travel tips - finances
Annie Lin | Sunday, September 5, 2010 at 4:21AM 
1. Create a savings plan and use it.
Before discussing a savings plan let’s first talk about debt. Debt isn’t a sexy subject but the reality is that large amounts of it can make extended travel difficult. It might be wise to take a little extra time to chip away at any debt before heading out on the road. It is possible to travel with debt as long as it is a manageable sum and you are able to continue paying it while you travel. We met a couple that rented their house while traveling and that in turn allowed them to continue paying their mortgage.
Of course the ideal situation is to pay off all your debt beforehand, which can be done with a structured savings plan. After nine years of paying my student loans I still owed $14K. We attended a financial seminar and adopted a savings plan, which you can read about it here. This savings plan allowed me to pay off my loans within a year and at the same time save for our travels.
Come up with a plan for your money and stick to it. You will be amazed at how quickly it accumulates. It will require some short-term sacrifices but it is a worthy goal when you hit the road and your primary focus is enjoying your travels, not how to make your next minimum payment.
2. Read I Will Teach You to be Rich by Ramit Sethi.
This book offered us practical financial advice on avoiding unnecessary bank fees and overall money management techniques. Regardless of your plans on extended travel the book is worth a read for a financial tune-up.
3. Determine a cash reserve.
One of the most important things to consider is setting aside some of your savings for when you return home. There is nothing better to take the buzz off of your exciting world travel than the pressure associated with going home broke.
Jon and I determined the total amount for our travel fund and agreed to save a quarter of the money that was labeled “untouchable” to provide a cushion for our return. Since we gave up our apartment and sold a lot of our belongings we needed this money for deposit, furniture, and to get us by until we were both gainfully employed. It was tempting to dip into this untouchable pot to extend our travels but the stress created by spending our reserve wouldn’t have been worth it in the long run.
To keep the money “untouchable,” we stashed it away in an ING Orange Savings Account. Out of sight and out of mind.
4. Access your money.
Jon and I weren’t comfortable having large amounts of cash on us so we used ATM machines to access our money. The key to the ATM’s is minimizing the fees. Things can get expensive very quickly if you are constantly making a run for your money.
We set up a Charles Schwab Online Brokerage Plus Checking account because they reimburse all ATM fees at the end of the month. We have seen in a month upwards of $50 in reimbursement. Charles Schwab requires a few extra steps when transferring money because their primary focus is investment banking. The extra effort is worth it to us as it has allowed us to hold on to more of our money.
The next step was to eliminate the foreign conversion fee on credit card charges. Most credit cards charge a fee to convert the money from a foreign currency when using the card internationally. We signed up for a Capital One No Hassle Miles Rewards credit card because they didn’t have a foreign conversion fee. As an added bonus, Capital One offered a good frequent flier program.
Lastly, we linked all of our accounts online so we can transfer money from one to another without hassle. We kept our existing checking accounts and credit cards since they were linked to recurring payments.
5. Create a budget tracking system.
You need a system in place to keep an eye on your money. We started with Quicken and that allowed us to easily run reports on where our money went. We created eight categories: transportation, food, lodging, entertainment, travel necessity, personal necessity, souvenirs, and one for Jon’s video production.
Mint or Quicken offer great tools to keep you on track.
6. Align spending with goals.
We discovered the strong temptation to indulge in all the sights and activities of the countries we visited. We didn’t want to miss anything. The problem with this philosophy is it can get very expensive. We would have quickly depleted our funds and came to the conclusion that you can’t do it all. Because you can’t do it all, going back to our traveling philosophy and goals helped us to make the necessary tough choices.
We would loved to have skydived in Queenstown, walked the Sydney Harbor Bridge, or visited more islands in Thailand but we instead sacrificed these activities so we could hit our goal of traveling for six months. Plus, it gives us a reason to go back.
7. Determine level of comfort.
Being in our thirties we have grown accustomed to a more comfortable lifestyle. We decided from the onset we wouldn’t do a complete backpacker route. A necessity for me was hot water and air-conditioning and Jon wanted internet access. Because of these choices our accommodations were often a bit more expensive than a traditional backpacker hostel. We easily could have gotten by most days in Asia for under $20USD including food and accommodations and in turn doubled the length of our travels. It comes down to personal preferences. If you rather travel for a longer length it is easy to find cheap food and places to stay but they can come at a cost of familiarity and comfort. It is worthwhile to consider the trade-off upfront.
8. Bring US dollars.
Regardless of where you are from it is always a good idea to have US dollars when traveling. The amount to bring depends on how long you are going to be gone. One thing to keep in mind is that in some countries US dollar is the only acceptable form of payment for passport visas and entry/departure tax. It is also good to have it as a back up for when you run out of the local currency and don’t have access to an ATM since practically everyone will accept US dollars.
We brought $750 for an eight-month trip and that was plenty to get us by.
9. Work abroad.
Working abroad while traveling can be a great way to absorb yourself into a culture, not to mention extending your travels.
We decided not to work during our travels because we were looking to travel for six months and saved what we thought would be enough. A friend worked in New Zealand for a year at a winery and we also met several other people who worked for a short period of time before continuing on their travels. It is definitely a viable option to consider.
10. Expect the unexpected.
It may sound like common sense but it is important to have a little cushion for unexpected expenses that will occur on the road. We extended our travels in New Zealand, got into a motorbike accident, and Jon’s computer crashed. All of these were unexpected and cost us a large amount of money that we hadn’t planned on. Unexpected expenses will occur, plan on it.
Reader Comments (1)
I was supposed to be heading over in November but it’s been re-confirmed for March 2011, and while a part of me is a bit bummed since I was getting amped to go in November – I know March will be much better for me precisely because I can get my finances to where I want them to be so I can travel around India (and neighbouring countries?) without money being a major concern.
I love that you mentioned having a reserve for when you return home – I think a lot of people forget this and when they come home are stressed about having money to hold them over while they search for employment, a place to live, furniture etc. Luckily, I remembered to include this in my savings goal (2-3 months living expenses) and also have set up an ING account for safe keeping.
Awesome post!
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