There’s a common travel saying “Take half the luggage and twice the money”. Unfortunately we’re not all blessed with trust funds and mummy’s fortune. Here’s how we did it on two moderate salaries. Hopefully this will help you learn how to save money for a world trip.
First thing to think about is how much you will need. I recommend looking for a Round the World Budget calculator which we used to figure out how much money we would need in different countries. Make a list of where you would like to go and plug it into the spreadsheet.
While doing a budget make sure you include items you may need to pay for back home when travelling, such as a mortgage, health cover and storage. Set aside a decent portion for important things like travel insurance and airfares. Always leave a contingency just in case, around 10% of the total.
For one year of travelling with two people on a budget, we saved approximately $40, 000 over 1.5 years. We are not big drinkers and plan to stay in budget accommodation or camp. Part of that money goes on big things like a camera, travel insurance and bills at home. We also have a contingency of being able to teach English when the money runs out.
If you’re someone who likes drinking, cities and going out to clubs, your budget is going to be higher than someone who enjoys camping in the great outdoors. Be realistic about your expectations before you go so that you don’t get on the road and find you’ve blown your budget in the first three months.
Also be realistic about how much you can save. Living off two-minute noodles for 6 months in order to save as much as you can is not fun! Allow yourself to enjoy life while you’re at home while limiting unnecessary expenses. We decided to save 1/3 of our monthly salaries which has been tough some months when large bills have come in, but worthwhile in the end.
How long do you have to save your money? The longer you have to save the more you can save (obviously). We had to push our trip back by three months in order to save just a little bit more to get to our target. But there comes a point where you need to go. Saving forever can seem like a drag. Set a leaving date and stick with it.
Set up a high interest savings fund
We set up a savings account with uBank, which has one of the highest interest rates on savings accounts. There are plenty of other high interest savings accounts out there. UBank also have a useful savings management tool to figure out how much money you can save by a certain date.
Once you have set up your account, make sure you put some money in it! Setting up an automatic savings plan can help as it takes the money out of your account on payday before you can spend it. We have a dual account so that we can’t take money out of it without the other person’s approval. If you’re the sort of person who can’t resist taking money out of your savings, think about getting a term deposit which can’t be touched for a certain amount of time.
You can also earn interest on the money while travelling. This may only be a small amount but any extra can keep you travelling just a little bit longer.
Cut down on unnecessary expenses
Can’t resist a new pair of shoes? How much do you really need them?
Here are some ideas to cut down your expenses:
- swap trips to the movies for home video nights (or tape the movies on TV!)
- buy clothes from opportunity shops
- eat leftovers for lunch or take a sandwich to work rather than eating out
- invite friends around for dinner rather than going out to a restaurant
- lower your alcohol intake – you’d be surprised how much you save
- visit your parents for free meals – they’ll love you for it!
Sometimes your salary is just not enough to reach your savings goal in time. I’ve had friends work seven days a week to make ends meet for the next trip. Personally I would find that too difficult; the emotional burnout of working so hard is a great risk.
To make some extra money I tracked down brand name clothes in op-shops and then sold them on eBay for a profit. I also did some freelance work on the side on weekends and after work. Sign up for marketing surveys/interviews which sometimes pay $80-$100 for giving your opinions on a product.
Allow yourself some treats
Saving is hard work. Make sure you occasionally let yourself have a guilt free pleasure; in my opinion food is the best reward! One of the ways I treated myself while saving is by eating out once a week. I’d make a sandwich four days out of five then go to the international food fair for a Okonomiyaki lunch. YUM!
Stick to your budget
This might be the hardest part! Keep those techniques you used in savings while you’re on the road. If you have a big night out, balance it out with a quiet chill out day. If you find you’re really overspending, it’s time to reassess your trip and expenses. Also don’t fall into the opposite trap, of being the person that annoys everyone by worrying about money all the time. Relax, stay balanced and have a great time.