How To Follow A Travel Budget
Posted on Oct 29, 2011 | 17 comments
Today I filled out a quick survey created by Jeremy Branham of Budget Travel Adventures and one of the questions he asked got me thinking.
What does budget travel mean to you?
My first thought was cheap deals and discount airfare, but then I realized that budget travel is about so much more.
A budget is about discipline, it's something to be followed. To me, budget travel means having the ability to make your travels fit your budget so you can sustain a travel lifestyle.
Recently, there was an article by Warren and Betsy Talbot at Married with Luggage that showed, down to the dollar, all the money they spent in a year traveling the world, and they didn't spend much. It cost the couple only $24,140 to travel for 365 days to countries like France, Belgium and Argentina. By simply tracking their expenses and taking advantage of opportunities such as housesitting, the Talbots were able to travel extensively for very little money.
I have found that the cost of long-term travel varies greatly for each individual or family. Some, like Nora Dunn, claim that you can travel for a year for under $14,000, while others may spend up to $80,000.
For me, the cost of your long-term travels comes down to two things:
1) Flexibility
Are you willing to sacrifice for your budget? Can you walk away from the pull of a 5 star hotel that's only going for $130 a night?
2) Budget Tracking
Are you disciplined enough to follow and track you daily expenses so you can stick to your budget?
Both are essential for staying under budget and traveling on the cheap.
How We Always Stay Under Budget When We Travel
This is as easy as it gets folks, and I guarantee that if you follow this method closely, you will save a ton of money while traveling.
Decide On Your Travel Budget
We set our travel budget at $100 a day or $36,500 a year. You just have to pick a reasonable, achievable, annual budget for your family and divide by 365. This will give you your Daily Travel Budget and this is the number you need. Like I said, for us, our Daily Travel Budget is $100.
Calculate All Your Pre-Trip Expenses and Adjust Your Daily Rate
It's up to you to include what you want in this, but if you are saying it costs $25,000 a year to travel the world and you are not including passports, visas, insurance, and pre-booked flights, then you're not really giving an accurate assessment for others or yourself. You may think you're spending $25,000 a year, when in fact it is much more like $35,000, and this can be a big shock when you come home.
Once you decide what to include as "pre-trip expenses", total up the damage and deduct it from your overall budget.
For example:
Annual Budget: $ 36,500 - Pre-Trip Expenses: $6,000 = Adjusted Budget: $ 30,500
New Daily Rate: $83.50
Now you have a nice new number and don't have to worry about your past expenses while you travel.
The Notebook, and Finding Your Magic Number
I don't believe you can keep an accurate daily budget on an app while you travel long-term. Connectivity and power are just too unpredictable. Budgeting needs to happen daily, almost hourly. You need something small and handy in which you can document your spending right away - before you conveniently forget that $5 cup of coffee you had in Paris.
Get a cheap, small notebook. This will be your daily travel budget log. Don't worry about losing it, we will deal with that in a bit.
Simply begin to track everything you spend.
Every day you track your expenses make a note if your balance is + or - and by how much. This is the only number you need to keep in your head. This is your Magic Number.
Monday you were $20 under budget, so you're magic number is $20, but Tuesday you went over by $12, so you're magic number is now only plus $8. And if and when you lose your notebook, you can just start again as long as you know your magic number.
Here's an example:
October 2, 2011 - Magic Number $65 - Philadelphia Day Trip
Breakfast and Coffee: $13
Gas: $45 fill up.
Campsite: $26
Lunch: From grocery shopping day before.
Dinner: $24 Philly Cheese Steak at Gino’s
Ice Cream: $10 Capagiro’s Gelato
Museum Entrance Donation: $7
Total For Day: $125
Budget Difference: $41.50 ($125-$83.50)
New Magic Number: $23.50 ($65 -$41,50)
What our family does is tend to splurge when we have worked our budget up to plus $300 or so. We lay low and run around the campsite for a few days and then head off to the big city. It works. And after a year of doing this you may become so aware of your budget, you won't need to track it anymore. Until then, I seriously recommend daily budgeting if you want to travel long-term.
Many will say that budgeting this way kills travel. That it crushes spontaneity and adventure, but I haven't found this to be the case. In fact, it does quite the opposite. It takes the second guessing out of the equation for you. When you find yourself standing in front of a place that is just begging you to indulge, you no longer have to ask the question,
Can we afford it?
Now, you just look at you notebook. Either you have a big enough magic number that day or you don't, and you move forward. And if in fact you know you will be in Paris in a few weeks and need to have that cup of coffee or climb the Eiffel tower, than start building up that magic number in advance. Just because you're budgeting, doesn't mean you lose freedom and the power of choice.
