Don’t Get Ripped Off With Foreign Currency

Travelling means dealing with unfamiliar currencies, and if you’re not careful you can spend a lot more than you expect because of the relative differences in value. Here’s some tips to ensure you don’t end up blowing your budget.

Picture by Paul Maguire

Getting foreign currency is a lot more straightforward than it used to be, especially in the age of credit cards and ATMs. If you run out of cash while overseas, it’s easy enough to hit the nearest ATM — though you’ll pay a pretty hefty service fee for doing so. The exchange rate on credit cards often beats anything you can get for actual cash, making them a good choice for higher-value purchases.

However you source your money, what hasn’t changed is the need to keep track of how you spend, a task that can often get neglected in the excitement of travel. Here’s some of the tips I’ve personally found useful during my global travels.

Constantly remind yourself: things are different

Once you’re immersed in a foreign country, it’s easy to forget to make a mental translation of the costs. Remind yourself than your £2 cup of coffee is costing $4.00 — not a rip-off, but not the bargain your Aussie-dollar-habituated brain might lazily assume otherwise.

It’s also worth remembering that straightforward price translation doesn’t always work — goods and services can cost hugely different amounts even when you factor in the conversion, and sometimes you have to grin and bear it. Eating out in South-East Asia sounds ridiculously cheap to Australians; making mobile phone calls in Africa appears to be a total rip-off; your cheap US meal is a rort once you tip the surly wait staff. Accept that there’ll be variations — but if something seems too expensive, then hold off on the spending if you can.

Use your phone for conversions

Making those mental calculations can be tricky, but given that you’re likely to be travelling with your mobile phone, it’s also unnecessary. While you can get hold of plenty of smart phone applications specifically for currency conversion, in practice a calculator is just about as helpful.

If you’re worried about your phone being stolen (a reasonable fear in some highly-trafficked cities), then head to the nearest $2 shop before you go and buy yourself a cheap calculator. No drama if it gets lost, and it will do the job just as well.

Simplify the maths with ratios

It’s easy to keep track of costs if where you’re visiting has close to a 1:1 conversion (hello Canada!), or if it’s a simple conversion (like the UK, where £1 roughly equates to $2AU as I write this). But what if you’re dealing with something less pleasant, like the Euro (1 Euro is worth about $1.75).

That doesn’t lend itself to easy mental calculations for most of us. Aside from using your phone or calculator, one good strategy (as suggested in this article) is to perform a series of simpler calculations. In this case, multiplying the Euro price by 7 and then dividing by 4 gets you the right result. The super-lazy approach is simply double the price — an overestimate, but one that will stop you going shopping-crazy.

Don’t waste too much time chasing exchange rates

If you’ve planned a long-term trip, then it’s easy to get caught up in the drama of exchange rates. Should I change some money now, or will there be a better deal closer to when I depart? As with hotel booking, it’s painfully easy to overthink this. Unless you’re a currency professional, it’s generally sensible to do your exchange at your local bank or the like in the week before you depart. (Avoid doing it at the airport, as the rates are rarely as good.)

Exchange first, set a budget and stick to it

If all that maths stresses you too much, take a simpler approach. Book and pay for all the main elements of your holiday (transit and accommodation) in advance. Work out how much you can afford to spend per day in Australian dollars, convert that, and you’ve got a daily budget.

How do you organise your currency needs before going on holiday, and then keep track of your spending when you hit the road? Share your ideas in the comments.

Lifehacker’s weekly Loaded column looks at better ways to manage (and stop worrying about) your money.