By Katie Matthews of Wandertooth
In late 2009, my husband and I sold our home, two cars, and most of our possessions to set out on a journey that took us through 15 countries in 15 months. In the five years that we’ve been married, we’ve travelled to over 30 countries with no intention of stopping. This, of course, begs the question: how do we afford to travel so much?
When we first discussed the idea of a life centred around travel, we had no idea how –along with our mortgage and life insurance payments –we would be able to save money for long-term travel. The places we’ve been aren’t all cheap, especially in Europe or those once-in-a-lifetime destinations, such as Ecuador’s Galapagos Islands.
Our method, which has been insanely successful in helping us achieve our travel goals, has come from trial and error. Now that we’ve honed our process, I’m thrilled to share our ways to save money for travel.
The Weekly Money Meeting
We are conscientious about setting aside time each week for our weekly money meeting. Every Sunday evening, we sit down and tally how much we spent during the previous week, and how much we need to budget for the upcoming week. If you don’t yet have a budget, tracking how much you spend is a great first step. We use our money meetings to pay bills, transfer money to our savings account, talk about how we are doing in terms of reaching our savings goal, and check in whether our goals still make sense. In the beginning, these meetings took about one hour, but they’ve gone much faster over time. If you’re working independently towards a savings goal, setting aside time each week to crunch the numbers, assess your progress, reflect upon how you’re doing and adjust your spending will help to keep you accountable and motivated.
Track AND Plan Your Spending
To save the most money, we take a two-pronged approach: we track what we’ve spent during the previous week, and plan what we need for the upcoming one.
Tracking spending allows us to see how much we were over or under budget during the previous week. If we come under budget, I immediately transfer the surplus to our savings account. If we overspent, we discuss why, whether we consistently overspend in specific areas, and whether we need to adjust our budget or change our behaviour. Tracking spending also allows us to identify areas where we could potentially reduce or cut expenses, allowing us to reduce spending over time. For example, I keep an eye on my cell phone bill, and reassess my phone plan every few months.
Sticking to one system of payment (cash, debit, or credit) will make it easier to track your spending. If you use cash, keep all of your receipts and tally them at the end of the week. If you use debit or credit, use your online account information to figure out what you spent. There are benefits to both, but if you’re having trouble staying on track, using cash and the envelope system is best.
To plan for spending, we use a calendar. We write down all of the automatic payments that come from our account or credit card, as well as budgeted weekly and daily expenses. Whenever we can, we try to spread our spending throughout the month; having many expenses all at once can be discouraging. It also allows us to plan for irregular expenses, such as gifts. Because we plan our spending, I know exactly how much of each paycheque I can transfer to savings, which reduces the temptation to ignore our budget.
Implement an Allowance System
Just like when you’re trying to lose weight, deprivation doesn’t lead to success when you’re trying to save money. We use an allowance system to minimize feelings of spending deprivation.
For us, we’ve fluctuated between $40 and $80 per week each for our individual allowances, and between $100 and $150 per week for our together allowance. Pick an amount that works for you, and then take it out of the bank at the beginning of the week.
An allowance system works really well if you are saving as a couple, because it eliminates any resentment or guilt around frivolous purchases.
I tend to spend my entire $60 allowance each week on coffee and fun with friends, whereas my husband tends to spend very little, and saves his allowance for larger purchases. If he comes home with a $150 pair of jeans, I don’t care: I know it came from his personal savings.
We also currently budget $100 per week to spend as a couple. This usually allows for one night out with drinks and a shared meal, and one night out with either just dinner (no alcohol) or drinks. If we don’t spend the entire $100, we put the extra money in a jar for times we want to spend more.
Resist Temptation by Using Cost Equivalencies
I use two tricks to help resist temptation. The cost equivalency trick involves figuring out how much you need for one day and one night in your dream destination, and then converting the price of anything into X number of days in destination Y. For example, I would love to upgrade my boots to a trendier pair, but I know they cost the equivalent of almost 10 days in Thailand. Not worth it.
There are a number of ways to figure out cost equivalency. Travel blogger Christine Gilbert multiplies the average cost of a hostel by three to figure out her daily budget. Warren and Betsy Talbot of the blog Married With Luggage have tracked every dime they’ve spent during their 33-month around-the-world journey, and post monthly and country-specific summaries on their website, RTW expenses. Blogger Shannon O’Donnell spent just under $18,000 for an 11-month, 15-country journey, and housesitting travel expert Nicole Connolly spends between $36 per day and $184 per day, depending on whether she is housesitting or staying in hotels. Jodi Ettenburg of the popular blog Legal Nomads has an excellent list of freely available long-term travel budgets in the Resources section of her blog.
Resist Temptation by Using Visual Reminders
If you find you lack the self-restraint necessary to stick to your budget, add some visual reminders to your wallet. When I was saving for my first three-month trip to Southeast Asia, I cut out pictures of Thailand and taped them to my credit and debit cards. Every time I was tempted to use either, I was forced to not only face my goal, but I also had to rip an image of my goal from the card if I decided to go ahead with the purchase. It was a powerful spending deterrent!
If you find you’re overspending on coffee and other treats while at work, find a picture of your dream destination and use it as the wallpaper on your computer, or frame a small picture of your destination and put it on your desk.
That’s it: my top tips for saving money for travel. Add your tips in the comments, and let us know if you’ve used any of these methods.