How to effectively manage and save your money on vacation

Avoiding the pitfalls of overspending while on vacation can be hard, but knowing how to manage your money on holiday will help you enjoy a rewarding respite.

Unexpected spending due to failures in managing one's holiday money can turn a dream trip into a nightmare.

• Financial preparation is key and having an expense plan that is realistic and up-to-date is crucial to avoid regrets and bitterness once you're back home.

1. Keep track of the current exchange rate in your destination to manage your money on holiday and get an idea of how much cash you need to carry daily.

• Exchanging your money in advance, or knowing the exchange rate, also protects you from unscrupulous money changers.

2. Sales and service taxes in different provinces and countries vary, while some destinations charge no tax at all.

• Knowing the current tax rates in your destination can help you make the right spending decisions.

3. Learn about tipping etiquette in your destination.

• If you're going to the U.S., there are standard tipping rates you're expected to pay in restaurants or hotels, while other countries allow you to tip based on your satisfaction with the meal and service.

Weigh the pros and cons of each option and determine which will give you the best benefit in terms of convenience, safety and cost.

1. Cash is the most convenient but is not safe to carry around, and there's a high chance you'll overspend because it's so easy to pay with cash.
2. An ATM card is the best cash alternative, but can be more costly due to conversion rates and transaction fees.
3. Credit cards are a safer method of payment but will incur you compound interests and international conversation fees. Debit card and cash passport cards work the same way as credit cards but with no compound interests.
4. Traveller's cheques are safe and convenient but are no longer popular because they must be cashed out at a bank. Traveller's cheques are also not accepted at many establishments today.

1. Use a logical combination of payment methods (cash for everyday expenses, credit card for big purchases). Minimize withdrawals from ATM machines to avoid international transaction fees.

2. Consider opening a traveller's bank account with the lowest international fees and conversion rates. Many banks offer this type of account and you can compare to find the best choice.

3. Set up your online banking subscription. This can save you money and make things easier when transferring funds from one account to another while on vacation.