Mind the gap and make it a year to remember

RISING unemployment means it's harder than ever for Scottish graduates and school leavers to walk straight into a job when they finish their education. Instead, many will be planning to take a gap year and hope the economic situation has improved by the time they return home.

However, it's not just young people leaving school and university that are taking time out to travel. These days you are just as likely to see a newly redundant thirty or fortysomething taking time out from their careers.

But whatever your age, it's important to manage your money while you're abroad. From flights to spending money and travel insurance, financial planning is essential for successful and stress-free travelling.

Peter Harrison, travel money expert at moneysupermarket.com, says: "A gap year is a great opportunity to experience different ways of life and see other parts of the world. But such a big adventure requires careful financial planning, especially as graduates and students may not have had much money education in the past."

Saving

Rather than fund your trip on loans and credit cards, it's a good idea to save up some money before you go. If you opt for a savings account with online access you can transfer funds to your current account while you're travelling.

Andrew Hagger of price comparison site moneynet.co.uk says this week he has seen the launch of two internet savings accounts with impressive rates.

Leeds Building Society has unveiled a new easy access online account paying 3.05 per cent gross. However 1 per cent of this rate is a bonus and is only part of the deal for the first year. Meanwhile Egg has launched an instant access internet account paying 2.80 per cent gross. However on this occasion the 12-month bonus element accounts for 1.55 per cent of the overall rate.

Savings accounts which pay a bonus are common in the savings market at the moment. Although the rates sound good, they can fall dramatically when the bonus period expires.

Hagger says: "Savers need to make a note in their diary to check the rate on offer in 12 months as they'll almost certainly need to switch again if they want to maintain a decent rate of return on their cash."

Where to go

Many gappers will embark on a round-the-world trip. There are a range of plane tickets available that will enable you to do this and how much they cost depends on the route you take, how many stops you have and when you go. Typically the cheapest tickets cost around £600 to £700 and follow a well-trodden backpacker route usually through South-East Asia to Australia and New Zealand and back through the US. According to roundtheworldflights.com the cheapest fares leave after Easter but before the summer holidays.

When planning your route it's important to look at how much it costs to live in the countries you plan to visit – some will be much more expensive than others.

Website thetravellerslounge.co.uk has estimated minimum daily costs for travelling on a budget, including food, hostels and day trips and tours. It says you can get by on between £15 and £25 a day in Australia and New Zealand, £25 to £35 a day in North America and as little as £5 to £15 each day in India and South-East Asia.

Some planning can help you save money on your travels. If you're backpacking around Europe, get a Eurorail or InterRail train pass as this will be cheaper than individual train tickets.

In other countries booking on to a tour or hop-on/hop-off backpacker bus will keep costs down while allowing you to see some amazing places and meet other travellers. Check out ozexperience.com if you're going to Australia, bazbus.com for South Africa or magicbus.co.nz for New Zealand.

If you'd prefer to work while you travel, both gapyear.com and gapyearforgrownups.co.uk offers advice on different types of jobs, both paid and unpaid, in various destinations.

Travel insurance

Wherever you go on your gap year, it's vital to have travel insurance. If you're going travelling for more than a month you'll need to buy a backpacker or extended trip policy as standard travel insurance policies normally have a limit of 31 days per trip.

Adrenaline junkies will also need to make sure they're covered for any adventurous activities they might take part in during their trip. Some backpacker policies cover some of these as standard while others will charge extra.

Preferential's Worldtrekker (preferential.co.uk/worldtrekker) policy covers up to 48 adventure activities at no extra cost, including scuba diving, snorkelling, para-scending and windsurfing.

Steve Nickerson, managing director of Preferential Direct, says, "Wherever you are planning to explore in the world on your gap year, travel insurance is vital. We estimate that around 45 per cent of gap year travellers may embark on their trip of a lifetime without remembering to purchase vital travel insurance before they go, and that if they do remember, they might not be insured for any hazardous activities they pursue during their trip."

As well as adventurous activities, a good travel insurance policy should provide cover for cancellation or curtailment, medical and repatriation expenses, loss or damage to personal possessions, loss or theft of money, legal expenses and personal liability.

Travellers should also ensure their cover limit takes account of expensive single items such as a camera or an iPod. In general, insurers will not cover belongings if they are not adequately secured. Gap year travellers should also be aware most policies have clauses relating to the consumption of alcohol.

Money

Travellers also need to research the best debit, credit and prepaid cards to take before they set off on their trip. Different credit and debit cards charge different fees for foreign use. Generally Nationwide's FlexAccount is the cheapest debit card while Abbey's Zero card is the best credit card.

Prepaid cards are another option for gap year travellers and there is now a decent selection of cards to choose from. Experts say the FairFX.com prepaid card is a good choice travelling around Europe while the Caxton FX Global prepaid card is best if you want to buy US dollars.

Keeping in touch

Using your UK SIM card in your mobile phone while on holiday can result in a big bill once you return home due to high roaming charges (when calls are routed over foreign networks). If gappers plan to spend a lot of time in Europe, they should speak to their existing network provider as they may offer an international discount tariff which is likely to work out cheaper.

If you're travelling further afield, a global SIM card offers cheaper calls in various destinations and in some countries it will be free to receive calls. For more information on foreign SIM cards visit sim4travel.com or gosim.com.


Student goes out on a limb

GILLIAN Smith, 21, studied in the Netherlands for six months as part of her degree in art, philosophy and contemporary practices at Dundee University. She also went travelling around Europe for a month afterwards.

She says: "The trip to the Netherlands was part of the Erasmus programme so I got £800 funding for it. Then I used my savings and some money from my parents for my travels around Europe. I booked the trip on my credit card so I used the travel insurance that comes with my credit card."

Gillian used a FairFX prepaid card while she was in the Netherlands and also for the spell around Europe afterwards.

Gillian says: "I did some research as I needed to find a cheap way to get money out while I was abroad.

"If I used my debit card it would work out quite expensive because I would be taking money out quite a lot over six months. The FairFX card also offered a good exchange rate so it seemed like the best thing to do."