Travelling and Money - BOD032

0:00Pete:The lesson there is not to go shopping with my big brother, who's much more impulsive than I am. Is he? He's actually a bad influence. He was like, do it, you deserve it, you work hard. It's just like endless crap, you don't need a sort of eight foot wide sombrero. Not only have you got to wrestle it on the plane and carry it all the way home, then you think, well, what do I do with it now? Hi, and welcome to the Bank of Dad podcast. I'm Kate, and this is my dad, Pete. Hello. And we're here to teach you the money lessons we were never taught at school. There's no judgment, no jargon, just real talk about how to handle your money.

0:35You alright?

0:36Pete:I am. What are you wearing? I'm wearing my Rush t-shirts because I'm newly back from Toronto where I went to see my favourite band. It was... Mixed? Mixed. This came about, we were talking about travel this week, so I thought I'd wear this t-shirt having just come back from a trip. and it was you know this was being planned for 10 months I think this is my favourite band in the whole world I love them more than I love my kids and actually I'm not surprised no this is not news to you and you know it's just all this build up and there was a chance I might not be able to go because mum's not been very well and it's like yes we can go big build up so we fly to Toronto on Wednesday fly to Toronto on Wednesday the gig is on Thursday night we fly back Friday night so it's ridiculous It's a flying visit.

1:25It booked because you didn't know that there were going to be UK dates. No, exactly. At the time. Toronto is the Rush's hometown.

1:32Pete:This is like the perfect. It's honestly a bucket list once in a lifetime trip. And then an hour and a half before the show, I start throwing my guts up with food poisoning. Three minutes before the show, I continue to throw up. Half time, I'm sitting down. It goes the other end. Yeah, sitting down, shall we say. So honestly, I wasn't as present for it as I would have liked. You did go and see the whole gig for one song. One and a half songs I listened to from the toilet. But honestly, it was a little bit disappointing, if I'm honest, because I wasn't as present as I would have liked to be. But the show was incredible.

2:06Pete:The atmosphere was amazing. Toronto is a beautiful city and the Canadians are such lovely people. I know. Honestly, it's not far from the American border and it could be a universe apart. I know. That's the joke everybody makes, isn't it? They're just lovely. Yeah, compared to their American cousins. it's just bizarre absolutely universally lovely well so it was a good trip in many ways just a little bit disappointing that it didn't wasn't as perfect as it could be yeah if my eyes are watering kate just spotted the nose hair and i had to pull it out flashback but i heard that still not the one there you go we overshare here what are you talking about this week kate This week we're talking about traveling and money.

2:51So we, I think you said previously, actually I know you did, said previously that these 10 episodes were harder probably to plan a bit harder to come, because, you know, we covered the real basics, but we were thinking about, we've already covered the real basics, but we were thinking about what young people are quite often doing. And if they're not in the process of saving to buy a house or whatever, or not at uni or whatever, quite often they're doing big trips.

3:16Pete:Yep. So we thought, well, why don't we cover that? Yeah, we'll do our best. Why don't we do that? So, Wanky Word of the Week this week. It is? Well, it's time for... It's time for... Yeah, come on. It's time for... Wanky Word of the Week!

3:37It's because we didn't do it last week. I'm all sixes and sevens.

3:40Pete:Cool. What is this week's Wanky Word of the Week? Excess. In terms of... Rude. For the benefit of those just listening, Dad started to cradle his food baby. Food baby. I like the word cradle more than anything. Yeah, yeah, yeah. So excess when it comes to insurance. In terms of insurance. Yeah. We're starting, we need to create a database of the wanky words. We do, yeah. So that we don't, like, have we done this one? Well, we did have a whole episode on insurance. Yeah, so maybe. Anyway, the excess is the bit of a claim that you pay. So, you know, if you need to, I mean, think of it in terms of car insurance.

