Planing to travel for an extended period of time can be a daunting, stressful, and an anxiety producing process. Not surprisingly, a large portion of most people’s travel fears revolve around money. If you’re planning to quit your job and travel, trust me, you’re not alone in your concern. I’m right there with you. But here’s how I’m making it work.
How High Is Your Risk Tolerance?
How stressed your monetary situation makes you feel (when it comes to travel) is largely dependent on what level of financial risk you are comfortable with.
My friend Autumn left home at the age of 19 with $500, and managed to live and travel the country (including Hawaii) for four years. While that sounds exciting, I personally would like to have a slightly larger bankroll to cushion unforeseen expenses and income dry spells. Plus, I want to travel by motorcycle, which naturally includes some expenses that walking and public transportation don’t require, i.e. insurance, gas, etc.
How Much Money do You Need?
But how much money is a reasonable amount to stash in the bank before you leave? Rolf Potts, author of “Vagabonding”, traveled internationally for two years on $12,000. I’ve also heard of people leaving home with sums up in the $20,000 to $50,000 range. I don’t think there is a set number for everyone. How much money you need to save will depend largely on your current lifestyle, the type of lifestyle you want to lead on the road, as well as the amount of money (if any) you will be making while traveling.
How To Save Thousands of Dollars – Quickly
First off, forget about being unnecessarily stingy with small purchases. This is a concept I discovered from Sethi Ramit in, “I Will Teach You To Be Rich”. For example, let’s say you want to travel next year, so, you decide to give up your daily cup of coffee. At $2 a day, and let’s say five days a week, you will have spent around $522 for the year. And that’s gourmet coffee every morning for a year. Now, that might seem like a lot at first, but it isn’t.
The average car payment in the United States is $400 / month. Let’s say you have one of these nice vehicles, so you also spend $100-$200 per month for insurance. And, if you factor in gas at $200 per month (which is conservative), you’re looking at $700 to $1000 per month to own and operate a newer-ish car. And that’s not including repairs, tires, etc. Selling or downgrading your vehicle could allow you to save $8,000 to $12,000 a year. Now, doesn’t that make your coffee savings seem like a joke?
You Want to Travel, Do You? Drink Your Coffee and Sell Your Car.
Forget about the little stuff and cut the big expenses. So what are the big expenses that consume most of your income, while simultaneously keeping you attached to your job and paycheck?
High Expense Items:
- House / Apartment
We’ve already talked about the car, but your mortgage / rent and debt are costing you serious money too. If you pay $400 – $1500 in rent or house payments a month, plus another $120 in credit card payments per month, that’s another $500 to $2000 a month you could be putting toward traveling.
Discussing the finer points of living without a home and/or a car are probably beyond the scope of this article. But, it’s something I intend to talk about extensively in the future, since I’ve done both. However, I’ll touch on it here.
Obviously your ability to cut costs will depend to no small degree on your current situation. It’s much easier for a single twenty-something (like me) to live without a car and apartment than a married person with children. However, don’t make that an excuse; You can do this.
If your situation is drastically different from mine, you can still use the principals I am. But, perhaps to a lesser degree. For example, you don’t need a $20,000 car to get to work and take the kids to soccer. You can do that safely in a $5,000 car, and in a pinch, an $800 car.
The same applies to your living situation. You can move someplace cheaper, live with more people to reduce rent, or re-finance your home and consolidate your debt. All while staying at the same income level and banking the extra cash. You don’t have to be homeless and sleeping in your truck like me to travel the world. However, living out of your truck is an adventure in and of itself.