The hardest part of making your travel dreams a reality is budgeting. While it would be nice to have unlimited funds to galavant around the globe taking drool worthy Instagram shots, the reality is a bit harsher. For most of us, budget backpacking is the best route. Even if your have the funds to splash out, use these tips to help you create an airtight trip budget and take the stress out of travel.
In the interest of transparency, I want to share with you how I was able to launch my career as a Travelling Gyspy. As a teenager, I received an inheritance from a relative and with some smart investing this money has helped me bridge the gap to make my travel dreams a reality. I was able to start travelling on my own at a young age and have been able to stretch the money I had to supplement travel for the last decade. To give you an idea of how things have changed, my first trip to Ghana and backpacking Europe took just over 1/5th of my savings. Since then I have travelled to 18 countries, and I have only just hit the halfway mark of the total amount I had received in the beginning. I have been able to achieve this through very strict budgeting, planning and hard work.
While I may be different (and very lucky) in that I had some financial help getting started, the tips and tricks I have developed over the years will help you make your travel dreams come true. The one comment I often get from people is the “Oh I wish I could travel like you do!”. It drives me CRAZY. I’m not special, or different in my ability to travel, it is the will power to buckle down and save that separates serial travellers from those who envy them. Its not a walk in the park, every longterm backpacker will tell you that they had to work incredibly hard to make their trip a reality. After 10 years of backpacking, I have developed some savings and budgeting habits that help me fund every trip I take.
But the most important step is the first. It is the decision to book your dream trip, and everything that follows will help you make it a reality.
The First Step is the Hardest.
Trip budgeting starts the moment you decide to plan a trip abroad. This is where it all begins. This is the first and undoubtedly the most important step you will take. You’ve decided that you want to book a vacation, backpacking adventure, or year abroad. The next step is how to make this a reality. How much money do you need? What sacrifices will you need to make? How long will it take for you to make this a reality? These are all things you will need to consider. And I will take you through step by step on how I create my savings plan and budget for my big trip abroad and how I stay on track to make sure I reach my goals.
I have created an Excel Spreadsheet* to get you started! Download it HERE, and follow the steps below to build your budget.
*customize the spreadsheet to reflect your spending habits. The cells contain formulas to help automate the process for you. If you have any questions feel free to send me an email at email@example.com and I am happy to help!
Tip #1: Create a Monthly Savings Plan.
The first step is to take a cold hard look at your finances. Start an excel spreadsheet and put in all your monthly expenses. Rent, food, phone, transport, credit card payments and spending money. It is so important to be honest about how much you spend, underestimating your monthly output can set back your savings. So be conservative. Next input your average monthly wage. From here you will be able to see what you can save if you don’t change your spending habits at all. Now here comes the hard part. The reality is you are probably going to need to cut back on something. If you are serious about making a big trip happen, cutting down on eating out, shopping and partying will go a LONG way to making your dream a reality.
Now that you have your financials down on paper and have made some strategies to save each month, you need to create another budget. YAY!… No? Am I the only one who gets excited about this? It’s ok I’ll make it easy for you…
Tip #2 Be Realistic About the Cost of Your Trip.
Now that you have your financials down on paper and have made some strategies to save each month, you need to create another budget. This one is for your trip! Start a new spread sheet in excel. Do a quick search online through a few reputable blogs (Nomadic Matt is my go to blog for budgeting/planning) to get an idea of what you should expect to spend per day in your destination. Also have a precursory look at any big activities you may want to partake in. Things like scuba diving, trekking, and tours will go above your daily budget and should be included in your estimate.
You will also want to enter a few additional pre-trip expenditures such as vaccinations, visas, flights, travel insurance, prescriptions and any gear you may need. Things on this list may change through the next few months but its always better to be a bit generous with your budget and find ways to save down the line. Better to have money left over than to be stuck overseas with nothing. Especially if this is your first big backpacking trip and you don’t really know what your spending habits will be.
How long till you reach your goal?
Now that you have a number for how much your trip is going to cost, compare it to your savings plan. Divide your total trip amount by the amount you will be saving each month. This will give you the number of months it will take you to save. Take into account there may be missed wages due to unexpected illness or time off. How long will it take for you to save the amount needed to fund your trip? Do you need to adjust your savings or your expenses? Is there an expense that you can cut back on? Or is it worth while to get a part-time job to help grow your savings faster?
