After having saved and budgeted my money to take off over a year of work, I wanted to offer some tips to any of you who may have wanted to do long-term travel but can’t seem to be able to save. Traveling is the best investment of your money, you learn and expand your mind, you experience things first hand, you meet incredible people and you will change your life forever. But if you really want to travel you have to work toward it with all of your energy, you can’t just wish yourself there. Below are some basics to get started saving and the single most helpful saving tactic that I think about before each purchase.
Before you can even think about leaving, you need to get your finances in order. That means no debt! If you are planning to travel long term, you won’t have a consistent income and you cannot afford to be paying monthly expenses. Pay over the minimum and get rid of any debt that is tacking on unreasonable interest rate payments to your monthly expenses and is eating away at your “savings.” That being said, if you have a savings account and a lot of credit card debt your savings is actually a “losings account.” You’re earning .25% in that savings account and paying much higher rates on your student loans or credit cards. Have your emergency savings but then put every penny into getting rid of that high rate debt. Of course, things get more difficult for long-term travel if you buy more expensive, payment-intensive things. Keep that in mind before buying a new car or (even worse) a home.
Debt free? Good. Now we can talk about saving.
Keep track of where your money is going. It is easy with electronic payments and websites or apps like Mint. They even categorize your spending and send out budget alerts. After you have a snapshot and realize your shocking spending habits, think about what you really need. Cut out unnecessary expenses and put the money straight into savings instead. Something that will really help with this is having your starting destination picked out. Figure out where you want to go and research that country like crazy and get used to its price levels. Start thinking in terms of how far a dollar will go in Guatemala and you’ll start realizing a $50 NIGHT out just cost you two full DAYS of traveling and exploring in this beautiful low-price-level country! This perspective makes it a lot easier to pass on expensive and ultimately unrewarding experiences or things.
For example, my Colombian Monthly Budget on my volunteer stipend of 1.5M Colombian Pesos (COP) or roughly $450:
- My roommate and I split a 3 bedroom apartment in a very nice area of Pasto for roughly $100 each, it would have only been $60 if we had invited a 3rd roommate. Additionally we pay about $50 each for all of our bills including internet – this puts us to about $150 a month for all of our basic expenses
- I paid a phone bill each month of about $12 for minutes, data and text, this was an expensive plan
- Transportation by taxi is only $1 to pretty much anywhere in our small city, but I mostly took public transportation for 40 cents each way and walked a lot. This obviously cuts out tons of expenses on owning a vehicle! To be fair, however, public transportation is much more accessible in Latin America, so a car really isn’t necessary. All in all I probably spent about $40 a month on transportation
- We did not cook often, but it was incredibly cheap to do so. We would make breakfast, of beans and eggs, for a week for both of us for about $6, then get free or $1 lunches at school each weekday and go out for $3 dinners most week nights. When we were feeling fancy we would go to some of the nicest restaurants in town for pricey $10-$12 dinners. A full steak dinner with sides and a beer is $12 in Pasto… Let’s say $150 a month went to food and eating out including splurges
- We also hired a maid once a week to clean our apartment for about $14 a month each
This brings us to a total of $366 for “necessities” but could probably be worked down to $300 by cooking more. Even with the steak dinners, however, that leaves $84 of free cash for weekend trips and beers in the park with the amigos. Some months I even bought nice clothing or hats!
Now, it is easy for me to be back in the U.S. and think about the money I am spending when I think about it in Pesos. A $15 beer? My would it be tasty, but no. It isn’t worth a future steak dinner to me. $50 for a fancy night out? Not a chance! That’s a future weekend trip to a beautiful finca with my friends. If you start thinking about what your dollars could buy in the country you’ve been wanting to visit, it’ll be a lot easier to save them.
We make a lot of money in America, but it is expensive to live here. Just remember your dollar will go a lot further in other countries and pile them away!
Now that you’re conscious of your spending, you are already practicing the budgeting skills you will need to stretch that savings on the road. I would always think, the more I spend today, the shorter my trip will be, and this really kept my budget inline. That all being said I am looking forward to making American dollars again and seeing all of my friends in Denver and Durango, this will undoubtedly require a few splurges, but you can rest assured that I will be back to my saving ways in no time – saving steak dinners like crazy…