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How To Budget For Travel: The Ultimate Guide

When I meet people and tell them I’m not going to work for the next 6 months, they often ask me how I can afford to live without working for so long. Guess what? It’s not as hard as it seems! Ever since I started traveling, my goal has been to work as little as possible and enjoy months-long vacations. I know this sounds lazy, but I honestly don’t believe life is about working 40 hours a week for 45 years. No, thanks. I’m almost 30 years old and I have never ever worked a full-time job for more than 6 months. And yet, unlike many travelers, I pay for all my travels. I don’t have mummy or daddy to back me up!

I don’t have kids and I don’t own anything of value, which is good when you want to live a life of travels. In this article, I explain simply what you need for travel, how to budget and how to prepare for your next trip. If you’d like to live a life of freedom and happiness, then keep reading because I’ve got a few tips for you!

Note: Affiliate links may be used in this post. I may receive a small commission at no extra cost to you if you make a purchase through my affiliate link. Read my full disclosure policy here.

What do I need before I leave?

Travel insurance

I never go anywhere without travel insurance. In some countries, hospitals and emergencies costs are crazy high and without insurance, you could end up with debt, no joke! And who wants to travel and come back with a debt? Nobody. There are many good travel insurances out there, and for every budget. I personally recommend World Nomads. They are affordable, easy to deal with and their coverage is pretty good.

Medication

Depending on where you go, there won’t be the same medications as the ones you know back home. I always take painkillers and paracetamol with me just in case. Of course, you will probably find alternatives in your destination country but it just feels better to have your own brand name medications.

Adapter

Don’t forget to buy a universal adapter! Otherwise, you won’t be able to charge your phone or camera. You can find them in electronics and multimedia stores. Don’t make the mistake of buying it at the airport, because it’s super expensive.

Passport

You only need to have a passport if you travel internationally. Many countries require that your passport be valid for at least six months after your arrival date before they’ll grant entry to their country. So don’t forget to look at your passport validity before you book your flights, or you could be denied boarding at the airport.

Credit card

Make sure to check with your bank that you have a credit card that works abroad. I got stuck with no money in Thailand because I forgot to tell my bank I was going there. Also check around for bank cards with no fees, as it will save you loads of money when traveling.

Cash

Take some cash with you to change it to the currency of your destination when you arrive. You’ll need money to take the bus, shuttle or taxi from the airport to your hotel so it’s best to have at least around $50 in local currency to start with.

Visa

Depending on where you go, you might need a visa. Don’t forget to check online, and buy it a few weeks before your travel date to be sure it’ll arrive on time. Some countries also deliver visas on arrival, but not all of them. You will be refused to board the plane if you try traveling abroad without a visa.

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How much is my trip going to cost me?

Well, the cost of a trip really depends on many things: what type of traveler are you (budget, middle range or luxury), where you’re going, what you want to do… The easiest way to figure out how much a trip is going to cost you is to know in what type of accommodation you will stay at, where you plan on eating, what type of activities you want to do, and what transports you’re going to take. 

I usually figure out how much a trip is going to cost me by using this tool called budgetyourtrip.com. It’s a fantastic website that lets you know what is the average daily cost of living in many countries. You can even choose what type of traveler you are (budget, middle range or luxury) to have a more accurate estimate. This tool really helps me a lot to plan my adventures around the world.

Are you planning a round the world trip? I’ve never done that but I know it has become very popular to travel the world on a gap year. I’ve met many people who’ve done it and they all had a budget between $30.000 and $50.000 for a full year of travel. Yeah I know that’s a lot of money! And in my opinion, you don’t need that much money to travel the world. But if you want the freedom of doing whatever you please, and a sense of security, then yeah I suggest you save at least $25.000.

To help you out in your budgeting mission, here is a short list of the average daily cost of travel in 4 regions of the world:

Western Europe: $60-$90

USA: $70-$90

South East Asia: $20-$50

South America: $30-$50

Whenever I stay long-term in a country, I use Expatistan and Numbeo to figure out how much living in my destination country is going to cost me. These tools are super useful honestly and very accurate in general. They make my life so much easier because I can compare the cities cost of living in the same country and choose my destination wisely. 

Now that we’ve figured out what we need before we leave, and how much our trip is going to cost it’s time to start saving.

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Learn how to budget

The first step to a life of travel is to learn how to budget. Budgeting is very easy once you know how to do it. Whenever I get a job, I start saving money after my first pay. I do this in 3 simple steps:

Know how much you earn: In most countries, I was paid weekly or bi-weekly. However, I prefer to establish my budget monthly. Knowing how much you make is super simple. You can simply look at your payslips what is your take-home pay. I was paid weekly in New Zealand so after I earned my first pay, I knew approximately how much I’d earn per month. This is a basic step, but it’s very important to know how much you make to plan your future trip.

