A day or two after we had finished our round the world travels I checked our budget spreadsheet. After a few minutes of updating it with the last few items ($60 worth of wine in the bar at JFK…oops!) I was able to see that we’d finished our 10 months around the world over budget: by just £50.
Budgeting – A Good Idea?
It was no surprise. We’d traveled on budget by carefully monitoring our spending along the way. The last thing we wanted when facing up to reality back home was a nasty surprise in our bank balance.
This article goes through the 5-step process we followed to stay within budget for our gap year travels, and assumes you’ve decided having budget is a good idea…even if you’re not sure exactly where you may end up or how long you may stay there.
Travel Round The World Within Budget: The 5 Principles
Here are the 5 basic principles we followed when it came to planning and controlling our budget, both before we set off and while we were on the road.
Before you go
- 1) Do personalised research
Read a few travel blogs and you’ll quickly come across a ‘Cost of a RTW trip’ type of post, full of numbers and costs of things – see example screenshot below. These are a great guideline but may be misleading.
- A 20 something will travel differently to a 30 something
- Countries may suffer disasters which affect the strength of the local tourist economy, prices change
- A backpacker, flashpacker, or tourist will travel differently. Which are you?
- Do you have specific interests that will incur high costs?
- Numbers you find may be out of date and exchange rates will have changed too
We collated a few price estimates from various sources and found some middle ground. We read blogs from travelers who seemed similar to us. We also went on hostelbookers.com and other similar services (airlines, trains) and found what it costs for a hotel in Phnom Penh, for a train from Hanoi to Hue, for a campervan in Australia etc etc.
- 2) Choose the right tool for the job
We used a spreadsheet as it’s the only way to organise numbers in electronic format properly. You could get by with a pencil and paper if that’s more your style…but a Google doc can never be lost or stolen.
- 3) Structure your budget
You can break out a budget by place (region, country), by time (day, week, month), by category (food, drink, travel, etc.). There are lots of ways to do it…and depending on how much time you want to invest in updating it the choice is yours. Imagine updating a spreadsheet like the one pictured for each day of your travels…we couldn’t face that.
Simple is best. We went for a total daily spend per person per region.
- $50 per day in SE Asia
- $100 per day in Australasia
- Other places where we were spending less time (Fiji, US, Singapore, China etc) would just have to fit into either of these broad categories
These figures where based on the information gleaned from point 1 and the fact we wanted to be able to spend money on doing cool things as/when they cropped up, so we over-estimated slightly to give ourselves some flexibility.
Being realistic on your spending will help – we met a Canadian girl in Laos who sat in the hostel all day and could barely afford to eat. That doesn’t sound like too much fun.
That was our budget done, a figure each day clearly in mind.
- 4) Record your actual spend
An important point when thinking about the budget structure is how you’ll actually populate it with data. How do you know what you’ve spent? We used CaxtonFX cards for cash withdrawals when on the road, rather than our normal bank cash card. Caxton FX give you a superior exchange rate and reduced withdrawal fees – we used them in every country we went to without issue. Plus, you are able to export a spreadsheet of your activity with them, so getting the spend into the budget spreadsheet was simple.
After a little spreadsheet formatting, we could see by month exactly how much either of us had withdrawn (and also check our card hadn’t been compromised).
We also used a credit card for one-off items and for this card we manually documented use of the credit card. Bit of a pain but only a few minutes work per month as cash generally rules. You’ll need some spreadsheet magic to organise things and present it the way you want it laid out.
We were staying for long periods (5-6 months) in each region so we summarised spend by month. i.e.
We also took notes on the big items so we knew why a certain month exceeded budget.
Remember when accessing spend to always use your home currency figures (i.e. your bank account) rather than the local currency for where you are. (The above are our spend in GBP.) Spending $50 cash in Vietnam will cost you more than $50, by the time you’ve added in withdrawal fees, any conversion rates etc.
- 5) Self-control
Having a daily budget in mind every day (see point 3) means if you’re in a country for a long period (i.e. a month) you can balance your spend across the whole period. For instance you can go crazy one day, well over budget, but know that in the following days you need to make up the shortfall. This gives you a good structure: enjoy yourself travelling but keep things balanced.
While you’re on the road
We always aimed to beat our daily budget which we achieved for the majority of our travels…but still ended up (marginally) over budget at the end. Why?
Because unexpected things come along you want to do, and going with the flow is one of the joys of travel.
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