4:17Pete:if you've got 3 ,000 quid worth of repairs that you have to do on your car, and the excess on your insurance policy is 300 pounds, then essentially you pay the first 300 pounds of any bill. So if you've got three grand worth of work, the insurance will pay 2 ,700, you will pay 300. Yeah. So it's the bit that you pay of any claim. And generally speaking, the higher the excess that you can add, particularly with car insurances, you can add voluntary excess. But the higher the excess, the less likely you are to claim. Because you don't want to pay it. Yeah. Well, also because if it's a small bit of work you need to do on your car, you'll just pay that.

5:00Yeah, because if you had to involve the insurance, you'd be paying more anyway. Yeah, right.

5:03Pete:So that's what the excess is. Right. So let's get into the main of it. Okay. Starting out. Where do you go about starting to plan a big trip financially? Obviously, I don't know how you go about planning a big trip. My sister should be here doing this, really. Yeah, she's probably done. She's done more travel than you have. And big trips like Australia and New Zealand. I mean, I wouldn't start from a financial point of view. If you're planning a big trip, then it's about the experience and the joy of it and the fun and everything you're going to get, right? Well, yeah, but we're assuming you're knowing where you're going to go, what you're going to do.

5:36Where should you start for the financial planning of it is the question.

5:39Pete:Okay, well, you need to sort of scratch together a reasonable budget. What is it going to cost you? So if you're going long distance, you need to think about airfares, you need to think about accommodation, you need to think about what you're going to eat and sort of throw together a budget of what you anticipate the whole thing will cost you and then add about a third on top because you'll almost certainly underestimate for a hundred like me anyway. So, you know, I think a realistic budget and one with some wiggle room, if you sort of get over there and realise you're spending twice what you thought you would every day on food and drink because it's more expensive than you thought.

6:12Pete:I mean, these days, there's so much great information. You think, right, I want to go to Machu Picchu or I want to go to Australia or whatever. There'll be like a billion YouTube videos that you can watch and, you know, we'll be very specific about what your daily costs might be and where to stay and how best to structure everything. So, I mean, assuming money's like no object, so you have to have a budget, then set the budget first and get the best holiday you can or best trip you can within that I would have thought is there a set amount that people should have budgeted for a trip? no I'm just asking a trip to Australia is going to cost more than a shepherd's hut in Devon isn't it?

6:54where did you come up with that example?

6:56Pete:because you've just been to a shepherd's hut was it Dorsey? no it was Devon exotic there's no set amount It's not like, you know, thou shalt not spend more than£80 per day on a trip or whatever. Just set your own budget based on your own means and what you want to do. Yeah. All right, what do commonly people forget to budget for? It's rather good. What do people commonly forget to budget for? Yeah, that's the good question. The stuff that you forget to think about. Yeah, because like food, we all know that we're going to need that. We're going to need food, we're going to need drinks, stuff like that.

7:38Pete:Obviously, wherever you go, there's opportunities to spend money that you hadn't thought about, whether that's sort of, for want of a better word, souvenirs or things to remember the place you've gone to buy, you know, little trinkets or whatever. And it's easy for those to sort of rack up. Or even just, I think, if I'm going somewhere I haven't been to, I'll always find out what the tipping culture is. Yeah. Because that's easy to forget about. It's usually cash. The US is stupid. You're talking about tipping now? Yeah. All right, okay. You were talking about taxes the other day, weren't you?

8:13I know, the US is generally a stupid apparently. Please let me back.

8:15Pete:No offense, American cousins. Oh, yeah. But no, no, no. There's lots of great things about America, but the tax thing does make no sense to my brain. But their tipping culture, when I went to a bodega, right, which is like your corner shop. Okay. And I got a bottle of Coke or something. They asked for a tip. it's like what have you done other than open the shop other than just go tip is for service right right it was like would you like to do a tip i was like no no you've done nothing to deserve it it's like really and then when we went to like restaurants and stuff it's like the minimum tip is huge and you get like that's because they don't pay people i know but the bodega one did make me giggle sorry carry on but yes tipping culture yeah i would Definitely find out about that.

