10 budgeting mistakes even smart travelers make

don't overpack if you are on a travel budgetWhen traveling, it’s easy to go overboard and spend more money than you expected. What’s important is that you spend your extra cash having fun experiences instead of on mistakes that could have been prevented with some planning. Read these 10 common money mistakes often made by travelers to help save money on your next trip.

Mistake #1: Overpacking

This is a mistake that can rack up travel costs for many reasons. First of all, depending on what airline you are flying with, you may be charged a fee for each bag you bring. Not only that, but travelers must pay not only based on how many bags they bring, but also on how much they weigh. Once you are off the plane and at your accommodation, if you have brought more luggage than you can carry yourself you will have to consider porter and bellhop costs. Just do yourself a favor and only bring items you can see yourself using and wearing multiple times.budget travelMistake #2: Not knowing the exchange rate

If you’re looking to save money, it’s a good idea to do a little research and figure out what destinations will give you the most mileage for your dollar. For example, many regions in Canada, Australia, and Western Europe have strong currencies, meaning you may end up losing money in the exchange. However, if you plan a trip to, say, Hanoi, Vietnam, or Prague in the Czech Republic, you can end up saving a lot of cash.

When traveling, you should also pay attention to what currency exchange offices offer the best rates. For instance, airport currency exchanges are usually not the best places to change your money.

Mistake #3: Forgetting to check the weather of your destination

Last June I went to Paris, France, traveling under the assumption that France is always hot (on television the French always seem to be sipping wine in sunny vineyards and relaxing in little clothing in quaint little cafes). If I had checked the weather beforehand, I would have known that shorts and sleeveless shirts were not practical for when I was going, and I wouldn’t have had to buy new clothing, a jacket, and an umbrella that I ended up leaving behind anyway.

The moral of the story? Check the weather of your destination before you leave so you can pack appropriately and save yourself from having to buy a whole new wardrobe.

Mistake #4: Not knowing international phone rates

If you really don’t need your phone, leave it home, as you can save a lot of added costs. There are many other ways to stay in touch with people at home, such as e-mail or web chat (find areas with free Wi-Fi or see if your hotel provides it). If you must have your phone, invest in an international calling plan. While every phone company offers a different plan, I have always found that services such as Skype and PennyTalk offer the best deals. Another low-cost option is to purchase a local SIM card in the country you are visiting.

budget travelMistake #5: Traveling like everyone else

Not only is traveling during high-peak season more crowded and chaotic, it’s more expensive. If there’s an activity you love, try an off-the-beaten path destination to do it instead of following the crowd. Instead of going away in the summer, find a destination that offers your ideal weather in the spring. This can not only save you money, but can also introduce you to new, unexplored destinations.

Mistake #6: Not knowing the tipping etiquette

Tipping etiquette differs from country to country, so don’t just assume that just because in your home town you leave 20% gratuity when going out to eat you must do that everywhere. For example, an article on MSNBC.com says that tipping in Fiji is discouraged, while a server in Mexico will expect a 10%-15% tip. Know the customs before you go to avoid throwing away money unnecessarily.

Mistake #7: Not purchasing travel insurance

While travel insurance isn’t free, it can also end up saving you a ton of money if an emergency does occur. Hospital bills, cancelled flights, and natural disasters aren’t cheap and you can get very affordable travel insurance plans at Access America and World Nomads. Also, if you have health insurance or a travel credit card at home, call their customer service numbers to ask what you are already covered for abroad.

Mistake #8: Not knowing your transportation options

While taxis may be the most convenient way to get around a place, they are often the most expensive. Using public transportation options such as trains, buses, tro-tros, tuk tuks, and metros can save travelers literally hundreds of dollars. If you are unsure of how to get to a place ask your accommodation to help you plan the cheapest route. Also, before even stepping on the plane to go abroad, contact your hotel and ask them what the most cost-efficient method to reach the hotel from the airport is, what stop to get off at, and specific walking directions.

Mistake #9: Not taking advantage of frequent flier programs

If you travel regularly, it pays to either signup for a frequent flier program or apply for a credit card that will give you miles. Having loyalty to specific airlines may be difficult for some people to commit to, however, it can lead to free flights and discounted travel.

Mistake #10: Always being a tourist

This is an easy mistake to make, as when people are in a place for the first time they usually end up being drawn to all the flashy signs and salespeople offering experiences at must-see attractions. While you should see the big sights, there are often free museums, open air entertainment, and complimentary attractions in every place you visit. This goes for restaurants, too. While the big, sparkling venue with the extensive (and pricey!) menu in English may look good, wouldn’t it be nice to have an authentic (and budget-friendly) dining experience at a smaller, local eatery? Street-food is also a money-saving option, as well as grocery stores (bonus if you’re accommodation has a kitchen or serves free breakfast). Also, ask your hotel when museums, restaurants, and attractions offer discounts and promotions, such as free entry on Monday nights at an art gallery or complimentary tapas at a Spanish restaurant with a drink purchase.