Remember above all else to be realistic in your estimate! While on paper it may seem easy to smash goals in the shortest amount of time possible, life isn’t that easy so allow for a margin of error in your calculations and unexpected setbacks.
Review, review, review.
You are now a couple months out from departure. It is time to start thinking about getting into the planning stage of your trip. This is a great time to revisit the savings goals you set out a few months ago. Where are you in terms of your savings plans? Are things on track? Have you been able to get ahead of your goals? Do you need to readjust your goals to align with the reality of your savings?
While friends will tell you that I am an EXCELLENT saver, I do have a few major flaws in the savings department. While I can go weeks without spending beyond my means, giving up my social life for the prospect of travel. I also go through what I call my stress spending about a month out from my trip. A subconscious coping mechanism, it always wreaks havoc on my savings. I go through a period of about 10 days where I say f*ck it and spend money like crazy. Eating out, drinking, shopping. Months of depriving myself comes to a head and I go a little wild. I know this habit of mine, and it helps keep me sane, so I try to account for it.
I also make sure I review my budget DAILY during this time. Why? Because seeing my trip funds disappear before my eyes snaps me back on track. Which brings me to Tip #3
Tip #3 Like with Dieting, Forgive Yourself for Slip-ups.
Slip-ups are inevitable. Unless you have a huge income, giving up luxuries and lifestyle is a common side effect of serious saving. And it sucks. As a huge advocate of lifestyle over luxury, I accept that for a few months of the year I give up some of my freedom so I can spend the rest of the year living my dream. Its a small price to pay. But when you fall off track with your savings, maybe you have a blow out weekend, need to get away for a few days or just spend a bit more on life, don’t beat yourself up! Like a diet, saving for a big trip takes CONSISTENCY. And when you have a huge binge, you can choose to sit there and hate yourself, or you can pick yourself back up and get back on track.
When you have a slip-up, sit down and look, what you spent the money on and why? Were you have a bit of a stress melt down like me? Did you lose sight of your goals? Remember you are only human. Take a look at your budget and savings plan. How does your slip up impact your goals? What can you do in the next week to get them back on track?
Tip #4 Budget by Month and Destination
Now this tip is for those planning a long term trip. For Example, while planning for my trip to South America, I needed to figure out how much per month I will be taking out of my savings. The first step is to determine the average daily budget for each country. Some areas of the world like South East Asia and Central America are fairly consistent across countries for how much you need to spend. But with South America, daily budget varies greatly between developed countries like Brazil and Argentina and less developed countries like Bolivia.
Because of this I broke down my budget into the 10 countries I will be visiting and how much I can expect to spend on average each day. Then I looked at how many days I plan on spending in each country. I multiplied each daily budget out by how many days I was spending in each place. Also adding in any of the big budget activities like trekking to the Lost City in Colombia, Sailing the San Blaas Islands and Machu Picchu. Finally I added everything together and just like that I had my rough budget for my 10 month trip in South America!
By planning my budget this way, I am able to deposit only what I need each month into my account. This protects me if my account gets compromised, and it allows for the remainder of my savings to continue to earn maximum interest, helping to replenish some of the money that has been taken out.
Tip #5 Stick to you Budget!!
This may seem obvious, but I think it is so important. You have worked so hard over the months leading up to your trip, it would be a shame to throw that all away and blow your budget in the first few weeks. The easiest way I have found to keep myself on track is by limiting how much money I carry with me. Each morning I put my daily budget (minus that nights accommodation cost) in my change purse. Say it’s $20 for that day. I know EXACTLY how much I have spent and if I am on track. Of course, there will always be days where you spend more and days where you spend less, but if you manage your money responsibly you can make a little budget go a very long way!
Final thoughts on budgeting?
Budgeting is extremely unsexy but it is an incredibly important part of long-term budget travelling.
The art of budgeting and saving is so important in making your travel dreams a reality and hopefully these tips will help you! Plan and budget your trip right, and your travel dreams may become a reality all the sooner.
Have any tips of your own? Leave me a comment!
Need some help budgeting? Send me a message, I’d love to help your travel dreams become a reality.