Financial Planning for Travel Emergencies

Travel isn’t all white sandy beaches and cocktails. That’s vacationing. That’s not what we do here. Any experienced traveler will tell you that plenty will go wrong. It’s unavoidable. Dealing with emergencies makes us better people. It’s a big part of the reason the habitual traveler keeps heading out for more. The risk of the unknown is what makes it an adventure.

This article discusses how to financially plan for problems you encounter on the road. And how to keep your money under control when the situation isn’t. Confidence in your financial situation helps you to think and act intelligently during stressful times.

What Could Possibly Go Wrong?

The most troubling and avoidable emergency you could face is running out of money without the means to get back home. This is where budgeting comes in. If you keep tabs on your budget and your bank account, this won’t happen. ‘Nuf said.

Travel emergencies are usually logistical. Most are just annoying, if not a bit stressful. A late bus, broken ferry, flat tire, lost passport, fully booked hotel. Minor inconveniences that can be solved with a lot of patience and a little cash.

On rare occasions life will rear its ugly head in the worst ways. Having a medical emergency another continent is a terrible experience. Being stranded overseas or having to leave unexpectedly because of a political or social uprising can be very scary.

Be financially able to end your trip at any time in case you have no choice. The odds are slim, but it’s smart to be prepared. You need to be able to make the best decision possible in the worst case scenario.

Expect to have to deal with unexpected problems. Understand that the solution to any given travel problem usually costs money, in varying amounts. Money that you didn’t think you’d have to spend. Have the financial flexibility to absorb these costs and to make up for it later.

Going home before you want to is the only tragedy within your control.

Keep your Money Under Control

When a situation is out of your control, spending money is unavoidable. You can’t really plan for this sort of expense. You have to rely on a flexible budget and the ability to make smart financial decisions on the spot.

You have a couple options to ease your conscience in the event of an emergency:

• Increase your daily spending allowance
• Be prepared to cut travel expenses or your savings account
• Dedicate part of your budget for emergency spending
• Carry a credit card

We tend to go with a mixture of the first two options. Adding extra to your daily spending money lets you deal with minor unexpected events that happen often. Broken shoes, worn out clothes, a new camera battery, a pricey meal, an overly expensive taxi ride, etc. The little stuff adds up and is impossible to account for before you leave.

For rare and expensive emergencies we prefer to make cuts to our travel plans and/or our savings for returning home. Having a dedicated amount for emergencies only isn’t very practical. We usually plan to spend every penny we can and if there is a huge emergency, we pull out the credit card or go home.

If the unexpected happens, know what can be given up. In the worst circumstances you won’t know or care where the money comes from, it simply must be spent. The hard choice comes later when you must reconcile the expense with your remaining funds. Knowing where you can cut costs down the road makes this much less painful.

Planning for the End

Eventually your trip will end. It may happen when you plan it to, or not. You may get burnt out and want to come home early, or you may decide to stretch your money and stay on the road longer.

You should have the financial means to come home and to support yourself for a month or two after you get back. Ideally you’ll save and plan for this expense and keep that money separate from your normal trip expenses. If this isn’t possible you can rely on a credit card or a willing loved one to graciously cover you. Thanks mom!

Being able to pay the bills for a couple months after your trip ends will make returning to “real world” less traumatic. Especially if you've been gone a long time. You may need time to find a job and a place to live. Most importantly you’ll want to spend lots of time catching up with friends and family, not to mention the 2,000 photos that need sorted.