Americans still don’t like dollar coins

dollar coinsAccording to an NPR story this week, the Federal Reserve is sitting on a billion dollars worth of the $1 Sacagawean and Presidential coins, and the program to replace dollar bills with the metal coins has largely been deemed a failure. The government spends millions annually to mint new coins in order to introduce all the US presidents, resulting in millions languishing in vaults a la “Scrooge McDuck” said Planet Money’s David Kestenbaum. Despite the fact that they are legal tender and the government’s many efforts to promote their use, Americans still distrust the dollar coin.

Why the reason for the distrust? Americans claim they are difficult to spend, not recognized by many merchants, or just weigh down pockets too much. Perhaps we should ask our foreign neighbors how they have integrated them into daily life. America is one of the few countries in the developed world to use a $1 banknote and the only one of the top five traded currencies (including the Euro, British Pound, Japanese Yen, and Australian dollars) to use a bill in such a small denomination. Canada replaced the dollar bill with the “loonie” coin in 1987 and the British pound note has been out of circulation since 1983. Is taking away the $1 bill the only way to get Americans to use the coin? We reported earlier this year on a possible way to earn frequent flyer miles by purchasing dollar coins, a legal (but not encouraged by the US Mint) practice that may actually contribute to this back log of currency. Maybe go out and spend the coins instead and hope the trend catches on.

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Photo courtesy Flickr user cometstarmoon. Hat tip to Honza Kerver for the NPR story link.

Remembering Europe before the Euro

American travelers often complain about the current money situation in Europe. With the Dollar/Euro exchange rate sitting around $1.40/1, along with inconvenient credit card PIN requirements, making a purchase in many European countries is downright inconvenient. But there was a time it was far more complicated – namely any date before 2002, when Europe’s common currency, the Euro, was first introduced.

My first taste of European travel came in the waning years of Deutsche Marks, Guilders and Pesetas. Every time you moved to a new country, you had to exchange your money for a new currency. For a young backpacker like me experiencing several countries for the first time, it was a confusing and expensive proposition, particularly when you were in transit among several of them at once. Traveling from The Netherlands via Belgium to France? Best not try to buy something in Brussels: that would require you to exchange money. And forget about keeping the notes, coins and exchange rates straight – each brightly colored pink note and strangely bearded head of state was a new lesson in geography, history and politics and quickly calculated math.

Europe has grown up since then. Today, I can use the same money for a pizza in Rome as I do to buy a sweater in Dublin. But despite the simplicity of the Euro, I still find myself pining for those days before the single currency began its monetary dominance. Maybe it’s no more than the naivete of youth – a simpler time in my life when those first exotic breaths of foreign culture and the feel of strange currencies in my palm suggested all the possibilities of travel and adventure.

Is travel easier in Europe now? Yes, absolutely. But with that ease of use, a distinct piece of national identity also disappeared along with it. Our globalized world marches on.

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[Photo by Flickr user viZZZual.com]

Ten things to know about your destination before you go

know before you go travel planningSo you’ve chosen your vacation destination – booked the tickets, agonized over TripAdvisor to find a hotel, and bought the guidebooks or downloaded the apps. Whether you like to plan your itinerary in advance or play it by ear, there are a few things you should research in advance to make your arrival – and your trip – go smoothly.

From airport taxis to local laws to transit passes, what should you know before you go?

