Congratulations! You’ve made the decision, announced it on Facebook, and marked your calendar — that long term trip of your dreams is going to happen.
It will be amazing. You’re never going to regret it. But before you go, let’s talk about how to travel the world and how to come home without going broke.
1. Know exactly how much you have to spend.
After you’ve saved up the amount of money you want to travel with, it’s time to calculate how far your money will go.
Here’s my advice: Take the full amount you have saved, excluding any untouchable savings such as money set aside for retirement or future expenses once coming home.
Deduct an estimated amount for your ticket to your first destination, your ticket to come home, any other major (ie, intercontinental) flights, travel insurance, car payments, student loan payments… you get the picture.
Take the remaining number. Divide it by the number of days you want to be gone. Boom! That’s your daily budget.
Number unrealistically small? Consider a shorter trip. Number bigger than expected? Congratulations, you just bought yourself a longer trip, or some really awesome, over-the-top excursions. Or you could just come home with more money – -but if you’re as travel addicted as I am, that’s unlikely to happen.
2. Choose your destinations based on your budget.
If you’re looking at a $50/day trip, your options are obviously going to be different than someone aiming to spend $30/day or $100/day.
My husband and I average about $50 per person/per day in most destinations — including parts of Europe. It can be done, but you’ll need to be choosier about where you go and what you do.
Thinking about trying scuba diving? Pass on the Great Barrier Reef and head to Thailand or Honduras. Hoping for classic European capitals? We found that our money went much further in Budapest than in Paris.
3. Get your finances in order.
Your arsenal of financial tools as a long term traveler will likely look something like this: one to two debit cards, two major credit cards (one to carry and one to hide in your bag as a backup), and roughly $200 USD for border fees and emergencies.
When choosing what debit and credit cards to bring, look for companies that are used to working with travelers.
We love our debit card through Charles Schwab, because they refund all ATM fees worldwide.
For credit cards, the goal is to avoid cards with foreign transaction fees — with so many cards on the market these days that cater to international travelers, there’s no reason to go another direction.
Before leaving, alert your financial companies about your travels — and don’t forget about your backups! It’s a bit of a hassle, but a few minutes on the phone could save you an enormous headache down the road if your card is blocked because the company believes it was stolen.
Another tip? Keep most of your money in a savings account not tied to your debit card, and move money over as needed. While expenses racked up on a stolen credit card can be resolved quickly, the funds attached to debit cards are much more vulnerable to theft and harder to recover.
4. Eliminate as many fixed expenses as possible.
One of the beauties of long term travel is the lack of monthly bills: no rent, no electric bill, no water bill.
Before leaving, eliminate as many monthly expenses as possible, including clearing small debts, canceling Hulu/Netflix, and suspending your cell phone service. This is beneficial both from a cost perspective, and also from a logistical one: fewer bills means fewer payments you can forget about when you’re busy kayaking in Croatia.
5. Track your budget daily once you hit the road.
A daily budget is always an estimate — there will be days that you spend triple and days that you barely make a dent.
In order to make sure that you’re not going to have to come home early, track every single expense. Some people scoff at this tactic, but I’ve never met a long term traveler that tracked everything who suddenly looked up and realized that they ran out of money without noticing.
At the end of each day, I tally up everything we spent, including lodging, food, transportation, excursions, and any miscellaneous purchases. It generally takes less than ten minutes, and provides peace of mind.
If you find that you’ve had several expensive days in a row, take the hint and scale it back — balance your splurges with an inexpensive day of hiking, relaxing on a beach, or simply wandering around the city that you are in. Taking in the sights doesn’t have to cost a dime.
6. Set hard limits for yourself.
When your travel funds are gone, they’re gone. As tempting as it can be to spend down every penny once you’re abroad (trust me, I get the struggle), don’t eat into the savings that you set aside to come home to for briefly extending your time on the road.
Of course, if you’re not ready to go back, there are other options — try earning money while traveling, or settling down in one inexpensive location to turn your last week abroad into your last month abroad.