One of our biggest worries when travelling long term was that we would run out of money on the road and have to make that call to our parents begging for money. But huzzah! We are not broke yet. Here are our top tips on how to manage your travel budget so you can retain your dignity and stay on the road for longer.
1. Set a budget before you leave home
Before you depart, it is helpful to calculate your daily travel budget. When calculating your total spending money, take into account any expenses from home you can’t avoid (e.g. car registration, insurance, storage fees) while you are gone. We also suggest having some money put away to cover expenses after you return home (for example rental bonds, moving fees and living expenses). That first pay cheque never comes quick enough!
Divide your total spending money by the number of days you intend to travel to work out your average daily budget. We know some people don’t have a confirmed return date, but if you are like us and taking a career break you will probably have a set timeframe.
Total savings ($50,000) – home expenses ($1,000) – return home kitty ($5,000) = Total spending money ($46,000)
Total spending money ($46,000) / number of travel days (365) = Average daily budget ($126)
Use your average daily budget as your benchmark while you keep track of your spending on the road (more info on this below). Some weeks you will be over budget and some weeks you’ll be under, depending on which country you are in and what activities you are doing, but this should be your budget goal.
2. Keep track of your travel spending
We recommend having a separate bank account for your travels. It makes it easier to keep track of your spending. It is also unlikely that your day-to-day account at home will be your best banking option while you are overseas, so it’s worth getting a new account. Shop around for the best deals – make sure you check the overseas ATM withdrawal fees and currency conversion fees.
Once every couple of weeks, we have a ‘Finance Day’ where we do a few calculations in our notebook to keep track of our spending. We do not track every single cent we spend every day (we have better things to do while on holiday). On Finance Day, we simply work out what we have spent so far on our trip, and calculate a daily average to compare to our budget goal. Simply check your travel bank account for your total withdrawals (minus any cash on hand), then divide by the number of days you have been travelling.
Total withdrawals ($20,000) – cash on hand ($400) = Total amount spent ($9,600)
Total amount spent ($19,600) / days on the road (180) = Average daily spend ($109)
Hopefully you are under budget! If not, you might need to have a few quiet days to reel in the spending, or head to a budget-friendly location for a while. Also bear in mind any money you have spent on things that are coming up – e.g. if you have spent $1000 for a flight that is in 2 weeks, taking this amount out of your calculations will give you a more accurate figure of what you have been spending per day.
3. Use public transport
It may not be the most comfortable option, and battling the language barrier can be a pain in the ass, but public transportation is by far the cheapest way to get around and it will really help your travel budget. It can make for some pretty good travel stories too!
4. Eat local
Buy your groceries at local markets and supermarkets to whip up a tasty meal in your hostel kitchen. If you eat out, find the place packed with locals. Not only will it usually be cheaper, it probably tastes delicious and the high turnover of food means you’re less likely to pick up a stomach bug.
5. Drink less
Boring, I know. But partying is a huge money suck. If you are pining for a beer, head to the local supermarket to buy a few cold ones and enjoy them in your hostel common room with other travellers. Make a night on the town a treat, rather than the norm.
6. Choose your activities wisely
We all have our bucket list items while travelling (think Galápagos Islands, the Trans-Siberian or hot air ballooning in Turkey), and it is worth splurging on these experiences. But not every tour or activity is worth the money, and trying to do everything will soon suck your travel budget dry. Pick and choose wisely so your money is spent on truly memorable experiences.
7. Travel slowly
Transport is usually one of our biggest expenses. The slower you travel, the less you will be paying for transport so take your time and really get to know the places you are visiting. Long travel days are also exhausting, so take it easy!
8. Look for cheap accommodation options
HostelWorld and Booking.com often have great deals, but they charge huge commissions so you can often get a cheaper deal if you contact the accommodation provider directly. If you need to reign in your travel budget, Couchsurfing and work exchange sites like HelpX or WorkAway are great options for free accommodation. You can also pack a tent to do some low cost camping.
Yay for transparency! This page contains some affiliate links. This means that if you book your accommodation through a link on this page, we get paid a small commission. Don’t worry – you don’t pay anything extra! And we promise that we only recommend places that we have truly enjoyed staying at.