  1. Best way from the airport to the city – This should be your first order of business – figuring out the most efficient and/or least expensive way to get to your hotel before you find yourself being hounded by taxi touts at baggage claim or standing in the rain waiting for a bus that comes every two hours. London’s Heathrow Express is a great compromise between an exorbitant taxi ride and a long Tube ride with transfers, but other cities may have cheap cab fares (find out approximately what you should pay before you get in the car) or excellent public transportation systems connecting with the airport. Check out any guidebook or the Getting In section of a Wikitravel article for the best info and check if your hotel offers pick up service for a good value.
  2. How much cash to start with and in what denominations – Now that you know how to get to your hotel, you’ll need cash to pay for your transfer. No matter what the exchange rate, you should find out how much money to withdraw from the ATM or exchange at the airport (note: most airports in the world have ATMs and will give you a better value than exchanging currency, but it never hurts to have some backup cash). Lonely Planet‘s Cost Index is great for determining about how much cash will cover a taxi ride, a meal or two, and other expenses for your first day or so. Some countries will give you large bills that are hard to break – try entering an odd amount like 130 to get some smaller bills or visit a newsstand to get change.
  3. What’s the tipping culture – So you’re in the taxi, cash in hand to pay the driver, do you tip? In many countries, like Turkey, people don’t generally tip taxi drivers, perhaps rounding up to the nearest lira or two, so a 38 TL fare would cost 40 TL (taxi drivers here are so loathe to give change they may eat the cost of a 52 TL fare and give you change for the 50). Likewise for restaurants and cafes, 10% is standard in many places outside of the US and often included in the bill. I’ll never forget leaving a 20% tip on top of an included 10% in a London bar – the waitress was thrilled but I felt like a fool. Figure out what’s appropriate and do as the locals do to avoid stiffing or overcompensating for service.
  4. A few key phrases in the local language – This is a necessity in some countries, and always a courtesy to know a few words of a foreign language. “Please” and “thank you” and “where is the bathroom?” will always be useful, and “two beers,” “another one” and “check” will usually result in good things.
  5. When to leave for the airport when you depart – It’s hard to think about going home when you’re enjoying vacation, but knowing how much time to allow for your departure can help you to maximize your last day. While your airline might tell you how far in advance to arrive, better to ask someone who really knows how long to budget, like your hotel concierge. A Lisbon hotel front desk clerk once saved me several hours waiting at the airport by letting me know the recommended three hours before check-in was overkill.
  6. What’s legal – Learning about the local laws can save you headaches and money. I just discovered that in Warsaw, jaywalking is illegal and punishable by a 50 zl fine, hence why all the residents wait patiently at crosswalks for the light to change. In some cities, it’s fine to bring a bottle of wine or beer into a park for a picnic, but in others, public drinking can get you fined. Knowing what’s legal can also help you avoid (or seek out, depending on your proclivities) potential danger areas such as red light districts. Wikitravel is good at listing info on local laws and dangers.
  7. What days museums are free or discounted – Visiting a museum on a free day might allow you to see something you’d otherwise miss due to the admission price, and free nights are often packed with locals and fun events. Find out what days you can get free to help plan your itinerary. Rick Steves’ guides always have a good summary of free (as well as closed) days.
  8. The real value of a transit or tourist pass – Many cities have a museum or tourist card that you can purchase to get free admission at many sites for a set time. But before you invest in a pass, check out if you really want to go to the included places (cheesy sights like wax musuems are invariably included) and if you’d have enough time to really enjoy visiting them all. Similarly, public transportation passes can be great in a city like New York, where a Metrocard can save you time and money, but if you prefer to walk or cab around town, you might skip it. The single best deal I’ve found is the Japan rail pass, which must be purchased in your home country, and gives free or discounted access to public transit and many of the country’s awesome bullet trains.
  9. Where to get help if you need it – I used to think registering with the U.S. Department of State when traveling abroad was a bit silly but a friend at the embassy in Istanbul stressed how important it is in case of a disaster in locating citizens, as well as to help Americans abroad in trouble. Leave your travel details with friends back home, carry the contact details for your embassy and credit cards and check your insurance policy for coverage away from home.
  10. Can’t-miss tips from locals and travelers – Here’s where social media can really help you have a great vacation – before departure, ask your travel-savvy friends on Facebook and Twitter what their don’t-miss recommendations are for what to see or where to eat. Even if they are well-known attractions, having a tip from someone who’s been there will help you prioritize. You can always ask us at Gadling, chances are one of us has been there and can provide recommendations – just post to our Facebook page or send us a tweet @Gadling.

Other tips you’ve found handy to know in advance? Leave us yours in the comments.

Mexico limits U.S. dollar purchases in bid to beat drug lords

Worried that your money isn’t green enough? Well, in Mexico, the contrary may be true. If you’re headed to Mexico this year, you’ll want to bite the bullet and exchange some greenbacks for pesos. New currency laws came into effect in parts of the country last month that limit U.S. dollar-purchases to $100 per cash transaction (the most a business can accept). And, some businesses won’t be able to take even your Washingtons and Lincolns, let alone your Benjies.

The effort is related to anti-money laundering efforts, particularly as they relate to the drug trade. Even at banks you’ll feel currency-related constraints, reports USA Today, where “the amount of dollars foreigners can trade for pesos at banks and money exchangers to no more than $1,500 per month.” This doesn’t compare to the limits out on the street, though:

In addition, the tourism board says, several Mexico states – most notably Quintana Roo, home to the major resort destinations of Cancun, Cozumel and Playa del Carmen – have imposed a $100 limit on cash purchases. And regardless of location, airlines at Mexican airports can no longer accept U.S. cash for checked bag fees or other charges, says Tim Smith at American Airlines.

But, you’re still good when you pay with plastic – the sky’s the limit (along with whatever your bank has imposed on you.

[photo by redjar via Flickr]