How to Budget for Long Term Travel

We are often asked how much it costs to travel for a year. Obviously this isn’t an easy question to answer – it depends on where you go, what you do and what level of comfort you would like. To answer this question for yourself you need to come up with a travel budget. This is how we budgeted for our year long round the world (RTW) trip.

Plan where you want to go

Have a rough idea of which countries you’d like to visit and how long for. You can (and very probably will) adjust this later, depending on what you can afford and how your plans change.

Calculate your pre-trip expenses

These include flights (RTW or pay as you go), travel insurance, visas, vaccinations and gear (clothes, backpack, camera etc).

Work out your daily budget

For this you need to know where you want to go, how long for and how much an average daily budget is for that country. For example we budgeted £12 each per day for India for 3 months which totals £1080 per person. It helps when countries within a region have similar budgets, so you can budget say £12 a day for 5 months on the Indian Subcontinent and £15 a day for 3 months in Southeast Asia. This gives you greater flexibility to change your plans without messing up your budget.

There are many resources you can use to find out the average daily budget for a country. A guidebook is a good place to start; you could borrow one from the library or download the ‘Getting Started’ chapter for free from the Lonely Planet online shop. You could search the Lonely Planet Thorn Tree forum. Travel Independent also lists average daily budgets. If you google ‘daily budget’ + the country you want to visit you’ll find plenty of other estimations.

Christine from Almost Fearless uses a simple technique to estimate a daily budget. She finds out the average cost of hostel accommodation in her destination on sites such as Hostel Bookers, then multiples this by 3 to cover food and other costs. I think this is about right, although you can get away with 2 x accommodation costs if you are frugal. You need to keep track of your spending on the road so that if you go over on your accommodation budget, you can cut down on food or other expenses to keep on budget.

Usually these daily budget estimates are for a pretty basic level of travel. If you want extra comforts such as a/c in your room then you’ll want to increase your daily budget. If your budget is tight then stick to cheaper countries to reduce your costs, and limit your time in expensive countries (Australia, New Zealand, Western Europe, USA etc).

Budget for extras

Your daily budget will cover your basic everyday expenses but it won’t be enough for more expensive items. You need to keep a separate budget aside for these extras such as flights or activities. We kept a big ‘fun budget’ aside so that we could learn to scuba dive, rent a houseboat in Kerala, skydive in New Zealand and do many other activities without worrying about our bank balance. We also used this budget to rent cars in Australia, New Zealand and USA; and to stay in some luxurious hotels when we needed a break.  Make this budget as big as you can – you won’t regret it.

Have a contingency

It’s also important to keep a contingency for the unexpected, as you never know what might happen.

Our RTW trip budget

As an example here’s what we spent for two people on our year long trip. Amounts are in GB£.

*Daily Budget Breakdown (for two people)

Notes on Our Budget

• Actual daily budgets are rounded up or down to the nearest pound for ease, but the total spent in each country is accurate.
• The daily budget is what we spent on everyday expenses including accommodation, food, local travel, internet, and sightseeing. Any major expenses such as flights, expensive activities and the occasional luxury hotel are accounted for separatly (see ‘During Trip’ budget above).
• We used World Nomads for travel insurance. They are very popular and reliable but this time we found insurance for £260 for us both with Multitrip. We did need to buy separate laptop and camera insurance though for an extra £127 with Photoguard, as no backpacker policies cover expensive valuables.
• We spent 10 days WWOOFing in Australia where we worked in exchange for food and accommodation so we didn’t spend any money at that time which helped reduce the Australia budget. We later rented a campervan so only had to pay campsite fees for accommodation.
• In New Zealand we upgraded our accommodation and stayed in apartments or motels so our budget was higher than planned.
• In the US we stayed with family and friends much of the time so this reduced our accommodation expenses, but we didn’t watch our spending too closely as we were near the end of our trip and still had money in our bank account.

We managed to save a lot for our trip (read How We Saved 75% of Our Income To Travel ) so we didn’t have to worry too much about what we spent. You could do this trip on much less but we chose to take advantage of all the activities on offer, including lots of scuba diving.

What if you don’t have a plan?

This budgeting technique worked when we had a good idea of where we were going in the year time frame. But what if you have no idea where you are going or how long for? This is the position we are in now. We don’t have a plan this time, except that we want to travel for as long as possible. We can’t budget for this, but we’ll keep track of our spending, try to travel as cheaply as possible (read How We Plan to Travel Forever) and always keep some emergency money aside.

For tips on how to deal with money while travelling read how to manage your finances when you are on the road.

How do you budget for long term travel? Any tips for budgeting when you have no plan? Leave a comment and tell us your tips.