One of the most common question in the world of long-term travel is just how much money should one save before setting off on their travels. Regardless of whether you’re making money on the road or relying on savings, it’s still important to estimate your travel costs. This way you can calculate how many months you can travel for and/or how much you need to earn per month to stay afloat. Then when you start travelling, there’s the question of how to track your expenses so that you can see whether you’re hitting your projections or going over. Sounds kind of technical right? Don’t worry! I’m gonna do my best to simplify it in this article. As a accounting school graduate and nomad for the last 2.5 years, I think you’re in safe hands ????
How to Estimate How Much You’ll Spend Travelling
Unfortunately, there’s no set number for how much you should save before travelling as it largely depends on the destinations you’re travelling to, where you come from, what you want to get up to while you’re there and finally, what you’re going back to.
Step 1: Where do you want to travel to?
Travel and living costs vary greatly across all the different countries in the world. If you come from a western country with a good currency, there’s a bunch of fun destinations that you could travel to where your money will last a lot longer. It depends on your taste really. If you want to visit the most beautiful locations in Europe than you’ll need to budget more than what you would if you just wanna hang out on the beach in Southeast Asia. To go through every country in the whole world in this one article would be near impossible so I suggest you do your own research to find out the estimated living costs in the destinations you plan to travel to. The best sources of information are the people that have already been to these destinations and can share their costs with you.
Step 2: Where Do You Come From?
After you determine where you want to go and how much money you expect to spend there, you need to calculate your cost of actually getting to these places and back. This includes flights, visa costs and travel insurance. The tricky thing with flights and insurance is to keep it flexible. You’ve probably heard the advice that you don’t want to plan too much as it’ll take the spontinatity out of your travels. Well, if you want to leave it a bit open, put in place a rough itinerary and then calculate an average cost of the flights in between destinations. For travel insurance, I use a policy where I can add in time and destinations while I’m already travelling and using the policy. Maybe you’d like to do that as well. Finally, visa costs are pretty constant. You just need to make sure you put them in your budget.
Step 3: What Do You Want to Get Up To While Travelling?
This is where budgets can truly vary. For instance, I lived in Thailand for 3 months spending under $1,000 USD each month. My friend travelled Thailand with his girlfriend for 2 weeks and spent about $6,500 USD as a couple. Same country, just different activities. So, you need to factor in how much you want to spend on activities. For me, I kept my costs pretty low as I working while travelling but you might get bored with only free activities in the places you travel to. A good option for you in this instance might be to do an organised tour. The tour will ideally take you to all the best locations and include awesome activities. The best part is that you’ll know your costs up-front, making it easier to budget.
Step 4: What Are You Going Back To?
An important final consideration that you might forget is what your life your life might look like when you return home. For example, when I asked a friend of mine the big question of how much to save before travelling, he replied with this: “Well all of us have different levels of risk and buffer. I always have felt I needed a lot in savings for 'just in case' moments. That's because i have no support system, no family to help me if i got stranded or broke.” It reminded me of how fortunate I am to have a family to move in with if I did have to come home without money but I realise that is not the case for some people. So, my final tip in this section would be to set aside an amount of money as a ‘coming home fund’ as the expenses won’t stop just because you have finished travelling.
How to Keep Track of Expenses While Travelling
So, you’ve prepared your estimate and now it’s time to find out if your spending is matching what you predicted. Why is it important to track expenses? Well, if takes you months before you figure out that you’re spending too much, it might be too late to rein back on your spending and you may have to cut your trip short. Nobody likes to run out of money ???? Personally, I love counting and tracking my expenses but some people hate it. While, I could tell you exactly how much I spent on coffee in the month of May, I don’t expect everyone to share the same meticulousness when it comes to tracking expenses. At the very least, you should track how much money is leaving your bank account at the end month so that you can calculate what negative cash-flow you’re working with. If it seems like a lot, you can start to dig deeper and find out what were the biggest expenses in that chunk of change leaving your piggy bank. If you wanna go the full nine yards and see exactly how much you’re spending on each individual category, I’d recommend downloading a simple expense-tracking app on your phone and putting in the expenses as soon as they occur. This is exactly what I do each time I buy something. As soon as the money leaves my hand, I pick up my phone and put it in. Then, at the end of the month, I tally it up and put the totals into a spreadsheet. It might seem a bit extreme but the value is in the data. Now, my estimates can be a lot more accurate given that I can see historical numbers. Again, choose how far you want to take this. I know that not everyone wants to spend time doing accounting when they’re out to have fun and that’s fine. Whatever gives you the peace of mind to know that you’re not overspending is usually good enough.
Each individual is different when it comes to spending but the principles can still apply in every situation. The big questions to ask yourself are... How much is it gonna take me to get started? (ie. first flights, insurance and other up-front costs) How much will I spend in each of my intended destinations? How much do I need when I come back? Finally, it always helps to over-budget a little bit as you never know what might happen on your travels. You might meet people on your travels that take you in a different direction. Maybe there’s a tour that you just found out about that’s not exactly in your budget? Travel is about embracing these opportunities, so allow yourself some money for those unexpected expenses and you won’t have to pass them up. Until next time, Chris