial goals as well.