We all know that to travel you need money. Some travel on high budgets, others on low ones. Regardless, there's always a certain amount of money involved. On top of it, most travellers have the regular home bills to handle at the same time.
I’m hoping to share a few tips to avoid missing bill payments or going on money spending frenzies while on the road. It's so easy to get carried away, get confused with exchange rates, or lose track of time. This first post of four is dedicated to budget.
The first thing to do before travelling and for the day-to-day life is a budget. A lot of people cringe at the idea. They feel trapped. There are so many negative connotations linked to the concept of budget, but in reality having one will bring you much closer to freedom than ignoring your financial responsibilities. This is what will allow you to travel in peace.
Making a budget doesn’t require a financial degree. Simple addition, subtraction, division, and multiplication will suffice. Here's a simple example of how you could go about it. I even made an Excel template that you can download and use. It adds up and automatically gives you your travel budget.
Download this Simple_Budget_Template document to build your budget and get your monthly travel savings. You'll generally need to save this amount over a few months to have enough for a trip. If you need to unlock the cells, the password is budget.
Read more below to learn how to build your budget.
Income and Savings
Either on paper or in a Excel-type document, in a first column, mark the total monthly net income you make. Below, note what 10% of the income is. This portion should be destined to savings, savings aimed at nothing. You need savings for a rainy time. While on the road, you don’t know what may happen there or back home. At the end, if 10% is too much, you can play with that amount so that everything fits. Over the years, you should aim at increasing that amount closer to 10%.
In a second column, make a list of all the items you need to pay per month (Monthly Spending) including the rent or mortgage, utilities, insurance, and everything else recurring weekly or monthly such as subscriptions, membership, groceries, and gas. Multiply the weekly spending by 4.5. There is a bit more than 4 weeks in a month. You also need to reserve a Personal Spending amount. You'll always spend on something like entertainment, shopping, or wellness.
In a separated column, make a list of the sporadic spending that may occur once or a few time per year such as dentist appointment, membership renewal, credit card annual fees, and car registration. Try to find them all. The more detailed you get, the better.
Add up the sporadic spending amounts. You might be scared at the final number, but it is what it is. If you ignore those numbers, that’s where your finances will get derailed and bad surprises may happen.
Now that you have the total number, divide it by 12. That’s the number you need to save per month to pay for these.
Finally, in one last column combine these elements together. At the top, indicate your income, then subtract the monthly spending amount and the monthly sporadic spending amount. The result is your Remainder.
Now, is the remainder positive or negative?
If it's negative, then you have a bit of work to do. If you want to be able to travel regularly, you need to make this number positive. What can you reduce or remove from that list? This means reducing it in real life as well, not only on paper. There's always something you can cut. Ask yourself “Would I rather this or a travelling?”. For example, would you rather have cable TV with 125 channels or a trip to Costa Rica? Maybe regular TV or something like Netflix could be a good alternative. I personally don’t have TV reception or cable at all. I have Netflix and a decent internet service. Go through your list like this until the budget balances out and you have a substantial positive number. Zero is too tight of a result. Give yourself some buffer.
If it's positive, great. By how much? If you want to be able to travel, this bottom number is important. It’s where the juice is. I mentioned earlier that you should reserve 10% of your income for savings. Is your remainder bigger than 10%?
Monthly Travel Budget
From your remainder, subtract your personal spending amount and your savings. This result is your monthly travel budget!
How does that amount look? How many months would it take to save the amount you need to go on that trip you have in mind? Too long? Please avoid jumping to the easy solution… credit cards. This is not a viable solution for sustained travel and even short-term travel. They can help reserve your booking and buying oversea, but you should have that amount in cash!
If your monthly travel budget is too small, it’s time to look at what you can cut. The same way as if your remainder was negative, go back to your list and see where you can reduce and eliminate. We need way less than we think. What are your priorities? How much do you want to travel? You can play with the savings number, but try to keep a decent amount. It’s your life saver, your Murphy’s law shield. If you have your savings, you won’t need it. If you don’t have it, somehow the universe will send you banana pies right on the nose!
Download the Simple_Budget_Template document. Play with the numbers and have fun thinking about all the trips you'll be able to go on with your basic stuff in order.
In my next posts, I'll dive a bit deeper and talk about:
Leave a comment if you found this post useful or have feedback!!
Who Am I? I'm many things. I'm passionate about tons of stuff. I love travel. I love self-improvement. I'm a sucker for optimization, efficiency, and minimalism. I renewed with mathematics and science, those are so amazing. Astronomy and chemistry are just plain awesome! I'm a student, a mentor, a traveler, a learner, an artist, an animator, and Disney brings me tears of joy! I love to grow and I will never stop! So who am I? All that and everything else I have not discovered about myself yet. It's a never ending answer!
Qui suis je? Je suis beaucoup de choses. Je suis passionné des tonnes de trucs. J'adore voyager. J'adore la croissance personnelle. Je suis vendue à l'optimisation, l'efficacité et le minimalisme. J'ai renoué avec les mathématiques et les sciences, des mondes tout simplement incroyable. L'astronomie et la chimie sont tout simplement génial! Je suis étudiante, mentor, voyageuse, artiste, animatrice et Disney m'apporte des larmes de joie! J'aime me pousser à fond et je ne cesserai jamais! Alors, qui suis-je? Tout cela et tout le reste que je n'ai pas encore découvert de moi-même. C'est une réponse sans fin!