It goes without saying that economic factors such as interest rates and inflation can affect your bank account savings and the cost of everyday essentials. However, have you ever stopped to think whether the value of your country’s currency is having a positive or negative impact on your own financial situation?You probably don’t have the time or inclination to follow the latest financial news or keep track of foreign exchange markets, but being currency savvy doesn’t always require an all-encompassing comprehension of global economics.
- Explore the idea of trading currency
In the past, only experienced and adept investors would convert one currency to another on the foreign exchange market. But thanks to the myriad of currency trading platforms and tools available online these days, anyone can take advantage of foreign exchange price movements. However, it is highly recommended to enlist the help of a qualified financial adviser or broker due to the sheer volume of currency traders and the amount of money being exchanged, which makes this market one of the world’s most volatile.
- Choose holiday destinations based on currency
Even if you have got a specific destination in mind for your upcoming holiday, you might want to check exchange rates first. By choosing a country with a weaker currency to your own, you could end up securing a cheaper deal and will have more money to spend as well. At this moment in time, countries that are more cost-effective to visit than last year include Brazil, Russia, Zambia, Norway, and Sweden.
- Use cash instead of credit
If you use your credit card regularly but don’t pay off the balance at the end of each month, you will spend more on purchases. The interest earned on your credit cards will then limit the amount you can save over time. Therefore, it makes sense to use cash instead of credit wherever possible. This also enables you to only buy what you can afford and help to avoid major financial problems later on in life.
- Think twice before transferring money abroad
Before the financial crisis of 2008, banks had a monopoly on moving money around the world. But since then their reputations have taken a battering and tech-based start-ups are offering a cheaper alternative for those wanting to transfer money abroad. For example, TransferWise charges just 0.5 per cent of the amount converted, compared to long-established giants such as Western Union and MoneyGram, which charge 5 to 8 per cent in fees. So, always think twice if you need to transfer money abroad.
- Pay in the local currency
Say you based your holiday destination decision on foreign exchange rates and are enjoying a bargain basement vacation. You might feel a little more frivolous when it comes to splashing the cash on your credit card, but don’t fall into the trap of paying for goods and services in your own currency.
Even though it is easier to understand, the exchange rate is usually far worse than the one you will get from your card provider. For this reason, always pay in the local currency.
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