Find out what are your expenses: To find out what your main expenses are, you need to figure out what are the things that you pay frequently (every week or month). Food and accommodation are my main expenses. Everything else is extra in my budget, but for example, if you smoke, cigarettes should be in your main expenses. Here is a list of my regular expenses and how I deal with them:

Accommodation: My rent is usually my biggest expense but I always rent a room that has all the charges included so I don’t have any surprises. This way I don’t pay for internet, water or electricity.

Food: I spend on average $40 per week on food. I try to eat healthily, and I go to the restaurant casually. I don’t drink, I don’t smoke and I don’t party which helps a lot in terms of saving quickly.

Transportation: I usually try to live as close as possible from my workplace so I can walk there. I have owned a car in New Zealand but exclusively used it to go grocery shopping or exploring on weekends so I wasn’t spending a lot of money on fuel. So far I’ve lived in 5 different countries, and have almost always managed to live close to my workplace. I had to take the public transports in London because it was simply easier than having a car in this big city.

Phone: I own a phone, but I’m far from addicted to it and rarely put credit on it. I try to use the wifi as much as I can.

Insurances: Travel insurances are also a big expense (probably $500 per year), but they are essential.

Clothes: I buy clothes once a year when it’s necessary. Other than that, I never buy anything material since I don’t want to carry loads of stuff when I travel. I’d rather spend my money on flight tickets and experiences.

Needless to say that the fewer expenses you have, the more you’ll save! that makes sense, right?

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Calculate how much you can save per month: When I work, I save on average $700 per month depending on where I work and on the cost of my accommodation. Some countries have better wages than others, so sometimes I can save a lot of money in just a few months. To save money fast for your next trip, you will definitely need to cut out on some stuff. I know this can be difficult! As I said, I don’t drink, smoke or party which makes me save a lot of money. However, I used to smoke and drink moderately, and still managed to save. But if you start counting how much you spend when you go out, I think you’ll be shocked!

I stopped going shopping when I found out I don’t need new clothes every month, the latest phone or computer. But I know it can be hard to do, especially when you live in a big city. I used to go shopping every weekend on Oxford Street, so I know the struggle. Once you’ve promised yourself that you’ll forget your weekly shopping spree to save money towards your next trip, you can calculate how much you can save per month. This is a very easy calculation: your wage after taxes – your expenses = the money you can save. The leftover money is your saving, so if it’s anything above $0, congrats!

READ: 7 Genius Ways To Save Money While Traveling

Prepare your trip

Determine your travel expenses: Planning your next trip is the best part but it can be difficult, especially when you’re on a budget. You don’t have to plan your trip in details 6 months before the departure date. You just need to know what your expenses will be during your trip to find out how much money you need to save. My travel expenses include travel insurance, visa, flights, accommodation, food, transportation, activities, and extras. Once you’ve looked up everything online using the tools I gave you earlier in this post and figured out how much you’ll need, you can easily calculate how long it should take you to save enough money.

Plan your next trip: It’s safer to have an extra budget just in case. I personally add an extra 1/4 of my total budget for emergencies. For example, if you plan to spend $2000 on your trip, you should save $2500. When we were in New Zealand, our windshield cracked and we had to change it before selling our car. This unfortunate event happened one week before the end of our trip, and it cost us the mighty sum of $300. Since I had planned an extra budget to be on the safe side, this event didn’t put us in a difficult situation. This is just an example, and your trip could go perfectly well. But there are sometimes things that don’t go as planned when you travel, so it’s better to be safe than sorry!

Stay focused on your goal: The most important I guess is to stay focused on your goal. Saving money is sometimes hard but if you want to turn your dream vacation into a reality, all you need is a little bit of discipline. Another tip: whenever I start saving,  buy my plane ticket as soon as I have enough money. That way I know when I will be traveling again which keeps me motivated to save up more money.

Now you know exactly how I save and plan my trips. I hope this post will help you save money for your next adventure. I know it can be difficult to realize, but it’s definitely possible. Let me know in the comments what you think!

Please note: all prices in this post are in United States Dollars.

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Are you traveling soon? Don’t forget your travel insurance!

Travel insurance is the only thing I don’t go anywhere without. Your travel insurance covers you against travel risks such as lost or stolen luggage, trip cancellation, and most importantly, unexpected medical costs abroad. I like WorldNomads because they are backed by reputable insurers, have 24h assistance providers, and are affordable. Get a quote and read the policy details to ensure that it’s right for you. For more information, read my travel insurance page.

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