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The first biggest obstacle when it comes to travel, especially long-term travel, is that nagging question of how to save money for a trip. Everyone has this idea that travel is expensive, that it is something reserved the rich and wealthy, that you need a lucky break and lottery winnings to do so…
Basically it all comes down to the fact that it might be possible for a lucky few, but it’s certainly “not possible for a normal person like me.”
Well, let me tell you, back before I became a rich and famous travel blogger, I was also a normal person like you.
(Haha, that’s totally a joke… I mean about the rich and famous part, not the normal person part.)
This meant that I had to put cash away each and every month to build up my travel fund, I had to scrimp and save, and make sacrifices that I didn’t always want to.
That is the part of this whole long-term travel lifestyle that isn’t glamorous, but it’s what gets the job done.
In this post we are going to be covering the gamut from how much it actually costs to travel the world, how you can save money for a trip to create life-long memories and make your friends jealous, and talk a bit about some more advanced tactics and strategies that might not be for everybody.
How Much Will it Cost?
Every adventure will have its own built in costs and will differ depending on where you plan on going and how you plan to go about doing it.
It can be extremely tough to know how much you need to save in advance for a major undertaking such as a multi-month trip.
When I first set out, I spent the better part of a year road on an incredible West Coast road trip, living out of my truck, as I camped and explored some of the most beautiful places in the country for about $1,200 per month–a major portion spent on gas.
A year later I was living in Medellin, Colombia, with a much higher standard of living and it was about the same cost per month–though I was able to effectively cut my costs in half by renting extra rooms on Airbnb, more or less living rent free.
More recently I spent a good chunk of time road tripping across Central America and on over to South America. During that time I was traveling with my girlfriend and we found our per person expenses were dramatically lower still.
I tracked three month’s of expenses and found that my price per month was about what I was paying for a studio apartment back when I was in college!
So yeah, in most cases, it’s actually cheaper to travel the world than to stay home.
But I didn’t know any of these things back when I was asking about how to save for a trip and whether I would go broke in three months and thought travel was just for rich people.
So given my four years of continuous travel, how much should you have in the bank before you set out to travel?
How Much Savings Do You Need?
Coincidentally, the Federal minimum wage amounts to $1,160 per month (at forty hours per week), which lines up quite well with my rolling average for travel expenses during that time.
I think this $1,200 per month figure is a good benchmark to aim for in your pursuit of a long-term adventure or mini-retirement–you can adjust the figure up or down depending on the nature of your trip, or we could round it up to $1,500 for a nice buffer as you learn the ins and outs of budget travel.
For a six month trip you would want to have between $7,200 and $9,000 in savings.
A year long trip would require from $14,400 to $18,000.
Those are some big, scary numbers, and it is a sizable amount of money, but it is doable by breaking it down a little more and by making both small and big adjustments to your current lifestyle (which is what we are building up to, you know, the whole idea of how to save for a trip).
Let’s take a closer look at the math of a six month trip, as that is a good chunk of time that most people would love to take and it is an achievable amount of money for most people.
In order to save $7,200 in a single year, you would need to put aside about $20 per day, or $600 per month.
Perhaps your time line is a bit longer, and you want to save that $7,200 amount over the course of 17 months before your departure. Easy, divide that total by 17 to get $424 per month, or $14 per day.
Adjust as necessary depending on your time until departure and your desired length of travel.
How to Save Money for a Trip
Let’s take a step by step look at how we can make this ambitious savings plan a reality:
This is the first and the most important step. Not knowing where your money goes (truthfully), is the easiest way to claim you “don’t have enough money to save for travel”.
You must diligently track your expenses for everything.
This sounds cumbersome, but the easiest way to do it is to put virtually all your expenses on plastic and then use a free service like Mint.com which aggregates all your expenses across every account to give you a clear financial picture of where your money is going.
I honestly credit Mint with helping me manage my finances and ultimately getting me traveling.
After a month or two you will find yourself asking incredulously whether you “really spend that much at the work cafeteria?”
Yes, yes you do, so start packing a lunch.
The fact is we often don’t know or underestimate how much these expenses really amount to. That’s fine if it’s something important, but if sacrificing a few relatively meaningless things adds up to our goal of travel, then it’s worth cutting back.
Open a Travel Account
The next most important step is to simply create a separate account where you will put this $600 per month.
Some banks allow the creation of a secondary savings account, but some people may need to open a new bank account (which is also harder to spend, ensuring you don’t tap into your travel fund).
I did this by opening a Capital One 360 savings account at the time. Set it up so the money automatically withdraws every month, leaving you with less money to live on and waste frivolously (more on that soon).
You could also take this time to open a Charles Schwab bank account, which is the best debit card for travelers.
