How To Save Money Before You Travel
So you’ve made the decision to travel longterm. Fantastic! Now what? Now it’s time to prepare, starting with saving some money. You don’t need to be wealthy to travel for an extended amount of time, and it can certainly be done on the cheap, but that being said, you will need SOME money to your name to fund your adventures. Luckily, saving doesn’t need to be difficult. I’ve gathered some of my favorite tips here to help you get started.
1. Know your savings goal
Without a doubt, the question I’m asked most often about traveling is, “How much money do I need”, to which I answer, “Well, that depends on a lot of different factors”. This typically leads to my second most often asked question, which is, “Ok, but roughly speaking, how much”.
There is no one answer to this question. It all comes down to how you want to travel. If your dream travel experience is to stay at a hotel with a balcony overlooking La Seine and eat at the finest restaurants Paris has to offer, you’re going to need quite a bit of money. However, since you’re reading this blog, it’s most likely because you want to travel for as long as possible and really stretch that budget as far as it will go. What it will cost you is entirely unique to your situation.
The amount you’ll spend per day is also highly variable based on where in the world you are. A sandwich on the Champs-Elysées could cost you $30 whereas a full meal in southeast Asia will run you less than $1. What I would recommend is to do a bit of research on where you intend to visit.
Read through my location guides and do a hefty bit of googling to determine the average costs in that area, and use that to estimate what you’ll need. Whatever total you end up with, I’d suggest rounding up a bit in case of unforeseen expenses (you also don’t want to come home broke!).
2. Make a list of your expenses
Once you’ve determined how much you need to save, it’s time to figure out how to do the actual saving. This next exercise is a tough one and it requires you to be brutally honest with yourself. I want you to keep a running list of everything you spend over the course of a day. Now, repeat this over a few more days to get a rough idea of your typical spending patterns.
From this number, you can estimate how much you would spend in an average month. Finally, add on your fixed monthly expenditures such as rent, utilities, food, etc., and add up these totals. Let me guess; it’s a pretty scary number, right? If you were to take your average monthly take-home pay and subtract this number, how long would it take you to reach your savings goal? Probably longer than you were hoping. Don’t panic. We’re about to fix that.
Look over that list again. This is where the honesty comes in. How many of the things on that list are necessities and how many are merely wants? Ask yourself, do I need that venti latte in the morning before work? Do I need to go out to dinner every weekend with friends? Once you see it written out in front of you, you’ll be amazed at how quickly seemingly inconsequential purchases can add up. That coffee you buy everyday may only cost $3, but that adds up to almost $1,100 over the course of a year!
Imagine how much faster you could reach your goal by adding that back into your savings. Sure, it will be difficult to cut some of these things out of your routine, but always keep that end goal in mind. Just think, would you rather go to the movies to see another film you’ll forget all about in a week, or watch the sunset from a far-off foreign shore? Remembering what you’re saving for makes the sacrifices that much easier.
3. Master the art of grocery shopping
One of the easiest necessary spending categories to get under control is food. If you’ve never given it much consideration, you’re most likely spending more money than you need to be. First things first, if you go out to eat or order takeaway often, it’s time to embrace the art of cooking for yourself at home.
The average monthly cost of groceries for one person in the United States is about $300. Let’s assume the average cost of takeaway is $10 per meal. At that rate, your monthly grocery budget is spent in just 10 days. Meal prepping doesn’t have to be difficult either. Buy a slow cooker, throw your ingredients in before you leave for school or work, and by the time you get home, you have dinner ready for a week.
When it comes to the actual shopping, be a bargain hunter! Ditch the brand names in favor of the generic alternatives. It won’t kill you, I promise, and those savings add up quickly. Also, be sure to keep an eye out for the meat specials. Grocery stores will drastically cut the price of meat when the sell-by date is approaching. Don’t let that date deter you. Buy it when it’s cheap and freeze it until you need it. You’ll save a bunch of money and it will be just as fresh as the day you bought it once it’s been thawed.
4. Kick the habit
If you’re a smoker or heavy drinker, here’s that reason you’ve been looking for to quit. Aside from the obvious health implications, the average smoker will spend between $2,000 to $5,000 per year on cigarettes depending on where they live. You could live comfortably in Thailand for over six months with that amount of money! Let that sink in for a moment.
The same goes for drinking. If your regular Friday night activities include hitting the bar with friends, consider cheaper social alternatives, or practice restraint and limit the amount of drinks you would typically order in a night. If that seems hard to do, keep this in mind; in Prague, beer is cheaper than water. You just need to get there first.
5. Cut the cable
If you’re still paying for cable, it’s time to embrace the present, call your provider, and cancel. Online streaming services like Netflix, Amazon Prime and Hulu have more content than you could ever hope to watch, and regularly offer current TV programming the day after it airs. The best part? You could get a yearly membership with any of these services for the cost of just one month of cable. Of course, you could always go completely TV free, but hey, I’m not here to ask the impossible of you.
6. Ditch the car
Driving isn’t cheap. Once you add the cost of monthly car payments, insurance and regular maintenance to your weekly fill-up, it becomes downright expensive. If you live in an area with public transportation, try commuting via bus or train rather than driving everywhere. In Boston, a monthly MBTA card will run you about $70, which is much less than you’d be paying for your car.
If you don’t live in an area with a public transportation system or if your car is absolutely necessary, consider driving for a ride sharing company such as Uber or Lyft in your free time. Not only will you offset the cost of your car, you’ll make some extra money on the side as well! If you’re still not convinced, check out my article on the benefits of Ditching Your Car.
7. Sell what you don’t need
This one is simple. If you have things of value sitting around that you aren’t using anymore, what’s the use of hanging on to it? Besides, if you’re planning to travel longterm, you’ll already be pretty limited as to what you can take with you. Before I left for my first trip, I sold a bunch of things I no longer had need of, such as my TV, guitar amp, and various furniture. If nothing else, cutting down on your material possessions is incredibly freeing and will act as one less tether holding you back.
8. Deposit diligently
When I used to bartend, I had a great system in place for saving money. At the end of the night, I would take all the cash I had made and change it into the largest bills I could. Then, I would take everything $20 and higher and immediately deposit it at the nearest ATM. Everything smaller than a $20 became my spending money for the week.
By doing this, I limited the amount of cash immediately available to me, thus reducing the urge to spend it. Additionally, having that set amount of small bills on hand made it easy for me to budget for the week.
If you’re paid via check rather than cash, look into setting up direct deposit. Typically, you can set it up to deposit into multiple accounts. By doing so, you can put the majority into a savings account, and keep only what you need for the week into checking. My general rule of thumb for money is “out of sight, out of mind”, by which I mean if I don’t see it, I won’t be tempted to spend it.
Currently, I use the Barclay Dream Account for savings. They have one of the highest interest rates I’ve found in a bank, plus they give you a bonus for every six months you complete a direct deposit and don’t withdraw. It’s free to open an account and there are no minimums, which is a huge plus.
For checking, I’m using Capital One 360. I’ve liked Capital One ever since I got their Venture credit card for traveling (but more on that in another post), so I decided to give their checking account a try. Nothing particularly out of the ordinary so far, but no complaints either! Like the Barclay account, it has a higher than average interest rate as far as checking accounts go, and there are no startup fees or minimums.
(Full disclosure, I do get a referral bonus if you sign up for Capital One through that link. That is actually the account I use though! I’ll never recommend anything to you that I don’t genuinely use and enjoy.)
That about does it! The sooner you start implementing these rules, the closer you’ll be to taking off on your next adventure. As always, if you have any questions about saving money or traveling in general, don’t hesitate to contact me!