Long-Term Travel Budget Planning Made Easy

Written By: jeff

Posted On: February 28th, 2011

Traveling on a budget, budgettravel, travel the world on a budget, traveling the world, how to travel on a budget, how to plan travel, how to budget for a trip, career break, career break advice, career break travel

Get started budgeting. Copyright CareerBreakSecrets.com

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.

  1. Calculate your Daily Lifestyle Costs
  2. Create budgeting scenarios based on a percentage of those costs
  3. Compare those scenarios with your savings or whatever you plan to use to finance your trip
  4. 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.

If you like this post, sign up for our newsletter or subscribe to our RSS feed to keep up with Career Break Secrets’ career break and travel advice.

Tags: ,

8 Responses to “Long-Term Travel Budget Planning Made Easy”

  1. Whitney says:

    While steps one and three are helpful, it’s step TWO that people have the most problem with. Those of us who are planning would benefit much more from example budgets, and what those budgets get you per day in different areas of the world. Simply stating that we should “calculate how much you’re going to spend on the road” isn’t at all helpful. A frame of reference to help us calculate those numbers is what most people came to this article hoping to find….and I am disappointed to not find it!

  2. jeff says:

    Whitney, thanks for the comments. Also good to get feedback. A couple of points. First, I wasn’t trying to delve into the actual budgeting of a trip. I am making a distinction between budgeting planning (softer numbers) and budgeting (in which you would want to get down to hard numbers). The point of this article was to help people answer the question, ¨Can I really afford to do this?¨ As you rightly mentioned, information on true costs are hard to come by and that was my frustration in trying to answer the key question for myself. So that is why I never stated ¨calculate how much you’re going to spend on the road¨. You’re right, that would not be helpful.

    My alternative is to do a scenario plan, an exercise which by its very nature will not give you hard numbers. Why? At the early stages for most people, the planning of where you will go is in flux. I changed my itinerary dozens of times as I refined by planning and budgeting, no exaggeration.

    The process outlined in this post is meant to get you started, not help you finish it. In fact, your travel budgeting will continue until the day you return from your trip. Since budgeting is a hot topic, we will continue to write more on the topic and try to highlight ways to help you get better numbers, create better budget tools, etc.

    I think there’s value in going through the process outlined here because it will force you to start to think about your costs on the road and back home. I believe it does give you a frame of reference. It may not be the one you were expecting. I stand by this post and the information contained in it. I have to, it’s the process I used myself.

    Keep checking back to see what we post next. And, I invite you to write to me to give me a better sense of what you would find helpful and I would be happy to use that input to write a post that addresses that need. If you need it, I’m sure others do too.

  3. We never did Step 1.. but now just running a rough calculation in my head… hah, it is a lot more than it would appear at first. Rent alone is $35/day. Ugh.
    jill- Jack and Jill Travel The World recently posted..South America- Here We Come Yes- We’re Still Doing This RTW Thing

  4. It’s super hard to do the budgeting for long-term travel, so I like how you broke it down here. I tried to find out what other budget backpackers spent, added something like 10% and then I added in a healthy back-up fund.
    Brooke vs. the World recently posted..Day 66- Fun with 50 Bucks in Cities Around the World

  5. Ive never gone on a trip or vacation rather that was longer than a week. I would not know were to start planning for a long term trip and really dont know if that is something I would ever get the courage to do. Thanks for the write up!
    Bluegreen Kirk recently posted..A Snorkeling Vacation In Dry Tortugas Offers Reefs Of Fun And Adventure

  6. annie says:

    Hi, i’ve done several long term trips alone. I’ve done 2 with my family and 3 kids in tow. In addition to your method, I recommend using a spreadsheet for this exercise. And while on your long term trip. Keep track of your spending. If you don’t, it’s easy to go over budget.

  7. Nice post. I was checking continuously this weblog and I’m inspired! Very helpful info particularly the last part :) I handle such information much. I was looking for this particular information for a long time. Thank you and good luck.

  8. Very nice break down. I’m not a budgeter myself. I’ve tried a millions times but I’m horrible at counting, keeping track of, and planning for how much i spend, or how much i’m going to spend. Yet somehow it all works out. I like that you don’t say “this is what it will cost you” but rather, “how much do you already spend” and
    FACT, traveling is often MUCH cheaper than regular living back at home.
    Jade – Budget traveler recently posted..Top 5 ways to Avoid Obnoxious Money Issues While Traveling

Leave a Reply

CommentLuv badge