Great News!  You have decided you want to spend some time in another country.  There are a number of things to discuss with your financial planner to understand how the added expenses of traveling abroad fit within your annual budget, and whether your planned travels will affect your long-term financial goals (like retirement and education funding) in a way that is acceptable to you.  Once you know the long-term financial implications of your travel goal you can begin thinking about planning the experience you want to achieve!

Whether your travel plans are for a short-term vacation or you want to live abroad for a few months, there are three components of your personal financial plan that are particularly important:  saving and investing for travel, budgeting cash flow, and risk management.

1. Saving and Investing for Travel

When planning for travel, it is best to save enough to accomplish the objective without going into debt. If you plan to travel within the next two years, I suggest not taking investment risk with those travel funds. Markets are too volatile, and you might find your investments have fallen in value just as you need them to pay for the trip.

If your plans are more long-term (five year or more in the future) then you might be willing to take some investment risk rather than keep all your money safe. For most of us, we must allocate our limited cash flow resources among several competing objectives. You want to travel but then you also want tot save for retirement or to educate your children down the road. This causes us to have to prioritize our objectives.

For example, if you have achieved financial independence (ability to retire) travel may be part of your retirement plans. Then again you might be young, have no kids and your desire to travel is stronger right now than your need to begin aggressively saving for retirement.

There should always be a balance between how you live today and how you plan for the future. We call this making life count™. To me, travel has always been a top priority not a discretionary expense, more like a need and our long-term plans have always incorporated that priority.

2. Budgeting Cash Flow

Regardless the length of your planned travel you should evaluate the costs for airfare, housing, food, health care and in some cases travel insurance. Do not forget to include estimates for any travel expenses you may have while overseas. Train tickets, rental cars, inter-nation airfares are examples you might consider. If you need to you can minimize these costs by being frugal, traveling basic economy, booking your stay at a youth or senior hostel, avoiding splurging on expensive restaurants. Together, these basic expenses can add up quickly and it is worth thinking through how you want to budget the dollars you plan to spend while away. The point is, do not bust your budget.

Your experience is not getting there, it is being there. 

Your experience is not getting there, it is being there. Only you can decide which elements of your trip are more important to you and require a bigger piece of your budget. Depending on where you plan to visit you should add into your cost estimates the costs for passport and visa requirements as well as various inoculations that may be required. These can add up to many hundreds of dollars per traveler, so check into this early in your planning process.

Managing the cash flow of your planned trip is one side of the coin, but the other side of cash flow management is to think about how you will pay your bills and take care of your property while you are gone. For those of you who have pet friends, you should also consider the cost of caring for them in your absence. Happily, paying bills is easy now with on-line payment options that most banks provide. Just be sure to set these bill paying options up before you leave town. You might even want to do this a month or two before you go to make sure everything works properly.

Call your credit card companies and let them know….  That way, they will not suspend your credit or cash card when they see activity in a foreign country!  A painful lesson I learned through experience.

3. Managing Risks

There are three risks to consider when planning your trip: how to mitigate the risk of medical emergency while in another country, how to mitigate the risk of loss while on your trip or having to cancel your trip all together, and how to mitigate the risk of what happens at home while you are gone.

I want to share a few suggestions and lessons learned the hard way. My suggestions in this section revolve around planning for medical issues, trip cancellations, leaving home, and timing your travel.

Medical Issues and Trip Cancellations

Talk to your health care insurance provider about your trip abroad to see whether they will insure you or alternatively sell you a temporary plan to cover you while traveling. If you are covered by Medicare understand that it generally does not pay for care in another country, but your Medicare tie-in plan might.

Consider trip cancellation insurance to provide coverage in case an unplanned event forces you to cancel your trip. Plans typically include some coverage for lost baggage. I learned two lessons about that on a trip to Spain some years ago. The first lesson is to always have a change of clothes with you in carry-on and the second is to have travel insurance. I am a big guy, and Spanish sizes are typically not XXL and even if the say they are, they are not American-type XXL. You should have seen me in the tight t-shirt and gym shorts (well, maybe not) the $100 airline payment allowed me to buy when my luggage got lost for 4 days! My experience in Spain could have been avoided with good planning in advance.

I learned two lessons on a trip to Spain some years ago. The first lesson is to always have a change of clothes with you in carry-on and the second is to have travel insurance. 

Travel insurance also may include lump sum dollars for emergency medical care, medical evacuation and help you recover at least some of the trip costs when circumstance warrant. Watch out for pre-existing condition limitations on travel insurance. Check with your doctor about whether vaccinations are recommended for your destination.

Before You Leave Home

Whether you live in an apartment or own a house is primarily a life-style decision. One advantage of living in an apartment is the ability to lock the door behind you and go. That is not the case for a homeowner and the longer you travel the more this becomes an issue.

We have someone who comes to our house to check on things once a week while we travel. She waters the plants, and if something is wrong, she can connect with us to secure whatever services are needed at the time.  Once, we had an ant infestation occur while on a several week vacation. We got a call from our house-checker friend. We reached out to our pest control people who coordinated a day and time to resolve the issue.

Through a combination of trying to avoid risk, and otherwise by transferring risks to insurance companies you can reduce the chance that some unknown occurrence could hurt you financially.

Over the years, many of our client’s financial plans included travel and each accomplished their objectives through different means. Two clients sold their home, put their personal effects into storage and traveled the country for a couple years in recreational vehicles. Two clients sailed around the world with their families for a couple years. Two of our clients took executive positions with companies in China and Switzerland for several years. Every one of these clients achieved their travel dreams through good planning and execution.

Decisions About Timing

After careful evaluation you may decide that travel this year is not feasible. Do not despair, planning pays off. If cash flows are tight right now, set a specific time bound goal and begin saving now so you can take your trip down the road. If your cash flow is more fluid, then make the trip’s expenses part of this year’s planned spending.

No matter what a person earns, few people can do everything they want. Trade-offs are necessary. The only way to be certain about the trade-offs in your financial life is to do a thorough financial plan and consider the implications of what you are considering doing. These are your goals, your priorities, and you must be the one to make them happen but give serious consideration to engaging a financial planner to help you evaluate your options.

Stay tuned

Over the last several weeks I’ve started sharing my learnings about international travel. In the coming weeks I will begin to explore issues related to longer-term residence; visas, establishing foreign accounts to pay local bills and have access to cash, effect of foreign exchange rates, issues around renting a property live in.

If you have an idea that you may be interested in considering living abroad whether temporarily or permanently then look for future articles from me. 

Stewart S. Koesten, M.S.F.S., CFP®, CIMA®. is Executive Chairman of Aspyre Wealth Partners with more than 35 years of experience as a wealth management advisor. Stew especially enjoys working with people who travel or live abroad, or those who want to travel or live abroad. Contact Stewart Koesten at (913) 345-1881 or visit our website at We are here to help.

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