Spikes and Drops in the Euro

The Euro has been on quite the roller coaster lately. Working it's way up to $1.49 (in early May) and subsequently falling down to $1.42 a few days later due to news that Greece may leave the European Union. For now, it has stabilized around the $1.43 mark. For those travelers who have waited to purchase specific tour and transportation items/packages, this is good news. However, if you followed my advice and used the 5 year maximum conversion rate ($1.57 on July 7th, 2008) it is even better news.

If we continue to see the Euro hanging below the $1.50 mark, the use of the 5 year high in the planning stages of a trip will definitely pay off. Let's say you were leaving tomorrow and had a total travel budget of €3000 (meals, remaining lodging, tours, tips, etc...). If you used the 5 year high of $1.57, then you planned on those costs being about $4750. In reality they would now be closer to $4290, resulting in a savings of $460.  The recent drop in the conversion rate alone from $1.49 (May 4th, 2011) to $1.43 (May 7th, 2011), would save $180.

I take trip budgeting/planning very seriously, in so much as I have developed a fairly comprehensive spreadsheet in MS Excel, that accepts an overall amount I have available for a trip (i.e., $8000). The sheet can then be updated with the latest conversion rate value, which is used to calculate the actual costs of lodging (based on pre-entered amounts) and other "in country" costs (tips, meals, etc...) in their native currency.  The result is a dynamic amount for daily spending that can go up or down based on the fluctuation in currency and the amount spent on previous days within the budget. In a future post I will go into more detail regarding how you to can setup your own comprehensive travel budget plan to save yourself from financial headaches and worries, when you get back from your trip. Also, keep in mind the best way to exchange currency is through ATM machines in the country you will be visiting, which will provide the most economical way of obtaining local currency.