In this post, Emanuele & Romana of The Siracusas give budgeting tips for those looking to do an extended trip.
Even though the idea of long-term travel has got some glamour attached to it, most people will never get beyond the normal yearly two week vacation. First, there is a misconception that you need to be a millionaire to travel for an extended period of time, and second, many people would never quit their jobs and dive into financial uncertainty. In this bad economy you wouldn’t blame them, would you?
We took our first extended trip in November 2010 and travelled around the world until July 2011. When we told our friends we were going to travel for 8-plus months some of them thought we’d won the lottery or something like that. However, the truth is we’d made a conscious decision to treat travel as a priority in our life, and subsequently we started saving money towards our goal of taking an extended trip.
It all sounds so simple, doesn’t it? Well, it wasn’t. For a start, it took some time before we were able to develop good saving habits, plus, for a reason or another, the right moment to leave never seemed to arrive, and finally the fear of the uncertainty we were going to face during and after the trip would kick in from time to time.
But eventually we made it! We bought a round the world ticket and boarded a flight to Delhi – So our life-changing adventure began and so far none of us got to regret our choice!
If you’re considering taking your first extended trip read on because we are going to share some budgeting advice we already shared with the readers of our travel blog. We hope you find our tips useful – maybe not all of the following points are applicable to everyone’s situation, however we hope you have sufficient material of interest to reflect on. Or else, if you are an experienced long-term traveller, why not share your advice with us in the comments below?
1. Understand how much you need and set a goal. There are three broad types of expenses you will incur:
a) pre-trip expenses (vaccines, travel gear, insurance, flights, first visas, etc.). Making a list of things you need to buy or pay for will make your life easier. Make the list, check the prices and sum them up.
b) travel expenses (daily spend, transportation, food, hotels, etc.). You’ll find travel budget related information very easily online. Lonely planet’s website is a good place to start. See what is the estimate daily spend for each destination you want to visit and add 10% or 20% on top of it, for unforeseen expenses and costs, just to be on the safe side.
c) post-trip expenses (it’s wise to keep some sort of financial buffer for your return – you don’t want to end up in a situation where you need to depend on others to “re-start” your life). Ask yourself this question: how much will you need at your return? Include this figure in the calculation of your total budget.
Once you have a figure then you can set your saving goal and think of saving strategies that can get you there.
2. Pay your credit card bills and any other loans – Think about it: the interest rate you pay for a loan or a credit card is always higher than the interest rate you get from savings (if you have a savings account) – therefore in a long run perspective it should make more sense to clear all your loans, including credit card balances, before even thinking of saving any money. In one word, if you have any spare amount at the end of the month, use it to pay debts first.
3. Create an excel sheet and write down every single expense of your day. The morning espresso, the petrol, the supermarket bill – everything. Keep doing it for a few months. This will help you ‘see’ your spending patterns. It may help you realize where you are spending unnecessary money and it will help you to understand where you can cut.
4. Open a savings account. Shop around with different banks to get the best interest rate and the best access conditions. If possible don’t use the same bank where you have your regular account and don’t get a debit card for this account. This will put you off, if you feel tempted to use your saving for the wrong purpose.
5. Self-control. Do you really need another pair of shoes? And is it so important to have those branded jeans that cost 4 times more than a normal pair? It’s easy to fall into temptations and buy something we may well do without. It’s easy to make excuses with ourselves but you have to keep your focus on your priorities. And if travel is your priority, that’s where your money need to go.
6. Make your hobby a source of extra-income: Do you have any skills that could get you some extra-money? Are you good at translating or writing texts, can you design websites or logos, can you take decent pictures? See if you can put your passion to work in your spare time. Also do not underestimate the fact that these skills could also get you some money when you’ll be travelling.
Finally, if you’re serious about saving for an extended trip take the first step now. The more you hesitate, the more excuses you’ll find with yourself, the more unlikely you are to take the trip of your lifetime!