Next time you take a short trip, give this a try. Or you can even try it at home. It works. And if your funds are limited and you want to travel forever like us, it's pretty much a must.
OK Escapists, that’s it for now, but make sure you come back and check in on our progress in our quest to travel forever. We promise we’ll put everything we’ve got on the table for you.
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Thanks for the visit, and best of luck with your adventures!
Hey guys,
Thank you for the shout out. We are delighted that you found our expense summaries useful and then shared them with your readers. It has really helped us through the last year to get in the habit of tracking our expenses daily. While it cannot be called "fun" to do, it really helps to make sure we are staying on budget and able to stay traveling for longer.
Great tips on the idea of the "Magic Number". For us we've been using the magic number each day and tacking that on to the end of our trip. So, $20 means another breakfast on the road somewhere. After our first year we added another 100 days onto the end of our adventure. Thank you for the great ideas.
Let us know if you are interested in a guest post at RTW Expenses. We'd love to include one from you guys.
Warren Talbot recently posted..What is it like to travel around the world? (Reader Questions #3)
They are so useful. I play to copy you when we travel with our family!
I think the "fun" of tracking expenses comes with the payoff of seeing how cheap you can travel. 100 days extra just for tracking! That is a huge, and fun, payoff.
Thanks!
Thanks for the great tips! I always have trouble in the "budget tracking" part. I'm too excited about traveling and don't want to bother myself with writing everything down. It always comes back to haunt me later! When we take our big trip after teaching in Korea, we'll have to be more diligent about it.
Maggie recently posted..How to Avoid Rude French People
Yep, I am the same way, that's why I track everything now - it keeps me from hating myself later.
I say do it Maggie, it really helps and you'll save a ton and have just as much fun.
Thanks for stopping by.
I wish I found it easy to stick to a budget. We've just completely blown our budget in the last 2 months by buying a new camera and a gold metal detector.
You can do it Amy! Try this method - it works!
And after some time you won't even need to do it anymore. Just make sure you start with a reasonable budget.
I know I can do it ... I just keep being tempted!
Good to see someone including the pre-travel expenses. They are such a major part, and it's fooling yourself not to include that initial outlay.
Warren and Betsy have it down Jarrad! Follow them and you'll start saving.
Glad to see you here!
Hey Justin. Thanks for that post. I'm really anal about our budget. Thinking I might give this a try to simplify the whole thing. Reading this was the poke in the ribs I needed to have a travel budget discussion with Gert who just happened to be home tonight. With nearly 4 months of planning and getting ready under our belt I still hadn't shared what I expected us to live on each week while away! All fixed now. Sadly I can tell u we've planned on more like $250 a day. There is 5 of us and with the girls being older it's practically 4 adults and a child travelling so maybe we are justified in spending more. Maybe not!! lol
Tracey recently posted..Chaos Reigns!! Packing up for long term travel is hell.
$250 a day! You won't need to budget with that! That is plenty.
Hey, if your doing a once in a lifetime trip, you might as well go for it!
Great advice on tracking your budget. We are also planning on a budget of $100 a day for our RTW trip. We are planning on traveling for 2 years, but if we can stretch it out longer, we will.
We operate an awful lot like you guys. We are completely frugal. We go camping, refuse to spend money on anything, and then end up at the Four Seasons for brunch. It works for us. And I'm happy sitting by the campfire being very low key. But there's also a part of me that wants the finer things.
Clark Vandeventer recently posted..9 places I’ve loved in 9 years
Great Article. Really enjoyed reading it. My wife and I are very budget conciseness and with kids and all that goes with that, ya kinda have to be!
Another informative post, as usual! But i have to disagree with you regarding not being able to keep your expenses on an app. We have an iPod touch with us, and use the app, Expenditure. it is TERRIFIC. you can carry-over, and you can also EXPORT TO EXCEL!! that in itself is wonderful as you can further tweak your spreadsheet there. the app lets you customise your own categories and there's no need to add up much, except you do have to add up your daily yourself. we have the iPod with us pretty much all the time (the size of a notebook) and just input as we go through the day.
interesting about the 'magic number'--we have come up with our own magic number in a not-so-concise way, but same premise and we did take into consideration of our pre-trip expenses too. but going to re-work our numbers based on your formula and see what we come up with!
Let me know how it goes! I am off to check out expenditure.
Your probably right. I have to get more tech savvy. Anything that helps me save money I am into. Thanks!
Saving time is good too
with2kidsintow recently posted..Hong Kong-- Bright Lights, BIG City