9:01Pete:That's easy to forget about. Yeah. And if you've got multiple interactions, you know, that can definitely add up. Insurance is something that nobody wants to pay for and, you know, might try and sort of minimize it, but it's actually really important. We'll get to that in a bit. Yeah, we'll circle back, yeah. And those impulse buys, got to keep those under control. It's probably about it for stuff that they don't plan for. I'm doing this from my own experience. You can say, what about impulse buys? Yeah. Because you knew you were going to buy that Rush T-shirt, but what did you buy that you didn't know you were going to buy?

9:30Pete:I may have bought a watch. I mean, not like a ridiculous watch. Yeah, but it wasn't a 12 quid watch either, was it? No. It was about 300 quid. Yeah. So, you know, I have the means. Yeah, it wasn't like it put you into debt or anything. But that was 300 quid you didn't necessarily plan to spend. The lesson there is not to go shopping with my big brother. Oh, really? Who's much more impulsive than I am. Is he? He's actually a bad influence. He was like, do it, you deserve it, you work hard. I do deserve it I do deserve it I'm nice and I work very very hard I shall have this watch I think jeez I hope your mum doesn't mind yeah that's the person you really need to be okay alright yeah so small daily ad amounts, insurances and maybe the impulse buys yeah tip and culture that kind of thing okay so before you go what should you get done before you go so what financial admin should you do before you leave the UK you know if you're going for a trip for eight months what do you need to make sure it's sorted eight months is a big thing but yes if you're going on proper travel so you know if you have any bills in the uk you need to make sure that money's going to be there to pay them while you are away yeah uh so if particularly annual bills if an annual bill falls due while you're away you think actually i need to make sure there's money you know if it's going to be like a 400 quid direct debit payment yeah because your car insurance needs renewing I mean it would be logical to stop your car insurance or at least massively reduce it if you're not going to be reducing your car or sell your car or whatever.

11:02Pete:So these are the things to kind of think through ahead of time. But make sure you've got money in for any bills. Yeah, exactly. And you can do that. I mean eight months is a long time but if it's like a two-month trip or whatever and presumably you want to move back to the rental flat that you've been living in before you went on the trip, you have to pay your rent for two months. Yeah. And so you just need to think what bills will fold you while I'm away and make sure there's money in an account to pay them. Yeah. Particularly if you're not working. You know, you'll need to have had the money set aside, built that wealth in a savings account that then can be drawn from.

11:38And is untouchable whilst you're away. Do not spend your rent whilst you're away. No, definitely not.

11:44Pete:So I think as far as sort of admin while you're away, that's the only thing that sort of came to mind really um because thereafter it's the day-to-day costs of while you're away isn't it yeah but this yeah this is just is there any prep to do before you go and i'd say those are kind of that's the main one really i yeah nothing else leaps to mind all right this is a funny one because when i first started going on trips with my best friend she was a bit like you won't need it and I came from a you need it family she was on my side by the end of it how important is travel insurance really essential yeah we've got I don't even know why that's a question but that probably tells you more about how my mind works yeah but I'm just my best friend yeah she who is he yeah she was like no I don't need it we never use travel insurance on my family holidays I'm like fuck no Pete explodes what I was like Izzy I love you I will cover the damn insurance if you don't want to do it I'm not going we split it that's insane well that's insane I shouldn't say that about Izzy's lovely family I mean we were too young you know too young adults we're probably going to be fine but getting hit by a bus happens regardless of age well yeah and the cost of repatriating a body I realise this is a worst case scenario right yeah but you know extensive medical bills depends where you are in the world.

13:10Yeah.

