You’ve got the itch, but you’re scratching your head trying to figure out how people leave it all behind to take a career break to travel. When I decided that I really wanted to travel, I spent a lot of time trying to figure out IF I afford it. I researched lots of places on the web to try to get costs and budget numbers. But, in 2006, there were very few out there, publicly available.
In my mind, I had numbers like $10/day, $20/day in my head. But, I had no idea if that was based on reality. And, what if I was wrong? I’d be in the middle of a foreign land with nothing.
So, out of necessity, I took a different tack. I decided to look at my current lifestyle to see how much I was spending per day to maintain myself. This lifestyle included all the bells and whistles. It included my mortgage, my car payment, cable, electric and gas bills, dog food, etc, etc. I used a 4-part assessment process to see if I could indeed travel for as long as I wanted to. And today, I’m sharing that with you. I have yet to see anyone else write about budgeting for their trip in this way.
- Calculate your Daily Lifestyle Costs
- Create budgeting scenarios based on a percentage of those costs
- Compare those scenarios with your savings or whatever you plan to use to finance your trip
- Revise and refine
Step One: Calculate Your Daily Lifestyle Costs or How Expensive Are You?
The most common way to talk about travel budgets is on a per-day basis. So, that’s what I used and how we’ll talk about it here. Since it will always be difficult to know what your true costs on the road will be, let’s start with what you do know: how much your current lifestyle costs. This is your lifestyle at 100% (assuming you’re not overloaded with debt, in which case it will be your lifestyle at 100%+). So, grab a piece of paper or your favorite spreadsheet and total up your monthly expenses. Don’t leave anything out: mortgage/rent, bills, entertainment, gym, any pampering you might treat yourself to. Throw it all in. I would recommend doing one that includes what you put into savings and one that keeps your monthly savings contribution out of the calculation.
Now, take that number and divide by 30. It’s pretty high isn’t it? You didn’t realize you were so expensive to maintain. If you’re like me, I didn’t realize I cost so much. Here are a few numbers that may surprise you. For after-tax salaries (assuming no savings), your daily costs would be as follows.
- $30,000/365: $82.19
- $40,000/365: $109.59
- $60,000/365: $164.38
So, even if your after-tax income is around $30,000/year, you spend about $82 bucks a day to live. For the record, most long-term travelers don’t spend anywhere near that while on the road…unless they are traveling in Europe.
Step Two: Create Budget Scenarios
So, now that you have those numbers, I want you to calculate scenarios about how much you think you could live on while on the road. Could you live on 50% of your number from Step 1? 30%? 60%? This will start to give you the ranges of daily budgets that you will want to set for yourself.
To make this number more real, start looking at your expenses and see what goes away. Are there expenses that you will not be incurring while you’re traveling? I bet there will be many. Of course, there may be some new ones. For example, while you may get rid of your apartment or plan to sell your house, you may incur some storage fees.
Personally, this was the point, I decided to get rid of a lot of my stuff. After all, why pay for stuff back home that you won’t be using on the road. And, that is money you could be using for extra perks or tours while you’re traveling.
Step Three: Evaluate Your Savings
So, now you have some baseline daily rates for your budget. How long do you plan to be gone for? 30 days? 90? 180? To be conservative, include in that a number of days that you will have once your back and will be looking for a new job (assuming you won’t be going back to your current job). You want to build in a cushion so you aren’t freaking out about money once you return. And, it will reduce the chances that you will leap at the first job that comes along, especially if it’s not one you want.
Take your daily rates and multiply them by the number of days on the road to get your total travel budget. Now compare that to what you have in the savings. Is it doable? Are you short?
So, let’s say you want to travel for 60 days, you decide to build in another 60 days for job hunting. And, let’s say you decide on a budget of $70 per day. The calculation would simply be 120 days * $70 = $8400. That’s the amount you want to have in the savings for your trip.
Step Four: Revise and Refine
This step will start to get the wheels turning about how to really finance your trip while you’re away. It will also get you thinking about other expenses like plane tickets, insurance, shots, etc, and how you will budget for those items.
For me, once I did these calculations, I realized that I had the savings to finance the trip and it made giving notice at work a lot easier.
Happy budgeting and let me know in the comments if you have any questions.