Travel advice: How will the weak loonie affect your holiday plans?

Are you considering traveling this holiday season? As the Canadian dollar continues to weaken against major global currencies, many travelers are feeling the financial strain. A weaker dollar means less purchasing power abroad, making trips to popular destinations more expensive than in previous years.

The Bank of Montreal’s Real Financial Progress Index recently reported that 79% of Canadians are planning to cut back their holiday budgets this year. With the loonie hitting a four-year low in early November, experts predict that the dollar will remain weak throughout the rest of the year.

For those planning to travel internationally during the holidays, the impact of exchange rates can be significant. With a depreciated dollar, exchanging money for U.S. dollars or euros will result in getting less value for each dollar spent, affecting expenses such as flights, hotels, meals, transportation, and entertainment.

Even domestic holiday expenses like groceries and gift shopping may feel more expensive than in previous years. This has led to a surge in thrifting and shopping from overseas retailers to save money during the holiday season.

To save on international travel during this time of a weaker Canadian dollar, here are some strategies to consider:

1. Book ahead of time: Avoid booking last-minute flights and hotels to save on costs as rates tend to increase closer to the travel date.

2. Use a travel rewards credit card: Take advantage of cashback rewards on travel expenses to offset the reduced purchasing power.

3. Opt for a local stay: Consider booking an Airbnb or VRBO accommodation instead of a hotel to save money and have access to a kitchen to cook meals.

4. Choose a more affordable destination: Consider visiting destinations like Mexico or the Dominican Republic instead of pricier locations like Hawaii to save on overall expenses.

It’s difficult to predict the future of the Canadian dollar, so it’s important to stick to solid budgeting principles and save and invest where possible. By being mindful of your expenses and implementing cost-saving strategies, you can still enjoy a holiday getaway without breaking the bank.

Written by Christopher Liew, a CFA Charterholder and former financial advisor, this article provides valuable insights into how the weakening Canadian dollar can impact travel plans and offers practical tips to help travelers navigate through these financial challenges.

For more personal finance tips and advice, visit Blueprint Financial. If you have any questions, tips, or stories about personal finance, please email us at dotcom@bellmedia.ca.