Be Financially Responsible
This is not meant to judge, I too have succumbed to periods of financial irresponsibility where I blow my money on stupid things or rake up fees or interest payments.
Sometimes it’s a result of not knowing, other times it is a result of being careless.
It’s important to educate yourself about the ins and outs of personal finance, even on a basic level. That’s an important step, so that way when you are messing up and wasting money to fees and interest, you KNOW you are messing up and should course correct.
There are some great books out there that are cheap and packed with information. I devoured many of these when I was in my previous life as a desk jockey. Three great books that I’ve read and that I think should be read by everyone are:
Lifestyle inflation is one of the biggest culprits when it comes to increasing wages and incomes — many people make more (sometimes substantially more) over the years, but the never seem to save anything, they just increase their baseline expenses over time.
Everyone always thinks if only I made $x,000 more per month, I’d be set, but they end up spending it.
Remember how you used to live, happily I might add, after graduating from high school? You don’t honestly need all those trappings you’ve amassed since then.
Take stock of this, remember that the ensuing sacrifices aren’t really that bad, that you were once happy with less, and that it is ultimately for the greater good — which is firing your boss and taking the trip of your dreams.
Downsize and Minimize
My big adjustment recommendations would be to downsize and embrace minimalism by selling off items that you no longer need or want–and which would otherwise encumber your future adventure.
Honestly, if you are embracing travel then you don’t want to have a mountain of stuff waiting for you back home, nor do you want to be paying for exorbitant self-storage costs.
Start to reduce your belongings, use the money from selling toward your travel fund, and eventually bring everything down to a few boxes that you can store with friends or family for free.
If your time until departure is a year or more away, I would recommend that you downsize your current living situation by moving into a smaller and cheaper apartment, or to move in with new one or more roommates.
If you are in a popular tourist area, you might be able to rent out your other rooms on Airbnb rather than take on roommates and save even more money.
Likewise, some people list their entire home as a private rental on Airbnb (they command much higher prices for a private apartment than shared) and then they go stay with their girlfriend or sleep on friend’s couches if they get a guest for a few nights.
I put the same listing up for my property and could nearly pay the entire month’s rent in a long weekend.
Create a Budget
Now that you have a better idea of how much you are actually spending, with those cold hard facts of Mint staring you in the face, it’s time to create a budget.
This means identifying how much you earn versus how much you spend each month and limiting the spending in categories you can control (whether that’s going out to restaurants, shopping, groceries, etc) into amounts that leave enough to save your target monthly savings to travel.
Separate Needs and Wants
We all spend money on lots of different things in a given month. Most simply these can be divided up into Needs or Wants.
In the beginning you should review your monthly expenses — Mint will provide you a nice little summary of how much you are spending in each category — and then classify them into needs or wants.
Needs are things like a roof over head, bills to pay, and food (although not restaurant food).
Wants are all those little luxuries that add up like:
- Coffee shops
- Nights out at the bar, nice wine
- Restaurants or take-out
- Cable TV
- Subscriptions to magazines, newspapers, or those monthly boxes
- New clothes or general shopping
The list goes on and on… By now you should know how much you are spending on any given “Want” category — maybe some of them you will decide to keep around, but the majority can be slashed or eliminated all together if you are trying to save for a trip or long-term travel.
Reduce Needless Expenses
In terms of making small day-to-day adjustments, here are some real-life recommendations on areas you can reduce or eliminate in order to save big money:
Save $4 per day or $120 per month
Save $80 per month
Cell Phone Plan
Save $100 per month
Hear me out, before you dismiss this idea outright.
Did you know you can switch your current number to VoIP and get calls for free over the Internet?
WiFi is ubiquitous in the USA, from your home, work, restaurants, or bars. You are probably already connected to WiFi 90% of the day where you can get and make calls over the Internet and save a lot of money.
Bonus: This is exactly how I manage my cheap international phone plan, allowing me to make and receive unlimited phone calls to friends and family in the USA on the exact same number I’ve had since high school.
Eating Out Once a Day
Save $10 per day or $300 per month
Quit Drinking Calories
A soda a day will cost you $30 a month, a Friday night at the bar will cost you about that as well, or $120 per month.
Bonus: get healthier and drop a few pounds.
Change Your Commute
Start taking public transportation to and from work in order to save big money on gas. Even consider selling the car now and getting rid of the car payment, insurance payment, maintenance, and gas.
If you aren’t ready for that, how about commuting by bike?
The average one-way commute is 16 miles, which is a gallon and a half per day at 20 MPG, about $6 per week or $24 per month.
Times that by 5 days per week and you’re at $128 per month.
Bonus: get healthier in the process and skip the gym membership (which you should do anyway — here’s how I exercise while traveling), saving another $60 per month.
