How much: set your expectations
How much money do you need to travel the world? This question doesn’t lead you to the correct answer because it’s by far too broad. Individual expectations vary widely so you have to make sure you set your expectations right first.
Are you willing to sleep in rooms with strangers? Do you need an individual bathroom? Are you willing to walk to the beach or do you want to wake up to the sound of the waves coming in? Will you be able to travel slower but way cheaper using public transportation or do you need the comfort und privacy of a dedicated car? Let alone drive it yourself? So you see there are a lot of variables which could change your demand for cash during your travels. I found it very relieving not to think about this in the beginning too much but decide it on a day to day or week to week basis depending on my individual needs and opportunities present.
There is no one size fits all, but I found some decisions will affect your spending more than others. Your mode of accommodation, transportation and activities like diving, hiking or going out for drinks occasionally will dramatically change your budget. .
Of course there are places which are way cheaper than others and sometimes you just need to induce yourself in a cozy and freshly washed white linen on a comfortable hotel bed. Also it’s always good to have a little money on the side. I’ll call this your “Fuck you” budget. Whenever you have the feeling your environment is imposing hardships that you would like to get rid of you take some cash out of this pocket throw it towards the problem and shout a hearty “Fuck you” and continue to new shores.
Of course your mileage may vary. If you have a costly hobby and are not able to bring your own equipment rental costs may expand the need for cash dramatically. If you go out drinking a lot in countries like Canada, the United States or some parts of Scandinavia you might see your wallet suffer under the price of liquor. Spending money in fancy restaurants can also bring your budget down faster than you’d like.
In general there are always choices to make. You don’t have to worry about the budget up front too much. Decisions will be made locally and based on your situation at this moment. Just make sure you have the money available, and then some more. You will probably need it.
When: fill up your budget
It’s easy. Let’s say you want to travel for a year and you budget 1.000 EUR per month of your travels. That makes 1.000 EUR x 12 months = 12.000 EUR that you should have spare. Now you need to find out how much money you can save per month and divide the 12.000 by that amount. That is the time-span when your first flight into the world will leave. That easy. Wait! Only you need to save that money. And you can’t really save something, can’t you? As soon as the last day of the month arrives you recognize there is not much left to save?
There is a solution for this: pay yourself first.
The problem with saving for a big event like a world trip is that at first it might feel totally overwhelming. You can’t imagine saving an amount of 12.000 EUR, can you? This is totally understandable and you shouldn’t worry about it right now. Rome wasn’t build in a day. Let the principle of constants help you. When you look at the Grand Canyon it was not formed over night, but it took ages of constant water flow to form this spectacular structure.
As soon as you receive your income for a month you take away some cash and pretend it has never been on your account in the first place. This amount of money is gone. It never existed for anything else then paying yourself. With the rest of the money you can do whatever you did before. Let’s say you have 1.000 EUR a month without the idea of self payment. It’s very likely you will spend the whole amount. Why? Just because you can. Now imagine you would only have 800 EUR available. Would you buy a pair of new shoes this month? Unlikely. That is all you need to do.
You sacrifice a little of your short term consume to save for the long term. On the other hand you will not need the 5th pair of shoes when you start travelling anyway. They will waste your space and make you feel less agile then you could be. You might think 200 EUR a month are nothing compared to the 12.000 which are your final goal. You’re right. 200 EUR feels like you will never arrive there. But then there is time. And with every month in the future your budget will grow. It will just take 60 months to fill your budget for your trip. If you’re celebrating your 20th birthday today, you’ll be heading on a world trip for one year as soon as you turn 25. Sounds nice?
Of course you can change the time-span needed when you apply more discipline. New computer game with monthly fees? An expansive car that costs you insurance, gas and maintenance? A new hobby with costly investments up front? A large apartment that needs new furniture? All these distract you from reaching your goal. Let’s say you’d be able to save double a month. Congratulations! You will board MS World trip before turning 23. Sounds nice, no?
Get a raise and never think about that money again
Then there is also one more thing that I’d advise you to do tomorrow. Prepare yourself to walk into the office of your boss and ask for a raise on top of your regular salary. Don’t be a fool and think it will be easy. Prepare yourself and think about reasons you have earned this money. You took responsibilities you have not had before? You are working on an innovative project for your company? You have been learning a skill that you apply to your job? Now is your time to ask for the extra cash you’d be thinking about all the time.
If you’re well prepared and have your strategy played well it’s likely your boss will agree with you. Great! But wait. The extra money coming in now isn’t meant to be translated into a new pair of shoes each month. You guessed it. It will be added to the Paycheck you give to yourself in the beginning of each month. The money will never appear on your monthly transaction ledger. Instead it will disappear as soon as you receive it, short-cutting your saving time for your trip. Say you receive a raise of 5%. Now you could save 450 EUR a month and lift off in 2,2 years from now. This sounds very reasonable, no? Imagine getting a 10% raise. Now the date of departure gets disturbingly close. Aren’t they?
Where to keep your money
Now that you have your self payment system up and running it’s best to forget about it for a while. When you check back in a few months you will likely be excited by the results you see. So the best is to keep your personal paycheck somewhere apart from the rest of your monthly transactions. I’d advise you to open a new account and dedicate it purely to this purpose. You should think of it as a place you can only reach for a specific purpose. And that purpose is to get the cash on the day before you close the door behind you for a year to see the world.
During the trip: prevent lifestyle inflation
So in a short while you’ll be able to afford the trip of your life. But as soon as you start you might feel tempted to spend the money to fast. Especially if you get used to a certain kind of lifestyle during your travel your cash burn rate might increase faster than you can down drinks to forget about the fact. So my advice here is keep it easy. Don’t expect a certain style of living as granted during your trip. Instead observe the environment and always try to orientate yourself a little lower than you would like to. That way you always have the chance to throw some “Fuck y**” money at someone to improve your situation dramatically.
A 12 bed dorm can be a fun experience if you know how to handle it well. Don’t expect the infinity pool in every location but buy yourself some comfort from time to time. When you manage to keep a steady low profile your budget will be more than sufficient and available when you get the opportunity to experience unique things every now and then.
At some point you might have the feeling you are burning your cash too fast. This is the time to look into alternate ways of living abroad as well. There is always couchsurfing or the opportunity to volunteer around you providing you with accommodation and more than often food. You could wwoof on a farm for a while or just buy a used tent, gas stove and live the adventure you were longing for in the first place. Heck some people even travel around the world with 10USD budget a day at all.