Mastering the Art of Long-Term Travel: Your Guide to Financial Planning
Have you ever dreamt of wandering the globe, soaking in different cultures, and experiencing the world on your own terms? Perhaps you envision yourself hiking through breathtaking mountain ranges, savoring exotic street food, or simply relaxing on pristine beaches. But the allure of long-term travel can be daunting, especially when it comes to financial planning.
For years, the idea of long-term travel seemed more like a daydream than a reality. Despite my passion for exploration, the reality of being a restaurant worker with $31,000 in debt and an empty savings account felt discouraging. It seemed like a life of travel was just a distant possibility. But as I delved deeper into the world of financial planning, I realized that with a strategic approach, it could be a reality.
Through tireless research and a commitment to changing my financial habits, I managed to pay off my debt, accumulate savings, and finally embark on the journey of a lifetime. Let me share the lessons I learned along the way, lessons that can empower you to turn your travel dreams into tangible experiences.
The "Big Picture" of Financial Planning for Long-Term Travel
The first step in planning for long-term travel is defining your itinerary. Determine the destinations you wish to explore, taking into consideration factors like climate, cultural events, and visa requirements. Having a rough outline provides a structural foundation for your journey, allowing you to estimate the duration and potential costs associated with each leg of your adventure.
For example, if your itinerary encompasses diverse regions like Southeast Asia, Europe, and South America, create a timeline that aligns with favorable weather conditions, festivals, and local events. This approach ensures an enriching and well-timed experience.
Building Your Financial Foundation: Budgeting and Saving
Once you have a budget in place, focus on building the financial foundation for your journey. Evaluate your current financial situation and establish a dedicated travel fund. Consider setting up automated transfers to this fund, treating it as a non-negotiable expense.
To illustrate, if your goal is to save $20,000 for a six-month journey, break it down into manageable monthly savings targets. Create a separate savings account and automate transfers to ensure consistency in building your travel fund.
Research, Research, Research
Studying the basics of your target travel destinations will save you a mess of trouble in the future. Ask yourself:
- Will you need to apply for a visa to visit certain countries?
- Do you need a permit for your upcoming dream hike?
- What does a typical meal or hotel room cost where you want to travel?
The internet holds a wealth of answers, making it your responsibility to find them and start preparing.
Mapping Out the Finances
The most crucial question you need to answer is: "What is this all going to cost?"
For me, I tend to choose destinations where travel costs roughly $40 a day. Some people do it cheaper, and some spend more. It is vital to calculate a comfortable daily figure and give yourself a target number to work towards.
If you want to travel for six months at $50 a day, aim to save up a minimum of $9000 (180 days x $50). I highly recommend adding 20% to your final figure to give yourself some financial padding. In this scenario, a good target number for savings is $10,800.
Tying Up Loose Ends
Life is complicated, and travel rarely comes easy. Identify roadblocks that stand between you and your trip, and start finding solutions.
- Do you have a pet that will need to be taken care of while you're gone?
- Is your boss willing to give you the time off to travel?
- Do your loved ones have any issues with the trip you're planning?
- Do you need to rent/sublet your house out while you're gone?
Remember, almost any problem that presents itself will have a solution if you're creative enough. Start figuring out answers now, not a week before you leave.
Commit to Growing Your Travel Savings
Do whatever it takes to make your travel savings vision a reality. Don't cut corners along the way, and don't let doubt or failures dictate the path you're on. A good hard look at your "Big Picture" will give you an idea of what you need to accomplish to start traveling the world. Keep your finances organized throughout the process, stay the course, and good things will fall into place.
Reprioritizing Your Expenses: A "No Spend" Approach
After examining my monthly expenses, I had some soul-searching to do.
- Am I really spending over a hundred dollars a week dining out at restaurants and drinking at bars?
- Why did I sign a two-year contract for 200+ channels of satellite TV?
- Why did I buy a $13,000 car when I didn't have any money for a down payment?
Ask yourself the same types of questions and be honest with yourself. Once you have a clear picture of your spending, it's time to take control of your finances.
