If you’re anything like me, the endless possibilities surrounding overseas travel are exciting after a few very restrictive years. We’ve all spent hours scrolling travel sites, social media and maps, discussing “itchy feet” and dreaming up our next trip. New travel options are popping up on the regular, adding to the many exotic destinations on our wishlist. Of course, these dreams are hampered by today’s crazy cost of living, thanks to inflation and ever-increasing mortgage rates driving disposable income down.

Post-Covid, travel is more expensive for a number of reasons. The price of airfares has really taken off, with Stats NZ reporting an approximate doubling in the index which measures international flight costs since early 2020. Add to this the increasing costs of travel insurance — Canstar estimates an average jump in premiums of 50 per cent between 2019 and 2022. And global inflation certainly plays a part, with many countries having peaked at even higher rates — around 10 per cent — than here at home. This means once you get to your destination, you may see even higher cost increases than in Aotearoa.

There’s also the question of what the heck is going on with the New Zealand dollar, AKA the ‘Kiwi’. The Kiwi dropped to a new seven-year low against the British pound in August, dipping just under 60 cents to the greenback (US Dollar) at the same time. While a weak Kiwi dollar is great for exporters (farmers, rejoice!) and our local tourism industry, these record-breaking times don’t help when it comes to our spending power overseas.The Kiwi dollar is not stretching nearly as far as it once was, and economists are forecasting the pain to worsen in the short term.

Converting your money into overseas currency to spend at your destination never comes free. For most financial products, providers charge fees for their services — and it’s no different for foreign-currency exchange. As with the KiwiSaver and investment funds industry in New Zealand, these fees can vary significantly depending on the provider, so it’s important to understand the costs involved and choose wisely. Knowing the right tricks can save you a small fortune, just as choosing a lower-cost provider for your investments and savings can make a significant difference to your balances in the long run.

There are a myriad of choices when it comes to converting your New Zealand dollars. Foreign-currency cash provides the most traditional and simple option, though it’s not necessarily efficient or cheap. Firstly, you’ll need to budget exactly how much you’ll spend during your trip if you’re planning to convert money before departure. There’s also the stress of keeping a significant amount of cash safe when you are travelling. Add to this the sometimes-hard-to-understand fees, commission and exchange rates charged by banks and other forex providers and you may be spending a lot more than you think.

Credit and debit cards are another common option, but beware transaction fees of up to around 2.5 per cent for each purchase. ATM fees for withdrawing cash overseas can incur an extra fixed fee (of course, it’s never a good idea to withdraw from a credit card at home or abroad). There’s also the risk of over-spending on either your credit or debit card — resulting in excess charges for going over your credit limit or into overdraft.

Travel-money cards work like a debit card but are already loaded up with foreign currency or currencies and are usually issued by alternative providers to the banks. The fees charged, like other financial products, vary wildly — from 0.5 per cent up to 3 per cent or more — and while a couple of per cent can sound minor, this really can add up over time. Moneyhub NZ provides a useful guide to travel cards on its website, with one provider, Wise (formerly TransferWise) coming out on top in exchange rates, fees and convenience.

My top five tips to make your dollars go further while travelling:

1. Never purchase forex at an airport — they tend to leverage traveller convenience with particularly high fees and poor exchange rates.
2. Beware of sneaky marketing tactics such as “0 per cent commission” which can often be misleading and involve hidden costs baked into exchange rates instead.
3. If you prefer to use overseas ATMs, consider withdrawing larger amounts less often, given fixed withdrawal fees in addition to commission and exchange-rate costs.
4. Never accept the “dynamic currency conversion” option offered by a bank or retailer, which adds extra fees — always pay or withdraw funds in local currency.
5. If you’re worried about the New Zealand dollar becoming weaker before you travel, convert your currency in advance to lock in a rate you’re comfortable with.

As with most financial decisions, every traveller’s situation is different. It’s important to take into account your own personal circumstances, risk appetite and preferences when choosing how to manage your overseas spending. Beware of extra commissions, bad exchange rates and other marketing tricks while planning, so you don’t get burnt by fees. And of course, the same goes when saving or spending your dollars here at home!