The biggest excuses people give as to why they don’t travel is that they just don’t have enough time…or cash. If you’ve decided that you want to go R-T-W, you’ve found the time to make it happen. Now it’s just managing the dough.
Before You Go:
This is the “money rolling in” stage. Although it may not feel like it’s rolling in, believe us, when you’ve been on the road for awhile, you’ll look back and think about how rich you were when you were working. The goal of the “money rolling in” stage is to stockpile as much moola as possible. This can start months, if not years, before you leave. Here are some tips for keeping the money in the bank and not in your hand.
- Open a savings account. Consider this account to be your “travel” money – it should be kept separate from your checking account, your nest egg (if you don’t want to spend that on travel) and any other accounts. Do not open another checking account because you will be more tempted to spend that money. Look for the best deal possible. Many banks offer great interest rates for the first year when opening a new account, and since you won’t be touching this money, you can earn a few hundred extra dollars just in interest alone by choosing the right bank.
- Make a deposit schedule. View your travel fund as something you have to “pay.” For example, every month when you sit down to pay your bills, “pay” 100 dollars – or as much as you can afford to set aside – into your travel account. We recommend dong this right after you receive a paycheck. By forcing yourself to part with your money right away, you won’t spend as much throughout the month.
- Sell your big items, or rent them. If you are going to be gone for an extended period of time, like a year, there is no reason to have your car sitting in the garage (or on the driveway) at your parent’s place. The value of the car will only depreciate while you are away. If you will absolutely require transportation upon your return, set the money aside in another account, so you can purchase a better car when you get back. As far as housing goes, if you have a mortgage, arrange for someone to rent your place. If you’re well enough off that you don’t have to do that, do it anyway. A little extra travelling cash will be worth it.
- Manage your debt. If you have student loans, car payments (not if you get rid of your car!) or a mortgage (not if you find someone to rent your house!), pay ahead on those items for when you will be gone. Start well before you want to leave, especially if you have high payments. It is not easy to make payments from a jungle in South America or the desert in Africa. Besides, your money will dwindle very quickly if you have to make massive payments every month. If you do have to pay them while on the road, simply build this into your budget and set up automatic payment so you don’t have to worry about it.
- Work extra. Do some babysitting, pick up another job that you can work once a week, mow a few lawns, etc. The more you work now, the more fun you can have later. Take that extra dough and put it in your travel account.
- Cut corners in your spending. Buy food that’s on sale, forget your morning latte from Starbucks, go out to Happy Hour instead of a nightclub. Pack your own lunch, buy in bulk, see if your favorite restaurants have early bird specials. Saving 5-10 bucks a day adds up quickly. In some parts of the world, that’s enough money for the whole day! Every dollar you save lets you travel a little bit longer.
- Be realistic in your budget planning.
- Make appropriate estimations based on where you are going. You will not be able to spend the same amount in Europe as you did in Southeast Asia. And always plan on the high side. It’s much, much better to overestimate your budget than underestimate it. Coming home with more than you planned or being able to splurge here and there is much better than having to break out the credit cards or come home early because you underestimated your budget.
- Be realistic in your expectations of yourself. Are you really going to eat bread and cheese every day? Probably not. Are you honestly going to turn down a night at the bar all the time? No. The answer to that question is no. Even those travelers who aren’t big drinkers tend to drink a little more often while on the road.
- Include an “extra” amount each week so you can splurge on a more expensive activity. Consider the fact you will meet people along the way that have different budgets. Be prepared to spend more to do things that they want to do, that you wouldn’t have done on your own. Do not let these “extras” catch you by surprise.
- Plan for your expenses while traveling. Figure out how you will pay your bills while you are traveling. Ask for online statements. Arrange for online banking and credit card payments, along with money transfers between accounts. Notify your bank and credit card company that you will traveling overseas for an extended period of time. Most bills can be set up on automatic bill pay so you don’t have to worry about hopping online while hiking the Himalayas.
- Figure out how you will have access to cash. ATM’s are the best way to access cash these days. The problem is that all banks charge for using other ATM’s, and the vast majority also charge for international withdrawals. Ask your bank how much you will be charged every time you use an ATM overseas. Arrange for a pin number on your credit card so you can get cash in a hurry, if necessary.
