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Advice on taking money overseas:

Whether you are scooting off for a weekend city break or sailing into the sunset to begin a gap year, you will need to have a firm grip on your overseas finances. Here's how to make the most your travel cash.

It is sometimes hard to know whether to take currency, credit cards or travellers cheques abroad. If you are away for more than a couple of nights or are planning any big purchases then you will probably find it useful to take a combination of all three. Travel guides should provide an idea of how much you will need to live on each day. If you are not paying for accommodation in advance then this is another considerable expense. Aim to come up with a minimum daily spend and then add as much as you can afford on top to cover fun and emergencies.

Local currency

Even if you don't like to carry much cash, it's a good idea to have a small amount of local currency for taxis, drinks and emergencies when you first arrive at your destination.

Local currency can often be drawn from cash machines abroad using your debit card or credit card, but if you use your credit card this will probably be counted as a cash withdrawal and attract a charge accordingly. There may also be a handling charge made.

Currency exchange rates are continually fluctuating according to wholesale market movements so there is never one 'official' rate of exchange for any particular currency. Different organisations will offer different rates for handling travellers cheques and currency. Make sure you check on the total cost of the transaction though - you may find that an attractive exchange rate is offset by higher commission charges.

You can make savings by shopping around for your foreign currency in advance and it is a good idea to leave time for this in case the bank needs to order the currency in. Airports, train terminals and ferries tend to offer the least competitive rates, so it is best to order your money before you go.

The bank or building society where you have your current account may offer currency commission-free to its customers and the Post Office issues currency commission-free over the counter.

Aim to buy only the amount of currency you are likely to need. If you have some left over you may have to pay a second charge to change it back to sterling. Try to have only paper money left over, as many banks and bureaux de change will either not accept coin or will offer a very poor exchange rate for it. The money will be converted at the exchange rate applicable to that day and could be worse (or better) than the rate when you bought it. Some travel money companies offer commission-free exchanges of leftover cash if you bought the currency from them and keep your receipt. You may also find that your travel insurance only covers you for a limited amount. This is typically between £250 and £500.

Travellers cheques

If you intend to buy expensive items, or are staying for more than just a couple of days, travellers cheques are a safe way of taking money with you. You can order them from banks, some building societies and some travel agents but shop around for the best rate of commission. The best thing about them is the security they offer. If they are lost or stolen, you can claim from the issuer. You should always keep a note of the serial numbers and the contact number for the issuer separate from the cheques so that they can be quickly and easily reported and replaced.

Depending on your destination, you may want to take travellers cheques in sterling or US dollars. Be aware that some remote areas may not accept travellers cheques on only take US dollars so it pays to do your homework. Your travel agent or guide books should be able to help with this decision.

Travellers cheques can be cashed at banks, hotels, most shops and bureaux de change. But shop around as the rates offered may vary and charges may apply. You may be asked to present your passport as proof of identity when you cash them.

Because they don't have an expiry date, travellers cheques can be kept between trips. But if you prefer to cash them you can pay sterling cheques straight into your bank account or change cheques where you bought them.

Personal finance data providers Moneyfacts (www.moneyfacts.co.uk) have a very useful website which allows you to check out up-to-the-minute commissions and charges on sterling and non-sterling travellers' cheques and foreign currency from all the major travel money providers.

Credit cards

Credit cards may be the easiest way to pay overseas but it can also be the most expensive. According to comparison website USwitch, we're wasting a staggering £560m in unnecessary credit card fees on holiday. This includes charges for withdrawing cash at ATMs, higher interest rates for cash withdrawals and interest being charged as soon as you withdraw your money from the machine. Purchases on your card will also be subject to currency exchange rates and possibly additional charges so check with your issuer before you travel so you know what to expect.

It is certainly worth travelling with a credit card though - they are particularly useful in emergencies and can be essential for advance booking of flights, accommodation and hire cars. Fraud is common overseas so make sure you do not let your card out of your sight when you are using it to pay bills. Make a note of the emergency numbers for your cards so that they can be stopped if lost or stolen.

Long term foreign finances

If you are travelling for several months or a whole year, it is more important than ever to manage your finances efficiently. Online banking will enable you to check your balance, transfer funds and pay your credit card bill from just about anywhere in the world. You should notify your bank that you are going abroad so they do not get suspicious about ongoing overseas withdrawals and account access. You may want to talk to them in advance about any debit cards which are due to expire while you are away and the best way for them to contact you in your absence.

If you own a property and need to cover mortgage repayments, you could rent out your home. A reputable estate agent offering a fully managed letting service is usually the best place to start. You will also need to tell your mortgage lender and make sure the deal you are on will run for the duration of your absence. If you would prefer not to rent your property then look for a mortgage that allows you to take repayment holidays.

Most travel insurers offer policies which last a year or more but shop around for the best deal and make sure you are covered for any extreme sports, dangerous activities or remote locations.

Your mobile phone operator may offer worldwide 'roaming' deals but these can be expensive. Global phone cards are a cheaper option and can be used in most touch-tone public phone booths. Remember to freeze or cancel your mobile contract if you don't plan to use it or you will still be charged line rental fees.

Finally, make sure there is someone at home who can act as a point of contact for you and perhaps even your bank or mortgage lender. It is helpful to have someone opening your mail if only to avoid any nasty surprises - such as a forgotten parking fine - when you return home.

Keep your cash safe

While you are travelling it is vital that you look after your money. Travellers and tourists are easy targets for pickpockets and thieves. Use a money belt to keep large sums of cash and travellers cheques in. Wear this under your clothes whenever possible. In hostels it is advisable to sleep with your money belt on rather than leave cash in your rucksack. Don't carry more cash than you need. You can use debit cards to make cashpoint withdrawals and payments in many developed countries overseas.