It's easy for expenses to get out of hand during the summer vacation. Some people risk getting into debt, warns the Financial Supervisory Authority.
The biggest risk is taking small loans to finance consumption here and now with money you don't actually have, says consumer economist Moa Langemark.
A recent survey, conducted by Yougov on behalf of Nordnet, shows that every eighth Swede between 18 and 29 years old takes out a loan to finance their vacation. Another survey from Länsförsäkringar shows that every twelfth family with children finances their vacation with a blancolån.
We have a very hard time imagining the situation that will arise later in the fall, which makes us tempted to consume here and now, and put off payment until the future, says Moa Langemark at the Financial Supervisory Authority.
The most important thing is not to put yourself in a situation where you can't pay back the money. Instead, choose a vacation that fits your wallet.
"A great disservice"
Even though the economy is slowly brightening and interest rates are on their way down, it's essential to be cautious, she emphasizes.
It's extremely difficult to know what will happen in the future. To then put yourself in a situation where you can't pay back is to do yourself a great disservice.
At the same time, Moa Langemark believes that it's necessary to be sensitive to, for example, the more pressured situation of families with children today compared to earlier.
You shouldn't make your children worried, but you can have a conversation about personal finance and get the children to understand the value of money, and explain that you can't afford that foreign vacation, she says.
Create a vacation budget
Her top tip for avoiding an economic hangover in the fall is to create a vacation budget and to avoid expensive small loans.
A simple way is to look at what expenses you had on your previous vacation, and calculate from that. To plan and create conditions so that it doesn't lead to a difficult debt situation in the fall.
Take no expensive small loans. A blancolån of 15,000 kronor, for example, can end up costing over 40 percent more.
Create a budget for the vacation. Calculate based on how large the expenses were last time.
Avoid unnecessary travel and add-on insurances. Often, cancellation insurance is included in the credit card and, as a rule, there is some travel insurance in the home insurance.
Check card and exchange fees. When paying by card abroad, it may be cheaper to choose to pay in the local currency rather than in Swedish kronor. It's often also cheaper to withdraw cash on the spot than to exchange.
A more general and long-term tip for building up a vacation fund is to have savings in an account with deposit insurance and as high an interest rate as possible.
For funds, it's a good idea to review the fund fees so that not too much of the return disappears that way.
Source: Moa Langemark, Financial Supervisory Authority