On the Road:
Now that you have the money saved, the goal is to make it last as long as possible while still having fun. We’ve compiled a list of things to can do to stick to- and stretch- your budget while still having the time of your life. While you will meet people who brag about how little they spend, they are usually the ones bowing out on every single activity and don’t seem to do much on a daily basis. Don’t be that person.
- Stick to your budget. It’s ok if you blow your budget for a day or two, but just because you went overboard, don’t throw the whole plan out the window. Readjust your weekly budget, and stick to it. There will be days where you go over, just like there will be days where you hardly spend anything. Remember that this is different than a vacation. You can’t keep up the same pace traveling long term than you do for a week. There will be plenty of days where you sit in the park all day, or decide to watch movies in your hostel, or catch up on your blog. If you’re horribly off in your estimates, reevaluate your expenses. Extra money isn’t suddenly going to appear when you run out two months before you’re supposed to go home.
- Keep track of your expenses. Whether you record every single penny you spend is up to each individual traveler. Some do it, some just keep an estimate. Each night, or at the very least each week, it’s a good idea record what you spent on both credit cards and in cash. If you notice you’re going over budget consistently, then you may want to start writing down everything to see where you’re overspending. Keep your credit card receipts so you can compare them with your statements to assure the correct conversion rate. Look at your online statements carefully to assure that you have not been charged for purchases you did not make.
- Pick up odd jobs. If you’re running a little low on dough, ask hostels if they offer beds in exchange for work. Look into WOOFing – farm work that generally does not require a visa. If you have a work visa and will be staying somewhere for awhile, move into an apartment or house. It will be cheaper than a hostel.
- Don’t be afraid to say no. Occasionally, the group of people that you have found yourself hanging out with will want to do something that is outside of your budget – an expensive dinner, a private hostel room, whatever. Don’t be afraid to tell them you can’t participate. There are plenty of other people to hang out with, and lots of things to see in a city. Spending time alone can be very enjoyable – you’ll have a better chance of meeting a local that way!
- Make friends! Chances are, if you make a great English friend in Laos, he’ll invite you to spend a night or two at his place when you land in London. Also, dorm accommodation is cheaper than private rooms, and rooms without a bathroom are more inexpensive than those with an ensuite. Don’t be afraid to get up close and personal with a few backpackers in order to save a few bucks.
- Stay outside of the city. Cities are expensive. Period. If good transportation is available, consider staying outside of a city, and venturing in for day trips. This will allow you more opportunity to eat at local restaurants, shop at local stores and immerse yourself in the “real” culture, all while saving yourself a few bucks. Check out Global Freeloaders and the Hospitality Club for free places to stay.
- Bring your student card or senior card. Many museums, government buildings and theatres will have discounted tickets for students and seniors. Inquire about a student card – or a youth card, if you are under 26 – before you go. Or start your trip in Bangkok and buy a fake student card on Khao San Road.
- Take a limited amount of money when you go out. Many backpackers fall into the trap of spending a lot of money on alcohol when they go out to the bars. Once they start drinking, they stop caring about a budget or how expensive another round of beers is. Limit the amount of damage you can do by only taking out, say, $20, or whatever you feel is reasonable. When you’ve spent that $20, you’re done, end of story. Make sure you include enough money for a cab.
- Remember what goes around comes around. Don’t fret about the extra $2 that you paid for a tip because someone didn’t throw in enough cash at dinner. If you do, you’ll end up stressed and irritated with your new travel friends and it will put a damper on your experiences. Chances are, the next night you’ll split a half bottle of wine with someone you just met and not have to pay anything.
When you get back:
There is an afterlife to traveling called reality. In order to ease your transition ‘back home,’ think about a few things before you go.
- Set aside enough money to get you through your first month. Give the money to someone you trust, or keep it in a separate savings account or investment. It can be awhile before you find a job – have enough cash to live day-to-day while you settle back in.
- Have somewhere to live. Most travelers are broke when they return to their home country. Ease the stress of settling back down by having someplace to crash for a few weeks – ask a good friend, a sibling or…your parents. Tell them you’ll send them a postcard from every country you visit in return for the couch.
- Start saving for your next trip! We’ve never met anyone who has gone on a long trip and said, “Ok, that’s enough.” As soon as you get back, start saving and dreaming about where you’ll go next time!