Prepare your finances to get the most out of the trip of your life

With Sterling now at its highest level this year against the Euro, and picking up against the US Dollar too, students considering a gap year will now find that their spending money will go further, at least in some parts of the world.

And even better news is that taking some simple financial steps now can help them make their money stretch far enough for the trip of a lifetime to last that bit longer.

Peter Harrison, travel money expert at moneysupermarket.com, said: "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.

"Students generally have a fairly limited credit profile as they haven't had time to build up a robust credit history, so they might find it hard to get accepted for the best deals. They will probably get the best offers from their current account provider.

"Taking time to sort their travel money out now could make all the difference - no one wants to have to cut their trip short, or worse get stranded with no money, just because they didn't plan properly."

moneysupermarket.com's top tips for gap-year travellers:

Savings

Saving up for such a big trip can take a while, so it is important to stash cash in the best paying account - gappers should take time to seek out the best deal. Principality Building Society's eSAVER Issue 2 is currently the top easy access account paying 2.85 per cent AER.

Debit cards

Students travelling around Europe should try and get a Nationwide FlexAccount current account because it is the only provider that doesn't make foreign currency charges on purchases and cash transactions anywhere in the Visa Europe Region. When making repeated withdrawals in Europe, banking with Nationwide can save travellers a bundle. For example, a withdrawal with a NatWest Current Account Plus debit card will incur a two per cent ATM fee (min £2) plus a 2.75 per cent transaction fee, meaning 10 withdrawals of €50 each would cost an extra £31.75 in fees.

For those travelling out of Europe Region, the Nationwide FlexAccount is still top; however it charges 0.84 per cent per transaction. If using a rival such as NatWest Current Plus Account, a 2.75 per cent transactional fee and a two per cent ATM fee will cost an extra £25.82 in fees for 10 withdrawals of $50.

Travellers should check their provider is able to supply a replacement debit card within 24 hours in an emergency, and that it will be delivered worldwide. They should also ensure they have the emergency telephone number close to hand.

Credit cards

Gap-year travellers may find it difficult to get a credit card, so a good alternative is to see if their parents will add them as an additional user on their card. But whether it's the student's card or their parent's, they will need to make sure it doesn't have any nasty charges. Nationwide Gold (Visa Europe Region) and Abbey Zero are the best credit cards for making overseas purchases as they don't levy foreign exchange fees. Whereas Thomas Cook's credit card charges a 2.5 per cent transactional fee - costing an extra £10.68 on 10 purchases of €50.

Overdrafts

Students taking their gap year after finishing university will probably have a bank account with an overdraft facility. But for those going on their gap year after finishing school, it can be difficult to get an overdraft. Contacting their current account provider is probably their best hope.

Pre-paid cards

If travellers are stuck with an uncompetitive debit or credit card, the FairFX.com and Caxton FX prepaid cards are good options. They can be topped up easily by parents if they are persuaded to help, and because there is no credit facility gappers can't spend more money than is already loaded on the card. Gap year travellers should beware of less competitive pre-paid cards on the market that often charge an application fee, a monthly fee and usage fees.

Mobile phones

Mobile users have three main options during their gap year travels. If travellers are staying in one country for a while then buying a local SIM card is the best option, but if they are travelling to several countries around the world then a global SIM card could save hundreds over the length of their trip. 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.

Travel insurance

Travel insurance might be the last thing on a pre travelers mind but comprehensive cover for the entire duration of the trip is essential. With policies varying widely, ‘gappers' need to check if they are covered for things like different types of work or extreme sports. For example, 12-month worldwide gap-year cover with Essential Travel and multitrip.com includes activities such as bungee jumping, jet skiing and scuba diving.

"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 while you are away. Gap year travellers should also be aware most policies have clauses relating to the consumption of alcohol, so it pays to tread carefully."

moneysupermarket.com recommends at least the following level of cover:

Medical expenses: £2 million
Personal liability: £1 million
Cancellation: £3,000 (or at least the value of your holiday)
Baggage:£1,500.

Peter Harrison added: "Before leaving, gap-year travellers should inform their bank of where and when they will be travelling, to prevent their cards being blocked - providers monitor for irregular payment behaviour and a card being used in Bangkok when the they are usually based in Barnsley will flag their attention. ‘Gappers' should also photocopy details of their financial products and give them to a trusted family member. It will make life a little easier in an emergency."