Travel with an eye on budget

By the end of next month, Mr Jevons Ang, 33, will have vacationed in India, South Korea, Japan, Taiwan, Hong Kong, Thailand and Malaysia, even visiting some places twice this year.

The bachelor, who works in hotel business development, travels for leisure an average of six times a year, spending $10,000 to $15,000, about 25 to 30 per cent of his annual income, to fund his trips.

To keep costs down, he finds deals on accommodation using websites such as Expedia and Agoda, and avoids travelling during peak periods. Without a car, mortgage or having to pay rent, he gladly spends on travel, his biggest expense.

"I would spend more if I had to because I love it. But I'm a very strategic shopper," says Mr Ang, who devotes up to a month to research, plan and save for long trips.

He is not the only one shopping for experiences abroad. A survey of Singaporean travellers taken at the Natas Holidays 2014 travel fair in August revealed that 17.1 per cent of travellers make four or more overseas trips a year.

According to frequent travellers, their travel is often split between one or two trips to long-haul destinations such as the United States and Europe, and shorter regional excursions to places such as Phuket, Bali and Hong Kong.

Though Credit Counselling Singapore has said that over-spending on travel and cars is one of the most common reasons people fall into debt, frequent travellers say taking multiple trips a year is affordable if done wisely.

Some, such as Ms Winnie Goh, 40, plan their trips based on airfare sales and deals. Ms Goh, her husband and two young daughters aged six and seven, spent five days in Hong Kong in September, capitalising on cheap airfare. The family paid $1,200, including taxes, for their round-trip tickets on Singapore Airlines.

They will spend about the same amount to fly budget airline Jetstar to Phuket for a family trip next month. Saving on airfare allows them to spend more on the accommodation necessary for a family of four, says Ms Goh.

The family travels overseas at least four times a year, and has two staycations, spending 25 to 30 per cent of their annual income on travel - the same amount earmarked for mortgage.

"We budget for travel every year because the kids learn so much. It is also important to take them to places we love, such as Australia where I studied.

"Travel is about bonding and sharing experiences. It's a big part of our life," says the personal assistant, whose husband is a technician at Exxon Mobil.

Some frequent travellers make their trips more affordable by saving on accommodation. Ms Michelle Williams, 24, a hotel service manager, takes an average of six trips a year and stays at hotels where she receives a staff rate, or bunks with friends.

Administrative assistant Low Qiuying, 26, travels about four times a year and tracks accommodation deals on websites such as Bookings.com or stays in backpacker hotels, where travellers can find beds for $5 to $50 a night.

Cutting down on transport and lodging are key considerations. A MasterCard Consumer Purchasing Priorities Survey of more than 400 people taken in July showed that transport takes up the largest portion of the Singaporean's holiday budget at 36 per cent, followed by 22 per cent for accommodation.

Sticking to a daily budget is another way to control one's spending.

For her 18-day trip to the United States last April, Ms Williams budgeted $100 a day for food, drink and transport.

"I give myself a bigger budget than I'd like to spend, just to be safe, but I usually spend less," she says. Purchases are made with cash or a debit card; she does not have a credit card.

Credit cards, however, are the preferred payment mode, according to travel agents.

On average, 70 per cent of Dynasty Travel customers, 85 per cent of CTC Travel customers and 90 per cent of Chan Brothers Travel customers pay for their trips using credit cards. This maximises their credit card points and air miles, and they enjoy discounts and free gifts as well.

Chief executive of First Principal Financial advisory firm Mohamed Salim, 52, cautions that making charges to a credit card is an easy way to overspend on holiday, when it is harder to keep track of expenses and shopping is enticing, especially with the strong Singapore currency.

Items seem cheaper, he says, "so it gives the false impression that you can afford to spend".

"The question is not whether it's a deal but whether it's a necessary purchase," he points out.

He shares a cautionary story: A woman came to him for help after buying a bag she could not afford while overseas. "She was a junior executive who saw a bag which cost close to two months of her salary. But she felt it was a bargain because she would have had to pay a lot more in Singapore for the bag.

"She bought it, not thinking whether she would have paid the same amount for a bag if she was in Singapore, or of the credit card bill she would have when she came back. It took her more than three months of scrimping and saving to pay the bill," he recounts.

He advises travellers to do their research and budget for specific items which can be bought cheaper overseas.

This is Mr Ang's preferred shopping method too.

"I don't shop much in Singapore. Instead I research the cost of items such as clothes in the destination and find out if I can get them tax free or at discounted rates, and then I budget for it.

"I mostly shop in the US or Japan where I can get unique items cheaper than I can get them here," he says.

He does not bother shopping in regional cities such as Hong Kong, Bangkok or Kuala Lumpur "because they offer basically the same things at similar prices to Singapore".

He also uses credit cards from UOB and American Express to earn points or score discounts while abroad, but he is careful to pay the bills as soon as he gets back to avoid incurring interest and late fees.

Financial planner Freddie Kang, 62, associate director of Financial Alliance advisory firm, says travel may be a part of people's lifestyle but it should not create debt. He advises people to avoid unplanned trips and to travel only when they have saved enough to afford the entire trip.

"Do not borrow to travel. When good deals are available, there's no harm in taking advantage of the bargains, such as promotions during travel fairs, more competitive pricing, freebies and discounted travel insurance,'' he says.

Be very careful with instalment plans, he says, adding: "When one does not have the money for the trip, but signs up for an instalment plan, then it's spending future money that you do not have yet.''

vlydia@sph.com.sg

This article was first published on Nov 9, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.