How to make a REALISTIC travel budget

title image showing coins with a title saying how to create a realistic travel budgetWe’ve all seen these posts entitled  “How to travel around the world for $50 a day!” Well that sounds great but is that a realistic travel budget? The short of it is yes it can be, but it’s fairly optimistic and not as simple as some of these articles would have you believe. We think that many are missing some pretty big items. Admittedly, “You can travel for $50 a day!” is a lot catchier and receives more clicks than “Let’s make sure you have a very realistic budget that requires more savings than you thought!” But we want you to be completely prepared with a comfortable budget.

By ignoring major costs you can effectively ruin an otherwise well planned trip and be left scrimping or cutting your trip short. Imagine being in a place you’ve always wanted to see but spending your time walking around for hours searching for the cheapest hotels and food because you now can’t afford either. So why not create a realistic budget that includes all of your expenses so you can enjoy yourself. Being realistic does not mean that long term travel isn’t affordable or attainable..…..we’ve done it 10 times and we’re pretty average folk.

how to make a realistic budget for long term travel depicting realistic point of view

Where do I start?

What is your dream trip? That’s a great place to start and so motivating to visualize yourself actually being there! Once you have decided on where you’d like to travel you can start looking at costs for each country in each of the categories below. We use sights like https://www.numbeo.com/cost-of-living/  to calculate food and transportation costs for specific destinations and booking.com for an estimate on hotel costs. In order to do this more accurately it helps to know what type of travel you are comfortable with. There are many resources that will provide daily costs by “budget,” “moderate,” and “luxury” travel styles. We tend to plan for budget-moderate travel in most categories. That way we can include a bit of cheap & some spoiling too. Hint: the more budget friendly your style is the longer you can travel!

What do I include?

Let’s start with the most common (but sometimes miscalculated) items on a travel budget and some thoughts on how to determine these costs:

Lodging:

If you don’t mind sleeping in a shared dorm you will be looking at the low end of accommodation costs, whereas a room with a private bathroom will be moderate. Maybe you want to mix it up and go with hostels most of the time and give yourself a private room every now and then. In that case you’ll choose a price range a bit higher than the average hostel bed price. If you are a couple staying in private rooms make sure you know if the price is quoted per person or per room.

Food:

Are you going to eat mostly in restaurants? Do you enjoy street food or do you prefer buying groceries and cooking in a hostel or apartment? These can be adjusted depending on whether food is cheap or expensive in certain countries to stretch your budget. In Uruguay we ate at the grocery store deli for $3-5 each, as restaurants were expensive. While in Peru we almost always ate big set meals at restaurants for $2-3 each. It’s better to be over budget than under so try to round up.  

Drinks:

Is this a country where you can drink tap water? If not, you will need to factor in the daily cost of water. Do you drink coffee or tea everyday? How much alcohol do you drink? These costs are often forgotten but can sometimes cost more than food. There are options to save on the cost & environmental impact of water bottles like this SteriPEN. This particular model is USB rechargeable which is very cool! (We haven’t tried this yet but it’s definitely coming on our next trip!)

Entertainment:

Every time you visit a museum, take a tour, or see a wonder of the world you will have to account for this cost. If you plan to do some big excursions and enjoy seeing everything a place has to offer then go big in this category. Check out some prices for the big items on your list (Machu Picchu, Disneyland…whatever) so you have an idea. This one will take some research or you could just ballpark and adjust your plans to fit. For example, if you give yourself $10 per day you will have $300 per month to spend. Some days you won’t use it at all, allowing for larger entertainment expenses on others.  

Daily transportation:

Will you be taking taxis everywhere or are you comfortable with public transportation? Are you planning to rent a car or moped for any portion of the trip? There are places we’ve been with no public transportation but services like Grab or Uber were almost half the cost of a taxi. Again, these costs might not be used daily so factor that in.

Miscellaneous:

This category is for all those little things that you purchase infrequently. It will vary greatly for everyone. For us, this mostly includes sim cards and data, laundry, medicine, toiletries, clothing, replacing lost or broken items, and gifts. If you buy a lot of clothing or use a lot of toiletries you could make that a whole category.

