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Save Money By Knowing About Exchange Rates
It can be intimidating for the first time traveler abroad to think about exchange rates. How do you make sure you are not overspending? How do you make sure that you are getting the most for your money? You do not want to spend money naively and then return home to see a bank account depleted twice as much as you thought. The way to get around the financial stress of traveling is to master the exchange rates. This simple guide will inform you about handling your money wisely when traveling abroad. Most people have trouble doing math in their heads, so it is no surprise that many bad financial decisions are made quickly abroad. Memorize the exchange rates before you travel to a foreign country, and practice converting foreign prices into domestic money.
For instance, if you travel to London and the pound is worth more than the American dollar, then you need to be very attentive to overspending. You can rehearse some scenarios before you leave. If one pound is worth fifty American cents, then you would probably be ill-advised to by a two-pound bottle of water. That will cost you four American dollars. Right now it is more expensive for Americans to travel to the United Kingdom and Europe because of the exchange rates.
Keep this in mind when planning your next vacation. You may want to go somewhere where you can get more bang for your buck. However, there are actually two kinds of exchange rates. There is the nominal rate and the real rate. The nominal rate describes how much foreign currency you will get in exchange for your domestic currency. It is a very straightforward number and any bank or money exchanger can tell you the nominal rate. On the other hand, the real rate is what your currency can actually buy you in a foreign land. Who cares if your money is nominally worth “less” in a different country when it can buy you three times as many goods and services? These are all things to take into consideration when planning your holiday. Tourism is always more enticing to different nations at different times, precisely because of the exchange rate. Some people even go so far as to move and work abroad for a year in order to make more money than they could at home for the same amount of work.
There can be a great influx of tourists trying to save money to a nation when the nation’s currency takes a dive in value. Once the visitor pays for airfare, everything else will be cheap compared to the value his dollar is getting at home. This can work the opposite way though. You can get very little for your money if you travel to a place with a stronger currency than yours. You can return home much poorer than when you started out, with not much to show for it. And whatever you do, before you make a purchase online, always check to be sure if it is in dollars or another currency. If you spend what you thought was one hundred dollars and it turns out that you spend one hundred euros, you are going to be poorer than you though.
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