"No Spend Days" became my favorite way of controlling my spending. When I was starting to grow my savings account, I would implement at least one day a week where I wasn't allowed to spend any money. No coffee, no snacks, no restaurants, no Amazon purchases, no gas in my car, no beer, no groceries - nothing. Choosing not to spend reminded me that I was in complete control of my money.
After four or five days without spending a penny, you'll realize that you don't need to spend to live a fulfilling life. My girlfriend and I occasionally planned "No Spend Dates" where we would fill a backpack with food, a hammock, and a frisbee. We would wander around town carefree knowing that we didn't need to spend money to enjoy each other's company. It's healthy to let your money know who's boss!
Maximizing Your Savings: Buying Used and Eliminating Unnecessary Expenses
While "No Spend Days" are a great way to get started, they won't last forever. You'll eventually need to make a purchase or two. My advice? Start your search by looking for a used option first. With patience and due diligence, you can likely find what you're looking for at a fraction of its "brand new" price.
I saved about $1,000 on my fully loaded MacBook Pro by purchasing it used off of Craigslist. It works perfectly, and I've never had an issue with it. You might be surprised at how much money you can save!
To further maximize your savings, take a close look at your recurring expenses.
- Can you find a cheaper monthly plan for your mobile phone?
- When was the last time you shopped around for a better insurance rate?
- Do you really need your gym membership?
- Are you willing to get rid of your satellite, cable, or internet TV contract?
Start slashing these monthly expenses and don't be shy about it. Every bill you eliminate or reduce is a huge victory. This extra money you save can be added to your savings, which will grow faster than before.
The Debt Dilemma: Attacking Debt Relentlessly
Let's face it, owing money to a bank is a complete drag. At my financial worst, I was tens of thousands of dollars in debt and barely able to make my minimum payments. Traveling the world while owing so much money just didn't feel right.
So, I began paying off my debt immediately, as quickly as I could. Every penny I earned went straight to paying off the banks, and I erased $31,000 of debt in 15 months. It was hard at times but was one of the best things I've ever done for myself.
Be vigilant in your quest to eradicate your debt. Make the choice to stop shelling out your hard-earned money to banks every month. Pay off your debt with the highest interest rate first and the lowest interest rate last.
Working Your Way to Travel: Maximizing Income
Now that you're focused on lowering your expenses and paying off your debt, it's time to start making more money. My solution? To work as much as I possibly could without driving myself crazy. I asked my boss for more hours, worked the shifts people didn't want, and stayed late to make extra money. It was all part of my plan to travel the world.
There are plenty of ways to increase your income.
- Ask for a Raise: Your boss isn't going to approach you and offer you more money any time soon, so be the one to start the conversation. Put together a proposal explaining why you deserve a raise and put your boss on the spot.
- Get a Second (or Third) Job: Boss won't give you more hours? Didn't get the raise you wanted? No problem, just go out and find another way to make extra money. Lyft, Uber, DoorDash, and GrubHub are all great ways to earn money.
- Find Odd Jobs: Someone out there needs your help and wants to give you money. You can link up with them on community-based websites, like Craigslist or NextDoor. I've found well-paying gigs landscaping and house-sitting with little to no effort. These jobs usually pay cash and are low-stress.
- Make Extra Money Online: There are many websites out there where you can make a few extra dollars from the comfort of your couch. The payouts will never be huge, but a few bucks a day can add up fast.
- Sell Your Old Stuff: Post your unwanted belongings on Craigslist, eBay, or just have a good old-fashioned garage sale. Selling these old belongings will earn you some extra money and go a long way in helping declutter your life before you start traveling.
The Power of "No Spend" Days: Creating a Strict Budget
Budgeting isn't as painful and complicated as it sounds. Once you've dissected your finances and lowered your monthly costs, you'll need to give yourself boundaries to keep control of your spending.
I began to treat my monthly bills - rent, utilities, insurance, cell phone, etc. - as fixed monthly expenses and excluded them from my budget. I got these expenses as low as I could, put them on autopay, and ignored them. My budget focused on the day-to-day spending that I could control. Think gas for your car, groceries, restaurants, bars, concert tickets, sporting events, impulse buys, clothing, etc.
