My family and I just got back from an amazing week long trip to Europe and it didn’t cost us a fortune! But how? Surely, travelling to German Christmas markets (see picture above) in the height of the Christmas season would not be cheap – or so we thought.
A great strategy (that I share with many of my clients) for managing family finances is to have a primary credit card that both husband and wife use to charge most of their everyday expenses. This creates a centralized view of spending that makes it easier to identify when you are spending more than your budget allows and apply the brakes when needed.
This is not to say that you won’t have other credit cards. You will likely need a backup that you can use in case your main credit card gets stolen or is otherwise not usable. It’s smart to use this backup credit card for monthly subscriptions and other recurring fees that you don’t want to be disrupted if your main card stops working (which may happen more frequently if you are using it for everything else).
If you are using a main credit card for the majority of your everyday family spending, it is best to pay it off monthly or else you’ll start to accrue finance charges that will negate the benefits of this approach. You’ll also need to increase your emergency savings to cover a whole month of typical credit card spending, so that you can still pay your credit card balance from the previous month if you lose your job (or other disruption in income).
Using credit cards for everyday spending is not for everyone. If you have a tendency to overspend when using them, there are other techniques and approaches that may suit you better. Talk to your financial advisor to determine the right technique for you.
But if it works for you, consider the potential travel benefits! If you choose a credit card that has a travel rewards program (preferably with a low or no annual fee), you could build up benefits each year when using the card for the majority of your everyday expenses, which can add up quickly!
In our case, we were able to pay for four seats, round trip, from Washington D.C. to Munich, as well as a full week’s rental car with our travel rewards. This shaved over a thousand dollars off the cost of our trip, leaving us with expenses related to food, beverage (gluhwein!), lodging, and souvenirs. Lodging for most of the trip through AirBnB helped to trim that cost down even further – as well as a favorable exchange rate. In the end, we probably spent less than $2,000 for a week in Germany. And we had a great time doing it!
We also travelled to Austria to see the amazing Alps, pictured here:
If you’d like to talk more about this strategy and other strategies for affording the things you want in life, give us a call!
Danke (German for “Thanks”),