Building A Budget and Saving Money
Money is definitely the most stressful part of planning any trip. Not stressful in the fact of needing a lot of money, but in the sense of figuring out how to budget the money you already have.
What does it mean to travel within your budget?
We've encountered a good deal of inquiries about how we're managing to travel for months on end, but we want to emphasize that we've simply done our best to work with the money that we already have. We plan according to what's in our bank accounts and not necessarily according to destinations we have to visit. We're not saying that it won't cost money to travel, but don’t let money be the deciding factor of whether you stay or go. Let it only be the factor of where you go.
We should rewind and specify what we mean by using and talking about a budget. It's both the funds that will sustain your expenses during the trip and the estimated amount you'll need to put away in the weeks (months or years) leading up to your departure. But both of these figures depend largely on your personal budget, the amount of money you're making and spending on a daily basis just living and what portion of that is disposable. That is to say, what is the bare minimum you need to survive and what can you allocate elsewhere.
We've found that budgeting becomes stressful when people are fixated on trips to places outside of their comfortable means. There's nothing wrong with planning and saving for a get away to Fiji, but if your vacation is going to leave you gutted and struggling when you return home, then is it worth it? Travel is always worth it, but pick the right kind of trip and destination that won't have you stressed when (if) you return home.
We've found that you can travel on almost any budget. We've met people traveling solely through hitch hiking, volunteering, and couch surfing who are paying simply to eat and enjoy. We've also met people staying entirely in hotels and flying from destination to destination rather than taking public transportation . There's no set standard on what a good trip or vacation should cost.
Figuring out your own personal budget.
When figuring out a budget or beginning to save for a trip you must first assess what type of trip or travel best suits your comfort level. Ask yourself some key questions. Would you rather stay in hotels? Are you wanting to see the beach or the jungle? What's most comfortable when you're traveling and how much time do you actually have? It's also good to clarify whether you have a specific location in mind or if you're simply looking for a place within your budget.
If you have a specific location in mind, then begin your research and start gathering some general costs like accommodation, food, travel etc. If you are looking to travel within your budget then you'll want to start with flight research. Work with sites like Skyscanner, which allows you to set the destination as everywhere, and the cheapest flights from your current location will show up. From there you can research and narrow down a destination.
Narrow down your location based on the type of travel you desire and the notes that you've made.
If you love being in hotels enjoying luxurious beaches, but you have a strict budget consider traveling Southeast Asia. Flights from the US to Thailand are becoming increasingly affordable and the southern beaches in Thailand are some of the most beautiful in the world. We spent our honeymoon in a decked out hotel, king size bed, room service two pools, five minutes from the beach in Phuket, for only $30/night. We even found hotels for as little as $10/night.
If you're looking for history, architecture, and a comfortable Western feel on a moderate budget, then consider Eastern Europe. There are continual flash deals between the States and Europe. Plus trains within Europe are fun and affordable. Cities like Prague and Budapest are stunning, brimming with historic beauty and easy to visit without dropping a whole lot of cash.
If you're craving adventure and luxury for very little money, then consider South America. Spirit airlines have, in recent years, increased the number of routes to South America all for their known affordable prices. Countries like Colombia, Brazil, and Peru have mountains and beaches as well as historic ruins and bustling city life. Accommodation and food are all very affordable and most the activities such as hiking or enjoying the beach can be done without a guide which cuts down on the cost.
Building a tangible and obtainable budget.
Based on location and your desired type of trip, let's dig into the research to create a realistic budget and an obtainable savings plan. When we start with the research we tend to include a good cushion on figures so that we're shooting for more than we need.
Start with accounting for transportation, the most expensive being airfare. Checking different sites, you'll want to include the highest possible price that you're particular route could end up costing.
Next, include any major transportation expenses that you foresee you'll encounter. Are you heading to Europe and planning to get the EuRail pass? If you’re unsure of what transportation you'll be taking than just include roughly $10/day for transportation. This should cover any local buses, taxis, or tuk-tuks you may end up taking around town. If you've already checked off setting up an itinerary, then it's worth it to research how you'll travel between the different sections of your trip and include the prices in your budget. For example, you're traveling in South America and you want to take buses through the countries or the whole continent, then take the time to do a brief search of what different bus journeys will cost and include them in your budget.
Then budget for accommodation. If you know initially that you’ll be staying mostly in hostels, then take the time to head over to hostelworld for some accurate prices. If you have specific locations set up, then search those specific cities in hostelworld and take an average of the costs to give yourself an idea of what to budget. If you're unsure of the specific cities, but you know the countries, then research how much accommodation in the capital will cost.
TRAVEL TIP: Hostels often charge a higher rate to stay on the weekends, some counting Friday as the weekend, so if you search for rates on a Saturday then you'll get a better cushion when budgeting for accommodation.
We usually account for $25/day for accommodation. Although in South America $15/day is a better estimate and in Southeast Asia, $10/day is living luxuriously. If you want to stay in hotels, account for $40 per day. If you're looking for free accommodation then you can look into Couchsurfing, Wolfing, House Sitting, or even camping.
Your food budget will probably account for a good chunk of the overall daily amount. We recommend $30 per day. With a standard 3 meals per day. That’s $10 per sitting which is plenty when you’re shopping at local bakeries and feasting on street food. We also consider beer to be part of our food fund which is why, personally, we round it out to $10/meal. Depending on where you're traveling, some helpful ways to save money on food is to look for hostels that include breakfast in the price, shop at local markets and not the branded convenience stores, and try to stray a bit from the tourist sites to eat. As for beer, which realistic we're always indulging in, consider buying at the shops rather than the bars. Also, find out what the local brand is because let's face it they all taste the same outside of craft beers so why not spend less for the same taste.