Those are just a few random, but all too common expenditures in the Average American’s day.
These are small sacrifices to make over the course of a year, but taken altogether could add up to $908 per month, and ultimately affording you the opportunity to go on your big 6+ month adventure.
Earning More Money
We’ve covered some big ways to save money for a trip, but the fact is that you can only reduce your living expenses and cut back so much before you reach a “floor” that you can’t pass.
While living frugally is super important when it comes to saving for travel — and an important practice phase for when you start traveling on a budget — sometimes the best (and fastest way) to get ahead is to earn more money in addition to reducing expenses.
This could mean asking for a raise at work, taking on a second job, or just learning how to earn extra money on the side.
Let’s say you start a side hustle or begin freelancing while you are still working the desk job in order to reach that $600 of savings per month figure.
You find some success and manage to earn $300 more per month — now you only need to cut your living expenses by $300 per month ($10 per day), a much more manageable figure
This is a significant achievement that can lessen the burden of scrimping and saving, but it’s even better to combine that scrimping and saving with increased earning.
Even a measly extra $300 will allow you to save up the necessary amount of $7,200 much fast, or allow you to save more money than expected and travel for longer.
- Save $900 per month means reaching the goal of $7,200 in 8 months instead of 12, OR
- Save $900 per month for the planned year amounts to $10,800 — an extra $3,600.
Perhaps most important with respect to earning money on the side is that, if done right, you can continue to earn money while you are traveling.
Remember how I mentioned that you should plan for $1,200 per month in expenses while traveling?
Well, if you save enough to travel for six months, and can continue to just $300 extra per month you bring your monthly out of pocket expenses to $900 — meaning your savings last much longer.
With your $7,200 budget you would be able to travel for 8 months instead of 6 months–that’s two WHOLE extra months.
Check out the Side Hustle Calculator for a better idea how this works, with interactive figures allowing you to change monthly expenses, total savings, and side hustle earnings to see how they all interact together.
If you are living or adventuring for even cheaper–say, living in SE Asia for $600 per month as is so popular (check out Nomad List for cost of living estimates around the world)–this effect is even more pronounced. You could effectively double the length of your trip at that point.
Learning the fundamentals of travel hacking you can also book what would otherwise be insanely expensive flights for penny’s on the dollar.
Steve Kamb of Nerd Fitness booked a Round The World (RTW) trip to four continents for only $418. I myself have used travel hacking to get free flights that would have cost me well over $1,000 overall, and have even used them to fly first class for just $100.
If you know the tricks of the trade, you can reduce your travel expenses drastically (which is how I manage to travel for around $1,200 per month or less).
You can even reduce your accommodation expenses to basically zero — just check out my guide to getting cheap accommodation (sometimes even FREE!) and read more about How to Travel the World on a Budget so you can stretch your dollars as much as possible.
In Tim Ferriss’ first book, the Four Hour Workweek, he talked a lot about how no one actually wants to be a millionaire and have one million dollars sitting around in a bank somewhere. They want to live a lifestyle that they think millionaires live, mostly related to time and freedom.
One exercise he introduced is “dreamlining” whereby you create your ideal lifestyle, whatever that may be, and deconstruct the costs.
Maybe it’s renting a nice big apartment in in Latin America, hiring a clean lady to take care of things, eating out at nice restaurants every day, taking private Spanish lessons, learning to play guitar, writing your book, etc.
Those are all things I’ve done, by the way.
Whatever it is that you want to do, figure out the costs — it probably isn’t as expensive as you think.
Once you have the monthly cost you work backward from their and know exactly how much you need to have on hand, and how much you would need to make to maintain it indefinitely.
In other parts of the world you may be surprised at how cheap it can be, and how far the dollar can take you.
Maybe your dream trip or lifestyle is somewhat expensive, maybe it isn’t. The first step to is knowing what you want, and what it will cost. At least now you’ve got a good idea of how to save for a how trip or long-term travel and how to make it actually happen (not just dream about it).
Read Next: Budget Travel Tips
Wish you could travel more? Click here to grab my free resources for affordable, long-term travel.
What do you think? What other ways can you save money every month? Sound off in the comments below.
Additional Resources and Reading
Do You Have a Trust Fund? – My thoughts on financing long term travel and whether you need to be rich.
Mint.com – That personal finance app that is a must have for anybody, not just travelers.
Nomad List – Cost of living estimates around the world.
Vagabonding – An excellent book that truly dispelled the idea that long-term travel was expensive.
The Four Hour Work Week – The book that really started this whole idea of becoming location independent for me.
40+ Side Hustle Jobs – My article on earning more while you are working and/or traveling.
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