Budgeting for your vacation may not have always crossed your mind to do in the past. But these days, travel budgets are essential. Mainly due to the fact that we are still living in a pandemic, but also really, really want to get away for a vacation. Finances may be off or slow for some people, and prices may be higher for trips. So we enlisted the help of Octavia Ramirez, founder of millennial-focused Paper & Coin, a financial planning company that helps creative people and millennials manage their money in a realistic way. She shares not only her finance story, but also how she saves and plans for vacations, minus the credit card shock when she gets home.
How did you get into personal finance and start Paper & Coin?
I actually kind of fell into this world of personal finance just out of my own experience. I was working as a cancer researcher before I got into this world. So really my story starts where I was just frustrated really with constantly feeling like I never had a sense of control over my finances.
I would get paid on payday and I felt like the next day I was broke. A lot of that had to do with the fact that I had a little bit of credit card debt. So, I was stuck in that negative cycle of having debt and then paying it off. And then getting back into debt and paying it off. I was just kind of sick and tired of being stuck in that cycle. I finally decided to kind of change my life. Then I paid off my credit card and actually ended up cutting it up entirely.
That was I think about eight years ago at this point and I’ve been credit card free and debt free ever since. I started helping people with their own personal finances and budgeting and understanding how to save and invest on the side. Eventually that grew into what’s now, Paper & Coin which is just a little bit more of a structured way of doing what I was doing before.
How can people plan out their travel budgets for a trip better?
It’s tough because travel is one of the most expensive ways to spend your money. But, I always say like if I wasn’t in the finance space I would be in the travel space somehow! it’s definitely something that I personally am really passionate about.
Travel Budgets: Start with the end…
What I found over the last several years of traveling is it’s always important to kind of start with the end in mind. Not just, ‘oh I want to go to Greece. So I’m just gonna go.’
Okay, well you want to go to Greece, what do you want to do there and where do you want to stay and how are you going to get around? Really kind of asking yourself those questions at the very beginning before you even put any numbers to paper.
Travel Budgets: Add in the numbers
The next thing is putting numbers to paper. Am I going to be staying with a group of people? Am I traveling solo? What does it look like if I am going to stay at a mid-level hotel or high-end hotel? Or am I going to be in a hostel somewhere? When you work backwards and ask yourself those questions, you have to start assigning numbers.
For example, my husband and I did a trip to Kenya and we knew we wanted a high-end hotel while also roughing it out in a tent in the middle of nowhere. We knew we’re going to spend six days on a safari and sleeping in tents. After that we’re going to want to stay at the Fairmont which will be about $200 a night.
So we needed to assign numbers to these things. This is how much this safari will cost for six days. This is how much the Fairmont costs. How much do we want to spend on food a day? (Always overestimate your daily food spending!).
Travel Budgets: Start mapping it out and booking
What I tell people is, you don’t have to have the full $5,000 or so set aside for your trip.
Now that you have an idea of what you want to do and have numbers assigned to it, you can start planning in advance and not have to spend or save it all at once. If I know I’m going to Kenya in October then I’m planning to at least book my flight in May. I don’t need to have all the money saved up for my accommodations and food and entertainment and transportation right on the front end, just my flight.
Travel Budgets: Book the most expensive things first
Now that I booked the flight and it’s out of my life, what’s the next most expensive thing. Accommodations. I look at my itinerary and where I need to front load some of those costs. The Fairmont Hotel is the next most expensive part. Save up and book that. And then work your way down. I always like to start with the most expensive things and then taper down like an upside down triangle.
Really the only thing we’re now paying for is just food and activities. Make sure to have cash on hand and I use our debit card while travelling instead of a credit card. When you do get to your destination, you don’t have that weighing on you. That thought of ‘how much have I spent? How much am I at right now?’
Always, always have an emergency fund
You want to give yourself enough time to save money for an emergency within your travel budgets, for a shit-hits-the-fan moment while travelling. Because it does happen, especially given recent events in the world. Sometimes a 10-day trip turns into a 4-day trip and you need an emergency or quick flight home. That can be expensive. You don’t want to go on a trip if you’re on the razor thin edge of your finances. You need to have a healthy margin in your budget for an emergency fund.
Be mindful of how you’re spending and exchange rates
Be mindful of when you need to make withdrawals in cash or when you’re going to choose to use your debit card. What I tell people is when you’re using your debit card overseas, use it to withdraw whatever amount of cash that you need and then only use your debit card again for larger purchases as opposed to using it for little things.
The strategy I use is this. Take as much cash as you’ll need for the day and that’s primarily for food and like the occasional rickshaw or taxi ride. And be smart about managing those foreign exchange fees because those can sneak up on you. Even a simple Coke or McDonald’s meal can be vastly more expensive than you’re used to because of exchange fees. Keep that in mind.
How can we travel right now?
I would say explore your own backyard! That sounds so cheesy but it’s true and I think even something like day trips to different cities and towns around southern Ontario can be really exciting too. There are so many like little nooks and crannies in Ontario to see.
And road trips to different cities whether that’s Montreal or all the way east, depending on how far you’re willing to drive. I say go for it and you know given the fact that you’ll be spending in Canadian dollars makes it more accessible. And even if you’re not able to afford or you can’t go to another country, you can still expand your horizons and not feel restricted.