13:11Pete:But I won't even dream of going to North America without insurance. Don't go, no. I mean, you can walk home with a million-pound bill. A million-pound medical bill, potentially. Yeah. Things, I mean, God forbid, worst-case scenario, repatriation of a body if you happen to be killed. You know, realise this. A bit morbid. A bit morbid and also vanishingly unlikely, but still possible. More likely it's going to be something goes seriously wrong. like you find yourself stranded you know or you know you are the subject of crime or you're in a car accident yeah right so i can't imagine not having insurance a really good uh uk influencer called luke tarrant i think he was in a motorcycle accident in vietnam i think it was lost his leg man alive so had to was it vietnam or thailand anyway but he was obviously had to do a load of hospital stays.

14:12Pete:Yeah, baloney, amputation, all of this, whatever. Physio, probably. And then he had to get moved to the UK, which was a helicopter trip. No, sorry, private jet. Private, right, okay. And then had to do all the rehab and stuff in the UK. Obviously, UK is UK, but he spent, I think it was like a month, two months in the hospital in the country that he was in. He also, later on, like he's incredible. He's already back on the bike. He's climbed mountains. He's a really good guy to follow. But then he was going to do this trip in Kyrgyzstan after, so with his, you know, amputation, we're going to go climb a mountain.

14:47Had a sort of infection on his stump. And he had surgery done on him without his consent.

14:53Pete:Oh, lie. Insurance covered. But the point is he had insurance to help cover it. Otherwise, you see all these people with GoFundMe pages. Your sister's boyfriend. Yeah, good example. you know was he works uh overseas yeah he works on the yachts so you know doubtless has insurance for all that sort of stuff and also his employer would insure him i think but you know in his weekend off um he has done motocross he doesn't do it anymore because he came off the bite and broke his back and had extensive spinal surgery not there oh yeah no he did he had spinal surgery in italy yeah yeah so it's like and and this is where insurance it's like all insurance you pay for it hoping that you never need it but if you do need it you you wouldn't want to be without it yeah so and in fact i love izzy and i love izzy's family they izzy does go for insurance whenever i'm there quite right too i mean it's also it's cheap yeah it was like five quid when we went to italy yeah you were there for what four days five days something like that it's yeah it wasn't like a six month trip well you know just in a 72 hour blast to toronto i'm 51 years old and the insurance just like 45 quid yeah but it covers like up to a million in medical bills what i paid to go to toronto yeah right it's just an absolute pittance i mean i've um you ask what people should look out for yeah so very often the cover you know you might be able to get like europe only cover sometimes you get a single trip cover yeah i have an annual policy the annual policy is just for europe though so i had to have an additional add-on thing to go to toronto generally speaking speaking we holiday in Europe yeah we do um it's the first time I've done long at all for about 25 years actually at least so it's you know I said so I brought a special post office travel insurance policy just for the Canada trip um specific days also what you might be doing while you're away so if you're going on a ski holiday you need to tell them yeah because you're more likely to injure yourself than you are when you want to start lounger yeah or if you're going to do motocross or you know if you're going to hire mopeds yeah even these are things that you need to they'll ask you about pre-existing medical conditions they'll ask you about as well yes um but you know it's these are things you think about the area that you're in what you're going to be doing while you're out there and make sure that the policy covers it and usually like everything there's like gold silver bronze level of cover so that might be maximum indemnity so how much the maximum they will pay out and things like cost of repatriation or medical evacuation or all that sort of stuff.

17:24Pete:You need to look at that. As boring as it is, you need to look at the small print really. But like the comparison sites are really good. I was going to say, because you I know you've favoured the post office before but I always comparison site it. I've used whichever is the cheapest usually. Or cheapest but and also has the cover I want. Yeah, yeah, of course. Yeah. Okay. Spending abroad. I know you're talking. That's fun. What's the cheapest way to spend money abroad? all right so are there bank accounts or cards that are better to use when traveling so find out from your bank what they'll cut what they will charge you to spend your own money abroad right so if you literally just take your like current account debit card yeah abroad are they going to charge you an explicit fee most don't yeah right but some may still so they're going to charge you an explicit fee for every transaction that you make that's going to rack up you know so it might be like it feels like 150 per transaction say £1.50, that's going to add up pretty quick every time you're buying drinks or whatever meals.

