Category: Financial Planning

Plan for a vacation without compromising on your long term financial goals.

T S Eliot once said – Travel is never a matter of money, but of courage! Being part of such a beautiful country where nature is at its best all round the year, we are fortunate that we could plan a trip anytime. However, there are families complaining that a trip every year is not possible due to budget constraints. Do you also think the same? Then this post would provide you with an insight on how you could plan a domestic and international vacation with your family. Let’s dive in –

Planning Affordable Family Vacations

Holiday’s are meant to rejuvenate, relax, refresh and spend some quality time with family and yourself.  But all this comes with an “expense” attached to it. So if you plan early about the vacation that would help you in getting economical tickets and hotel bookings and also you would have ample time to save and meet the expense required for the vacation.

It’s all About “Planning”

So, the first step in Planning a Vacation is

  • How many days of travel
  • Fix a Location
  • Filter the boarding options with expenses
  • Workout on a plan of sightseeing and ticket prices, travel at the location, food, shopping etc.
  • How much corpus [in case of emergency] you think would be needed, keep it aside as travel corpus
  • Travel Tickets
  • Miscellaneous food/sightseeing/shopping expenses

Once you have details of these, calculate the total amount and that would be your “Estimated Travel Expense” for that particular vacation.

How to Meet the Target of “Estimated Travel Expense”

Once you have boiled down to a figure X, look on the time you have to meet the target.Now look for your

  • Monthly Income
  • Necessary Expenses like expenses on food, medicines, schools etc
  • Non-necessary Expenses – Like “Eating Out” Movies or buying gadgets
  • Money needed for your other financial goals like retirement, education etc
  • Monthly Saving – after cutting all the above points this figure would tell you how much time you would need to meet your “Estimated Travel Expense”

Planning For Short Term Vacation i.e. within a year or two

If you have such a short timeframe, experts advise not to invest in volatile markets. These are some of the short-term options that you could choose for –

  • Savings Account – The money in a savings account earns an interest from the range of 3% to 6% per annum, however, if your interest earned is more than 10,000 than there would a TDS of 10 % deducted by Bank.
  • Fixed Deposits [Short term] – An individual could earn an interest of 7-8 % annually on Fixed Deposits, however, if your interest earned is more than 10,000 than there would a TDS of 10 % deducted by Bank.

  • Debt Funds [Short Terms] – One can go for short-term debt funds that usually have an investment period of 6-18 months and generate regular returns. We encourage our clients to set up vacation funds to enable them to meet their vacation goals through systematic planning and savings.

  • Liquid Funds – If you are looking for secure and moderate returns, you could go for liquid funds that could earn an interest of 4- 10 % .

  • Fixed Maturity Plans – These plans and close ended funds that have a lock in period and offer moderate returns, however, they are considered to be safer and tax efficient!

Planning for Medium Term Vacation i.e. after two to five Years

If you have a medium time frame, experts advise investing in instruments that offer returns within the time period. These are some of the medium term options that you could choose for –

  • Balanced Equity oriented Mutual Funds – These funds invest in a mix of equities and debt, giving the investor the best of both worlds
  • Secured Non-Convertible Debentures – When equity market seems to be volatile Non Convertible Debentures or NCD’s are considered to be a safe option with interest offering  to a range of 11-12 %.

  • Mutual Fund MIPs Growth options – MIPs are open-ended schemes that invest a majority of their assets in fixed income instruments and allocate a small portion to equity and equity-related instruments. MIPs typically invest in debt instruments like debentures, corporate bonds, government securities and so on, while maintaining a small exposure to equity to earn something extra.

Planning For Long Term Vacation i.e. after five to ten years

Well, if you could plan a vacation for such a longer time period, kudos to you! As the long term, investment options would surely help you in meeting your criteria –

  • Equity or Trading – Studying and analyzing the market could prove beneficial if you are planning to invest in stock options. The returns are on higher side but they also come with risk.
  • Gold Investment – Gold has always been a popular investment option so either you could directly buy gold or as expert advice to invest in Gold ETFs, Gold Mutual funds, Gold Deposit Scheme.

  • IPO’s – IPO’s offered by a reputed company chosen as an investment option, it could be fruitful in the long run.

  • ULIP – ULIP’s are often criticized because of the charges they apply, however, if an individual is investing for the long term he could surely earn an interest rate of 7-8%.

Holiday Investment Plans Offered by Travel Firms

Apart from the above-mentioned plans, some firms like SOTC and Thomas Cook also offer Holiday Investment plans to meet your budget criteria. Kuoni India launched Holiday Investment Plan with Kotak Mahindra Bank and Thomas Cook launched Holiday Savings Account in association with ICICI Bank and IndusInd Bank.

According to the plan, you choose a holiday destination and save for 12 months in a recurring deposit account of the banking partner. The 13th installment is either paid by the travel firm or is a combination of the interest accrued and a discount by the firm.

Club Mahindra and Sterling Holiday time share options are also available and  and offer different packages along with membership benefits to its customers.  Graded room with season options for 20,30 years makes stay options affordable with such benefits.

How do families afford holidays abroad?

Well, with proper planning and fixing a target and the destination it could be achieved. Here are some quick tips –

  • Start Planning in advance
  • Pick locations that are not on radar or choose off-peak seasons
  • Book your tickets well in advance
  • You would be sightseeing and not stay in a hotel, so look for cheaper options
  • Work on your itinerary
  • Try to use local transport, local food and local means for your quest.
  • Try online options with bed and breakfast that are cheaper and involve no broker costs.

10 of the world’s cheapest countries to go to on holiday


Wanderlust often complains that staying, eating and enjoying in Cambodia is so cheap that at times you feel guilty for paying so little.


Although it’s an underdeveloped country but offers a range of nature’s best spots. Make sure to put it on your bucket list.


It was known as the Tibet of the Americas, and you would surely be surprised to see the country.


With the budget airlines, prices to this country have been reduced quite a lot. So scenery for your eyes and easy to your pocket.


Quite recently Bulgaria has been picked up by the travelers and so enjoy the beauty of the unspoiled and unexplored destination.

Sri Lanka

Yes, one of our closest neighbors also offers a range of mountains, waterfalls and what more as Srilanka also holds good from our mythological perspective.


Explore the jungles, rugged mountains, and the best part is that it’s easy in your pocket.


With recent economic slowdown, holidaying in Greece could fit into many budget travelers.

Dominican Republic

A myth is that the Caribbean is pricey, however, the fact is that if you fly to the Dominican Republic you could enjoy a fantastic view of Caribbean and also goes with your pocket.


The prices to fly to Ireland have been reduced considerably over the past few years, listing the country amongst the list of cheap destinations.

We hope we have answered your queries on how you can plan your vacation with your fixed salary.If you still have any unanswered questions or need help, feel free to contact us here.

We would be glad to help you with your planning and investment related decisions.

Samiksha Seth

Content Strategist

Dilzer Consultants Pvt Ltd