More than a third of UK adults have admitted they are unable to convert different currencies into sterling when they go abroad and are overspending by a staggering £288 million a year on holiday as a result, a recent Post Office survey has revealed.

According to the report, 44% of holidaymakers don’t actually work out how much they are spending in sterling when they are abroad and 27% of people go over their budget on holiday.

One in five people prefer to go on holiday to places where they understand the currency, while 1.5 million holidaymakers actually avoid travelling to countries with unfamiliar currency, because they believe that working out how much everything costs will be difficult and stressful.

Whilst Turkey is becoming an increasingly popular holiday destination among British tourists, the Turkish lira was named as the most confusing currency, with 49% of people admitting they could not work out how to convert it into sterling. A further 35% did not convert US dollars accurately, and 26% struggled with the euro.

Sarah Munro, head of Post Office Travel Services, emphasised the importance of converting currencies accurately when going on holiday.

“At a time where budgets are being stretched, it’s more important than ever to keep a reign on holiday spending,” she said.

“To make the most of your pound make sure you do your research before you go. Check out the exchange rate and do some research to find out how much things basic staples like drinks and suncream will cost when you get there.

“Make sure you buy commission-free currency in advance and avoid purchasing it at airports where you won’t get the best rates and can be charged through the nose in commission.”

In order to help confused holidaymakers work out how much they are likely to spend abroad, Countdown’s maths whizz Rachel Riley has come up with some useful formulae in order to work out how much things cost using the most popular currencies.

“Working out how much things cost on holiday doesn’t have to be time consuming or confusing. To help avoid overspending, make a note of the exchange rate when you buy your currency and use my easy to remember formulae for working out some of the most popular currencies,” she said.

“It’s not always practical to carry a calculator around but most mobile phones have calculator functions, so make the most of this, particularly if buying expensive items, and work out how much you are spending before you purchase,” she added.

To work out the equivalent cost in pounds of something priced in euros, Riley says “The current euro exchange rate is around 1.09 so the easiest way to work this out in pounds is to take away one tenth of the price in euros”. With an exchange rate of 1.56, doubling the number of US dollars and taking off a third from that figure will give you the equivalent price in sterling.

Almost half of UK holidaymakers are unable to convert Turkish lira into pounds, but Riley has a simple formula for that too. “For the Turkish Lira it is around 2.4 which is approximately multiplying by 4 (or doubling twice) and then dividing by 10,” she said.

Riley’s top tips for sticking to a budget on holiday include making a note of the exchange rate before you go; using the calculator on your mobile phone to work out how much you’re spending in sterling, or carrying round a portable currency converter; and carrying around a prepaid travel card such as the Post Office Travel Money Card. This enables you to load the card with currency when the exchange rate is good. Because there is a finite amount on the card, it will help you stick to your budget rather than overspending.

As well as making sure you are aware of how much you are spending when on holiday, it is also essential you protect your possessions on holiday by taking out travel insurance. Tourists are an easy target for pickpockets and thieves. However, if you are covered by travel insurance you will usually be able to claim money back on whatever was lost or stolen, minus the excess stated on your policy document.

This entry was posted on Monday, June 29th, 2009 at 2:08 pm and is filed under Budgeting, Home Insurance, Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.