 

5 major items often missing from travel budgets

image showing hard currency from many countries

 

Cool, that wasn’t too hard. But wait, how did you get there? Travel budgets often read “Our costs in BLANK country not including flights.” OK well that’s fantastic, but where are you including the flights? Is there a separate budget called “Long term travel, traveling costs?” Or do we just pretend that expense didn’t happen? What about your travel insurance? Is that included? Do you have to pay for a visa or entry fee into that country? Either these items are missing or they are in some other spreadsheet that has to be included somewhere down the line. Why not take a realistic look at ALL of your potential expenses so you can make a goal, save for it and have a comfortable trip with fewer surprises. These are some big ticket items that need to be included for every trip. Some will be calculated one time, others will be recurring depending on your itinerary:

1. Return flights to and from home including transportation to & from the airport

Some of the best deals on flights end up landing in small airports outside of the city. The cost of getting into the city can be really costly. Make sure you check out prices and add them into your budget. It’s amazing how often this is overlooked.

2. Cost of traveling between destinations (flights, buses, trains. ferries, etc.)

Unless you are traveling to one place and staying there for your entire trip you need to include the cost of getting to each destination. Look up average travel costs along your planned route. Try to be flexible as it may be cheaper to go via a city that wasn’t originally on your itinerary. These prices can vary greatly. Sometimes a plane is cheaper than a bus. You may end up having to make a rough average on this one but again go a bit high and always round up!

3. Entry and visa fees for each country on your itinerary

These can add up to hundreds or thousands of dollars and should not be forgotten. You will be able to look these up online for your country and add them up. Also remember to look up exit fees. Sometimes these are included in your airline ticket. We’ve had border guards attempt to inflate entry and exit fees. It helps to know your stuff before you arrive.

4. Travel insurance (medical and/or trip cancellation)

This one is substantial if you are older or traveling for a long period of time. Shop around and get quotes. We are currently using “World Nomads”.

5. Foreign banking fees 

Some countries apply fees to withdraw cash from ATMs using a foreign card (ahem..Thailand $8+CDN!)  Do a quick check on travel forums for the countries on your itinerary to see what you may be charged and include an estimate in your budget. Talk to your bank before you leave and ask for a plan without debit fees for using ATMs. At least you can save from being charged from both sides. Also ask if there are any foreign partner banks in your destination that may have smaller, or no fees.

 

So what’s the most commonly missed cost of travel?

If you want to know how much you’ll need to save to take this long term trip then you’re forgetting one more thing. Do you have expenses at home while you’re away? Oops! If you forget these it can be a huge budget killer. You will need to know how long you are traveling for, as it affects these costs. For example, if you are gone for 2 months you will likely need to keep paying your rent or mortgage, and perhaps put utilities & phones on a vacation hold. If you decide to leave for longer you might rent out, sell or end the tenancy of your home, rent a storage unit and cancel your phone & utilities. If you don’t have any expenses at home, congratulations! You are winning! For the rest of us, here’s a list of what some of those costs at home might include:

How to make a realistic travel budget_Costs from home

 

So now I have an accurate budget right? Not exactly…..

Although it is really important to include these often forgotten costs, no budget will be 100% accurate. There are too many factors to account for. A good rule of thumb is to always budget on the high end to absorb unforeseen expenses. It’s inevitable that something will break, prices will change, hotels will be overpriced during a holiday, the cheap bus is fully booked or whatever. The more financial flexibility you have in your budget the less stress you will have. It’s a work in progress. Your budget can be fine tuned as you go by finding cost saving methods and sometimes a little rerouting. But the best way to stretch your budget is to also be flexible in what your needs really are. Choosing to take an 8 hour bus instead of a 40 minute flight could save you enough to add 4 extra days to your trip!

Thankfully, there are tons of apps and websites that can help you create and maintain your travel budget. Apps like https://trabeepocket.com/ will help you track expenses for multiple currencies while you travel. Some people prefer to start with something like $10,000 and calculate how long they can travel in say Southeast Asia with that amount. Others prefer to plan the trip, know how long they’ll be traveling and figure out how much it would cost from there. Whichever way you choose, you should now have the information and tools to make a pretty kick ass budget!

Check out our Resources page for a list of apps we use including currency converters.

As always, please leave a comment or question below. And don’t forget to Like and share this post on social media so we can help others with their budget too! We would love to answer any of your questions so ask away! If you’d rather send a question privately that’s great too! Just go to the contact us page. Ciao for now.

 

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2 Responses

  1. Margaret Martin says:

    Great job! No stone unturned, so to speak. Perhaps the only thing you didn’t factor in was music lessons for the pets. Lupita looks like she’s off to a good start, though. Danny will have some competition!

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