Some people have asked me about how I go about saving for travel, so I thought I’d say a little about it here. If you search for articles on the topic you see a lot of tips such as bringing lunch to work or skipping daily coffees (the kind of thing I wrote about in my how to be a cheapo post), but here’s something a little bit different.
Warning – I’m going to use maths.
Amount you save per week x Number of weeks you have to save
= Holiday Budget =
Daily Budget x Number of days + Flights + Intercity travel + Safety margin
So, for example, if you want to leave in 52 weeks time and can save $500 per week, that will give you a budget of $26,000 by the time you leave. If you can save more per week or need less money, you could do the same in a shorter timespan – if you need more money or have a shorter amount of time to save, you will have to save more per week to get there. This is assuming you don’t have any major debt – I’m no financial advisor, but I think it makes sense to pay off any credit card debt and allow budget for loan repayments if you have those things to deal with.
When we started saving, the plan was to have enough money to spend 6 months travelling around Europe and hope that we’d find work to cover another 3-6 months (else come home). Some quick research puts the average shoestring cost per day in Europe at 50€ per person (hostel dorm bed, self-catering most meals, public transport, maybe a beer if you’re lucky) which is currently around AUD$60. I rounded this up a bit since I’d like a bit of wiggle-room and some cities we’re visiting are a bit more pricey – so calculated that part of the budget at $100 per day for 180 days = $18,000. Add in another $2000 for flights from and back to Australia, a couple thousand for intercity travel and a bit more as a safety-margin (or for shopping!) and we ended up with the nice round number of $26,000 – which as I mentioned above requires saving $500 per week over one year.
Of course then things changed and we’re no longer travelling for such a long period, so we’ve actually already surpassed what we need. But it was useful to see that we were able to do it, and it’s a practical approach I’ll be using to save up for any big travel or purchases in the future. Personally I found that having a set amount to put into my savings account each week made it much easier to commit to than just topping it up when I felt I had money to spare.
For a lot of people $500 per week isn’t feasible – it wouldn’t be for us if we had a mortgage, kids or expensive medical bills for example – and the amount they can squirrel away is far less. And that’s okay! Plan for a shorter trip, a cheaper location or save up for a longer period of time. There are people who genuinely can’t afford to travel, but most people I come across prioritise smaller daily comforts or splurges over saving up to go somewhere – which is okay too, unless you actually really do want to travel and can’t figure out how! Saving up in small, consistent increments over a long period of time doesn’t sound very sexy and isn’t the easy answer people want to hear, but it does work – if slowly.
Since we haven’t actually gone yet I can’t say for sure that this formula is completely foolproof, or that we’ll definitely have enough money… but with the ‘safety margins’ adding some extra padding, I think we should be okay. Of course not everyone wants or needs to play things as safe as I do – we could probably get away with a much smaller amount by keeping strictly to a daily budget and not having any extra, but I like to have the option of staying in a nicer hotel every now and then or being able to pay for unforseen circumstances if necessary!
If you’re saving up a decent amount, don’t forget to put it in a high interest savings account. The interest each month might not sound like much, but if it all adds up to another few days in some wonderful place then I think it’s something that’s worth doing. We’ve been doing a bit of a shuffle to make the most of high interest rates, and to make sure we’re still generating interest on the remainder of our money when we leave and need to start taking money out. There’s probably other ways you could invest your savings, but this is one that I’m comfortable with.
Depending on how long you’re going, it’s also a good idea to set aside some money for when you get back home. This is especially important if you’ve sold your car/house/earthly possessions and quit your job – finding a new job, place to live and other unfortunately necessities of ‘real life’ can take a bit of time and initial funds. It’s hard enough getting back into the swing of things after a two week holiday, I can only imagine how difficult it would be after a few months or more away!
So there you go – very simple but challenging. Don’t worry, it becomes habit very quickly! I hope that this helps someone out there who isn’t sure how to begin saving for travel.