The importance of managing money during gap years

For many people, gap years are one of the best experiences of their life. They provide the opportunity to travel, see the world, experience other cultures and – depending on the program - help people in a less fortunate position. Gap years can make a huge difference to people, inspiring them to change the way they live their lives.

But foreign travel - in any form – doesn't come for free. Not only are there upfront costs associated with gap year programs, but participants will need access to finance throughout their trip. And this is not always straightforward - there are few ATMs in the jungle, in the outback or up a mountain. Equally, should a card be lost or stolen, there is likely to be some hassle associated with sorting out a replacement.

For gappers of all ages, the importance of financial planning and effective money management cannot be underestimated. Finding yourself in a strange, foreign land with just a few coins in your pocket is unnecessarily stressful, not to mention risky. However with a little forward planning, travellers should be able to establish contingencies for every foreseeable scenario, ensuring they are never caught short for food, accommodation or travel money.

Making sure you don't run out of money

According to a recent survey conducted by American Express, fear of running out of funds while overseas is one of the biggest concerns for people planning a gap year. But while more than half (56 per cent) of survey respondents said they budget for major expenses, a quarter (25 per cent) of travellers do not. Rather than keeping funds in the bank in case of an emergency, they simply plan to "see how it goes" - perhaps not the best strategy.

The Foreign & Commonwealth Office (FCO) urges all Brits heading abroad to budget whatever money they have and keep it in a safe place at all times. Not only this, but they are advised to check the validity, expiry dates and cash available on their credit and debit cards, the department stated. It is no use carrying round a piece of plastic that expired the previous month - this is no better than an empty purse or wallet, no matter how much money is sat in the 'rainy day' fund.

Gappers should also ensure they take at least two cards with them, treating one as their emergency reserve, the FCO added. "Make sure you know the PIN numbers for both debit and credit cards - and keep the emergency card somewhere safe," it said. Another important tip is to write down the 24/7 emergency number for your bank, and make a note of any card details. This may enable cash to be withdrawn from a bank without the use of a card. However, the emergency number and bank details must always be kept separate as if both were to fall into the wrong hands, you could become a victim of theft.

Making the most of your money overseas

Once steps have been taken to ensure you always have access to finance, it is important to focus on using it wisely. Spending months on end in hotels, hostels or other rented accommodation can quickly eat away at your travel funds, so look after your money or risk taking an early flight home.

According to research carried out in 2011 by AA Financial Services, 18 per cent of travellers incur bank charges by using their debit or credit card as a means of spending overseas. In addition, more than half of survey respondents' gap year money was held in cash, most likely purchased at unfavourable exchange and commission rates.

Mark Huggins, director of the company, explained that prepaid currency cards may be a better alternative in some destinations, such as Europe. He commented that the Sterling/Euro rate is poor enough without piling additional charges on top. "Using overseas ATMs can be very expensive with between two and three per cent typically being lost on bank charges," he added.

If gappers do want to use debit or credit cards in a foreign country, they should take care to check the validity before beginning their trip. Some cards - such as Mastercard and Visa - can be used widely, but travellers should never assume they will be able to rely on plastic payment in a particular land. Simply by conducting research before the start of your trip, the risk of card being invalid can be eliminated.

Spending your money in a foreign country

When visiting less economically developed countries in particular, it is important to ensure you have local currency in a small enough denomination. Waving around high-valued notes can be insensitive to local people, but perhaps more pertinently, put travellers at greater risks. Equally, the equivalent of a £50 note is unlikely to be much use for people buying a snack at the market or taking a short taxi ride.

The FCO urges obtaining local currency as soon as you cross the border into any new country. "When carrying money around with you, use a wallet for loose change and your day-to-day spending," the department advises. Travellers should also wear a secure money belt under their clothing in which to keep cash, but also valuable documents such as your passport, plane tickets and insurance information.

Enjoying your gap year

People who spend their whole gap year worrying about money management are likely to find it more difficult to relax and make the most of their experience. As such, making effective preparations - and saving up adequately before booking a foreign trip - is of crucial importance.

The more research you can do before starting a gap year, the better. It is difficult to prepare for every different eventuality, but this should be the ultimate aim in the weeks and months before the start of your trip.

Where money is concerned, there are few excuses for not taking precautions. Ensuring you have ready access to cash, and emergency funds in a separate account, are vitally important. With so much to see and do on a gap year, running slightly over budget is an occupational hazard, but with the right planning this should not be so much of a problem - till you get home at least.

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