Next, we create an estimated idea of what activities will cost based on where we're traveling. If we're headed to Peru, then we better account funding for Machu Picchu. If we're headed to the islands then we'll want to snorkel. If you're unsure of the cost then adding $20/day to your budget gives you some room to take tours, visit sites, and join the wild pub crawls.
Lastly, we always include an emergency fund. It's just as it sounds, money that you'll need in a pinch. We usually allow anywhere between $100 and $300 for a trip. It's good practice to be over prepared in case of emergencies or unexpected expenses. While visiting Eastern Europe, we were fined in Prague for not buying an Underground ticket. Later, when we made it to Fussen, Germany, we got on the wrong bus and ended up having to pay $130 for a taxi back because the bus station was closed. We've also been robbed having just gone to the ATM in Peru, and we've had medical emergencies like root canals that we had to handle on the road. Life happens and these events are already stressful, but being financially prepared means one less thing to worry about.
The budget, again, is a rough estimate of the potential expenses of your trip. We ended up spending about $500 less than our budget when we traveled to eastern Europe while spending four weeks visiting six different countries.
Making a reasonable savings plan.
Saving requires some discipline in your daily routine, a little bit of time, and a practical plan to achieve your goals.
After you've constructed what your trip could cost, then you'll want to apply some realistic factors to achieving your savings goals. Start with subtracting any money you've already saved from your estimated budget. If you haven't saved any, don't panic. We had nothing saved when we started planning our RTW trip. You'll want to look at your own personal expenses to figure out what you can afford to put away every week or every month and still maintain your daily life. Consider what money you're consistently making and break it down from there.
To say we were overwhelmed by the amount of savings we needed for a RTW trip. would be an understatement, so we had to tackle the idea of savings in a manageable way. For us, that meant figuring out what we could put away a week and even further a day in order to not stress ourselves out. We saved for a year aiming to put away at least $100/week. We ended up saving more than that, but having our tangible weekly goal was a good way to check in and to keep us motivated to save.
Based on the work we were doing at the time, hospitality work, we were dealing mostly with cash while we were saving. We decided to stick with the good old habit of a piggy bank. Both of us rounded up some old gallon glass jugs and started our savings that way. Not only was this an amazing way for loose change and dollar bills to add up quickly, but we were constantly reminded that we were working towards something. We could see our trip growing.
We ended up collecting different jars for different things. We each had a jar designated for the trip as a whole and then a combined jar that we would have as fun money. If we got a bonus at work or we made significantly more than our estimated weekly goal than we combined it in our fun budget.
We know that not everyone deals with cash in their daily life. Some of you planning your trip have careers and direct deposit, so for you, we recommend a theoretical piggy bank. Set up a separate account (hopefully it's free) and label it something inspiring (maybe it's Cocktails in the Cayman Islands). You can set up deposits or move money directly into that account. It might be worth considering automatic withdrawals from your main account into your trip account. You can also set up features for accounts that only allow you to put money in and not take money out until a designated time. This can be a better way to save money because you're able to watch the account grow, but unable to take money out.
Bottom line is that the money isn't just magically appearing. We know that it takes a lot of work and self-discipline to save, but we've found that if you want something badly enough, you'll make it happen.
So make it happen.
Here are a few extra tips to help you save in your everyday life:
-Choose an item that you habitually buy (coffee, beer, tea) and every time you're about to give in and buy your coffee think about how much better it will taste when enjoying it on vacation.
-Choosing to dine in and spend less money. You can try new recipes and eat on the couch in your pajamas (winning).
-Cut out unnecessary expenses and subscriptions in your everyday life. We've sacrificed sites such as Netflix and other monthly entertainment sites because we're able to use our resources at the library to check out movies and rent the latest albums for free.
-We've heard of people that match the cost of whatever they spend on coffee or beer and put that away for future trips.
-If you're dealing with cash consider picking a bill ($5 or $10 work best) and every time you encounter that bill, it has to go directly into your trip fund. It's a fun game of chance and an extra way of keeping motivated while saving.
-If your daily spending (like ours) is a bit of out-of-site-out-of-mind because you're using a credit card, then consider switching to a debit card and setting a limit. Sit down and make a practical life budget and then put a cap on your debit card. This will keep you accountable for what you're actually spending.
-Pick a day or two a week in which you're allowed the freedom to indulge and the rest of the week stick to your strict spending limits. This allows for a light at the end of the tunnel, as you're not completely cutting out your social life to save money, and not punishing yourself for spending a bit of money when you should be saving.
-If you go out to eat or drink, leave the credit card at home. Bring some comfortable play money, maybe money for a cab, but enjoy life within your means. When we only have a little bit of cash to play with, we tend to make better decisions about how we spend it. We stretch it farther.
These are all ways that seem easier said than done, but they're manageable. We've also found some travelers that call upon the internet to help crowdsource their funding. There's a thin line between when it's acceptable to ask others to help fund your trip, but the option is out there. If you find that this is an appropriate way to save the money to travel, then there are some really cool sites out there like Fund My Travel, Go Fund Me, and Fund My Adventure that allow you to put up a campaign explaining your plans to travel.