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Personal Finance

Should you borrow to fund a holiday?

Updated : April 24, 2019 07:39 AM IST

It's time to pack your bags, bring out that sun hat and board that flight to your dream destination!! Yes, the holiday season is here which means that most of us would be in the process of finalising our vacation fine print.

CNBC-TV18's special show 'Money Money Money' gets you travel-ready with the smart holiday checklist to ensure that you have fun without burdening your pocket or mind! To discuss this, Surabhi Upadhyay spoke with Karan Anand, Head-Relationships at Cox & Kings and Kartik Jhaveri, CFP and Director of Transcend Consulting.

Speaking on borrowing for holiday, Jhaveri said, "If you are spending Rs 100 to go on a holiday and if you are going to borrow that, then over the next year or maybe two years, you are actually going to end up spending about Rs 120 or maybe Rs 140. One doesn't know how much interest you are paying, what sort of holiday you are taking and how much you are borrowing. If you already had some investments - maybe you would have invested Rs 60 or Rs 80 and now you are getting Rs 100 in return for that. So, you are actually getting a greater discount on your holiday by having planned for it a little bit in advance. So, naturally, that is the option of choice. However, if you do not have anything, it is a beginning here that you start doing something for the next few holidays that you are going to take over the next years to come."

"You essentially start for planning every holiday or the multiple holidays that you have during the year right at the beginning of the year. For example, you would go on a holiday now in summer but the moment you come back you start planning for the next summer and that is the best thing. Sometimes the more experienced people who plan their life and money with us, we have observed that they have been saving for years together. Then it becomes like a little pool and that pool then keeps financing the holidays through and through all across life," he added.

"Fortunately in our business, we do get to travel. We get to vet all the products that we sell to our customers. At this time of the year, I would be going to Europe and that seems to be the flavour for most Indians on a long haul holiday. Europe has always captured the imagination of the Indian traveller and thanks to large tour operators packaging great value, it has also become accessible to not just the metros but also tier I, tier II cities," said Anand.
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