Sunday, July 30, 2006

Vacation money management

Managing money to spend on a vacation is an extension of the process used for A Day at the amusement park as previously described. You will probably want to set up one or more physical bougettes for the use of cash and predetermine credit card needs as much as possible. You don’t want to be bogged down keeping track of expenditures while on your trip, but you don’t want to over spend either. The more you think out your expenses ahead of time, the less problems and money management time will be needed while on your trip.

Recording Expenses Prior to the Trip: Expenses incurred before taking the trip such as hotel deposits, airfare payments, allocation of funds into physical bougettes (for the kids at least) should be documented on the associated budget ledger and account ledger like any other types of payments.

You may want to carry along extra cash and even a roll of quarters to feed toll road machines; however, these are not expenses until you actually use the dollars or place them into a physical bougette. Until then, these funds just represent a transfer of money from other accounts into your Cash account.

Recording Expenses during the Trip: I recommend that you take the time to think out your expected day-to-day expenses in advance of your trip. This process is necessary in order to determine a good estimated total expenditure. Then, while on the actual trip, you will only have to eyeball the actual expenses at the end of each day to confirm that each one is within your expectations. You don’t have to spend time and effort to total them up day in and day out unless they are getting out of line. At the end of the trip is time enough to total things up.

Consider using a Basic Expense Sheet to record day-to-day expenses while on vacation. While this form was presented as a place to start out tracking your expenses at the beginning of forming your budget system, it can be very useful in an ongoing basis while on a trip. The design of the form allows one to document both the type of expense, and the account to be used on one line. Taking along a couple of blank BASIC EXPENSE SHEET forms is all you need while on the trip as opposed to dragging along your entire budget binder! Place these sheets in a large brown envelop with as many receipts as you can keep up with. These receipts can help to confirm that you’ve included all expenses and the appropriate amounts.

I recommend entering expenses on each day; don’t wait until the end of the trip. Don’t put your receipts into the envelope until you record them on the Basic Expense Sheet. Also, if you make an expense not related to the trip costs, be sure to clearly indicate a specific budget category to associate it with on the BES.

Cash, cash, cash: The use of cash, especially for the kids, and souvenirs is hard to keep track of, while on vacation. Taking advantage of physical bougettes can make this job much easier. Realistically think through how much cash you plan to allot to each child, yourself, and your significant other before the start of your trip. Discuss these amounts in a family meeting. You may not get total agreement, but at least you should all reach an understanding. Kids as well as grownups can plow through lots of cash while having a good time. Roll after roll of quarters can disappear into the video game machines!

Unless you are going on a very long trip (more than two weeks), you should probably get all of your needed cash before you leave. I recommend using a credit card for all major expenses and restaurant meals, so the needed cash shouldn’t be a very large dollar amount. If you have kids, you will probably need several rolls of quarters to feed the inevitable video gaming machines that proliferate the landscape. Having actual quarters instead of just giving them dollars can help keep better control and prevent overfeeding the machines! Pre-allocate a number of rolls of quarters per child, and make sure they understand what they will be getting. One roll contains 40 quarters i.e. ten dollars. Don’t give them all of their allotments at once, but still keep them in separate physical bougettes. For other types of expenses such as gift stores, optional entertainment, etc., also keep dollars aside for each child. For you and your significant other, also set aside physical bougette cash. From a budget perspective, all of this cash can be dispensed with one line item documentation showing the withdrawal of dollars in one lump sum. You can get rolls of quarters from your local financial institution.

If you find a need to withdraw additional cash, you can use a convenient ATM while away from home, but bear in mind there will most likely be some kind of fee. If you do need to make a withdrawal via an ATM, try and get all of the cash you will need in at one time to minimize fees. Such cash should be allocated into the appropriate physical bougettes to alleviate the need for detailed expense documentation.

Credit Cards: For all of your credit card purchases, be sure to keep the receipts and have a special envelope to store them in. I recommend using a heavy brown type with a clasp. All of your big price items such as hotels, transportation, and car rentals should be set up ahead of time to the extent possible. The total estimated cost of these expenses should be reviewed to determine how much you have left for meals, excursions, and other entertainment. Try and make a daily tally of these other expenses to help you keep on track. While I don’t recommend dragging your budget ledger on vacation with you, there is still a need to stay within your allotted amount of vacation dollars. You can make your notes and keep daily totals on the outside of the envelope.

Make sure your card limit won’t be blown on all of the expenses for your trip. If in doubt, use one more than one card, such as one for your hotel and one for everything else. Even though you should be able to pay off all expenses upon your return from vacation, you don’t want to incur an over limit fee on your credit card along with a negative tick on your credit report.

Traveler’s Checks: The use of traveler’s checks is viewed positively by some and yet negatively by others. I would recommend that you follow your own past experiences in this area. However, if using such checks, you will need to itemize all associated expenses i.e. don’t attempt to use them in physical bougettes.

Treat the traveler’s checks like a gift card and set up a special ledger to keep track of the current available balance. Such dollars will remain allocated to and expensed from your Vacation Budget Category. Any fees associated with the acquisition, and usage of such checks would appear as expenses against the vacation budget. At the end of the trip any excess checks would be “cashed in” with the resulting dollars placed into one of your accounts and remain within your vacation budget.

Treatment of normal expenses: While on vacation, expenses for such items as gasoline, eating out, and entertainment, even groceries if staying at a place with a kitchen, are all a part of the vacation budget and not your normal budget categories for such items. If your vacation is at least two weeks long, you may consider transferring a portion of dollars from these other budgets to help in support of your vacation budget.

However, expenses for such things as hobbies, or “Christmas gifts”, should be made from the appropriate budget categories. For example, let’s say you like to build kit models and buy a model from a gift shop located next to the exhibit of the actual ship, I recommend that the expense go against your hobby budget. For these types of receipts, annotate them with the appropriate Budget Category right away for ease of assignment after you get back home. Also, keep receipts for these types of expenses in a separate envelope.

The Hotel Bill: Charging extra expenses to your hotel bill such as meals at the hotel, in room movies, etc. can be very convenient, but be sure that all such expenses are in line with your budget. Be sure to discuss hotel charges with your kids. They shouldn’t be making movie, video game or any other purchases against the hotel bill. Be especially careful of the use of the telephone. In these days of cell phones, the kids just shouldn’t be using the hotel phone except for a dire emergency. Also, when checking out, allow enough time to carefully review your bill. If you see unknown expenses, be sure to challenge them. The hotel will most likely be willing to deduct them. If you are staying in a given hotel for an extended period of time, you should check the status of your bill on a regular basis. These days, many hotels offer the ability to check your current charges right on your in-room television.

The Hotel Key Card: Many hotels and motels are now using magnetic stripped key cards instead of actual keys for entry into your room. There have been concerns bouncing around since the Fall of 2003 about personal information such as names, addresses, and even credit card numbers being placed onto these key cards when you check-in. If true, then one should not leave these cards behind upon checkout, but take them along and destroy them later. Various checks into these concerns by a wide variety of agencies and bureaus seem to reveal that this is not the case and thus the disposition of your key cards upon checkout should be of no consequence. The phenomenon has been regulated to “Urban Legend” status. However, I would recommend that at a minimum you deposit your card at the front desk or a designated box upon checkout instead of just leaving it in the room.

Keep funds safe: If you do plan to have a lot of extra cash while on vacation, you should make sure your hotel offers a safe in the room and use it to keep your extra cash. Only take out what you need on a day-to-day basis. Individual physical bougettes can be used to keep the cash separate. I also recommend keeping any extra travelers checks and credit cards in the safe when not in actual use.

Oh, remember to have FUN!!!


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