Give yourself a monthly limit and record your spending on a piece of paper at the end of each day. Writing down your expenses will force you to relive and rethink every purchase you make. My ambitious budget became a game for me, especially towards the end of the month. If I was spending more than I should, I rode my bike more often, ate more free meals at work, and reshaped the way I shopped at the grocery store. I changed my life to fit my budget.
Tracking and controlling your spending is a gratifying way to create healthy financial habits and put you in control of your destiny to travel.
Collecting Interest, Not Paying It: The Power of Smart Investing
Instead of giving banks your hard-earned money, be the one who collects interest. Your money should be working for you, not the other way around.
Once you have your debt under control, put a little money aside every month into a medium-risk investment account. It will grow steadily and earn your interest over the long run. I've been putting a small amount of money into a Vanguard Roth IRA retirement account, which earns an average of 7% interest every year. I don't plan on dipping into this money until I retire, but it serves as an emergency fund in case I run into any problems.
The Art of Travel Hacking: Earning and Saving Airline Miles
Paying for expensive flights isn't budget-friendly and can hinder future travel plans. Luckily, there's an easy way to earn airline miles that may allow you to fly for free. While I was saving and paying off debt, I was also busy accumulating hundreds of thousands of airline miles, which essentially allow me to fly for free. Thanks to these miles, I haven't paid for a flight in over a year!
The best way is through travel hacking credit cards and earning lucrative welcome bonuses. Banks offer bonuses of anywhere between 30,000-80,000 miles if you meet their minimum spending requirements of the first few months of the card. As a point of reference to the value of miles, I just booked a one-way flight from the U.S. to China for only 22,000 miles!
Patience and Persistence: The Long-Term View
My transformation from a broke waiter to a world traveler did not happen overnight. It took a couple of years of planning, habit changing, and hard work to materialize fully. If you want to save money and travel the world, learn to embrace a slow and steady approach as you get your finances in line with your aspirations. New habits take time to develop, and money doesn't always come easily. There will be times when you get frustrated and exhausted with the process. Stay the course, and keep focused.
All the hard work, budgeting, scrimping, and saving will reward you with travel sooner than you think. You'll thank yourself for sticking it out when you're happily exploring our beautiful planet without a worry in the world.
Frequently Asked Questions
Q: What are some tips for managing life while constantly traveling on a budget?
A: This is a great question! A balanced approach is key. Consider utilizing budget-friendly accommodations like hostels or vacation rentals, traveling during off-seasons, and seeking out local experiences that don't require a large budget.
Q: How do you manage your budget when traveling long-term via backpacking trips?
A: Backpacking is a fantastic way to save money! Pack light, be mindful of your food choices, and prioritize free or low-cost activities like hiking, biking, museums, or cultural events.
Q: How do people budget for long-term travel? What are some ways to reduce costs while on the road?
A: It's important to have a comprehensive budget plan. Track your expenses diligently to identify areas where you can cut back, and remember that flexibility is your friend. Take advantage of last-minute deals, explore local markets for affordable meals, and utilize public transportation.
Q: What are some ways that people can afford to travel long-term? How do they support themselves financially while traveling?
A: There are a lot of ways to support yourself! Many travelers work remotely as freelancers, online educators, or writers. Others might leverage their skills to find local work, volunteer, or engage in house-sitting or pet-sitting gigs.
Q: How do you manage your travel expenses and budget effectively while on the road?
A: Establish a daily spending limit, track your expenses diligently, and be mindful of exchange rates. Avoid unnecessary costs by using free or low-cost activities, exploring local markets for affordable food, and utilizing public transportation instead of taxis.
Q: What is the most financially responsible way for someone who loves traveling long-term but has an extremely tight budget?
A: It's possible to travel long-term even with a tight budget. Prioritize travel experiences over material possessions, be open to budget-friendly accommodations, and embrace the idea of "No Spend Days" where you focus on free or low-cost activities.
I hope this journey into the world of financial planning for long-term travel has been insightful. Remember, it's not about having the most expensive trip, but about creating experiences that enrich your life, allowing you to connect with the world on a deeper level. With careful planning, a bit of creativity, and a whole lot of passion, your dream of long-term travel can become a reality. Enjoy the journey!