18:25Pete:So look for stuff like that. Mostly, though, they don't do that, and it's all about the exchange rate. Don't jump to the question. No, no, no, but however much the euros they'll give you for your pound or whatever. Yeah. There is a certain amount of security about keeping all that in the sort of banking system because your banks are not going to completely screw you over, but neither are they you can almost certainly get better exchange rates than you can from your bank so the cheapest way to spend money abroad you're going to have to do a little bit of research on that I have a preference which I think we'll probably get into as to how to spend money I always use a currency card yeah I use Monzo because it's an international bank and they don't charge you anything there you go so whenever I'm away I don't use my nationwide account I only use my Monzo yeah they're a challenger bank so one of the newer sort of app only banks and also to be honest nationwide is my built account so I only ever spend on Monzo anyway but the point is I make sure I checked before and Monzo you can basically use it like your own bank account in other countries yeah there's reasons why I like a currency card I like it, I mean it's true also of Monzo but I like the fact that you can turn it off in app really quick.

19:46What, someone nicks it?

19:47Pete:Yeah, yeah. But you can very often do that with a bank card these days, though. You never used to be able to.

19:55Pete:So I think when it comes to exchange rate, it's easy to be suckered. They'll always very often say it's commission-free because, again, back in the day, when you exchange currency, there'd be a commission built in for the shop or wherever that was doing the exchanging. So they would get like a fee, like a kickback. So now they say, oh, it's commission-free. because it's all sorted out in the exchange rate. So still somebody's making money on it. What Monzo does is if I spend three euros, 2.98 or whatever, it leaves my bank account. Whatever the equivalent is in pounds leaves my bank account. Yeah, but they set that rate.

20:33Pete:That's the point. Yes. There's not a global rate, right? No. I mean, there is a market rate, but the banks will apply a little skew in their favor. Yeah, sure. That kind of makes sense, right? Yeah, they've got business to run. And so if you really wanted to determine what the cheapest way was, you would be comparing exchange rates continually. Ain't nobody got time for that. That sounds like too much of a baff. And we're probably talking cents or pennies rather than big money. If you really want to determine what the cheapest way to do it is, you're going to be tracking exchange rates, and I would never even think to do that.

21:10So a currency card is a card that you load up?

21:12Pete:You preload currency onto it. So you put£100 in and it changes that into€94 and that's what you want to expect. Yeah, normally you say how much of the currency you want on there. So, you know, I put like 300 Canadian dollars, about 150 quid on before I went, I think, and didn't spend it all quite. And because I also take... Cash. I take a little bit of cash. For like tips and... Yeah, I was thinking like cab driver. Cab driver. you know i always like to have some um cash on me right at the start but not loads and usually smallish bills fives and tens yeah i kept a dollar did you yeah i've got 20 canadian dollars in my pocket right now um take a bit of cash with you i load the rest on a currency card because you can then use that currency card in an atm so you can get more cash out yeah anyway you know we're there so i just really like them i like the sort of discreteness of it and i i like the that's discreet as in keeping it separate as opposed to keeping it on the down low.

22:14Pete:What's it called? Words spelt two different ways but sound the same. Something a nim. I can't remember. Anyway, so I like the sort of self-contained. It's not on the phone. Yeah, I think so. I like the self-contained nature of a currency card. Don't worry, it's not that important to look up. It'll annoy me. Carry on. I like the self-contained nature of a currency card just because it's like, okay, this is how much I have determined I want to spend. But if you end up spending a bit more, you can just load it up anywhere with an internet connection because they link to your bank. Yeah. When you're buying something in a restaurant or store or whatever, quite often you get asked a question by the card machine.