Currency Risk of Long Term Travel

Embarking on a major overseas trip means that early on in your travel planning you need to decide which currency you are going to budget in.  For those who save in a major currency such as Euros or US$ then its easy. However if your currency is less widely used and more volatile then the first thing you need to get familiar with is an on-line currency converter.

If you are travelling for an extended period of time – say 6 or 12 months on a gap year, then currency fluctuations can make a big difference to your spending power. One of the problems with extended travel is that generally spend your savings over the whole period rather than pre-paying a lot of expenses as if typical with a package holiday. Therefore exchange rate flucatations will have a bigger effect on your budget. On the other hand, if you are owed money from the tax department or a former employer this can be an advantage, as money comes into your account just as the expenses mount up!

One way to manage your exchange risk when travelling long term is to purchase foreign cash when you consider the exchange rates are in your favour. This means that on a regular basis, when you are in an Internet cafe, check an on-line currency converter, when the price looks right buy a larger amount of either local or US$, usually available in big cities.

If you do have a budget blow-out because of the value of your currency dropping, then consider changing your itineary to include more, cheaper countries. Or just slow down – almost always spending more time in a place will rapidly decrease your daily expenses.

Although it can be challenging, on of the great joys of long term travel is that you have the flexibility to change your plans as things evolve and plans develop.

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