Four Simple Rules For Planning Your Travel Budget

Explore the Four Rules For Planning Your Travel Budget by following two solo travelers, Hannah and Jack, in the process of planning their long-term trips. Find out why it is important to know your goals and make a plan. 

Hannah

Hannah is a teacher who loves to cycle and explore non-touristic sites. Her dream is to take a gap year, fly to Hanoi, Vietnam and cycle all the way to her home in London, UK. What stopped her until now from doing so was that she didn't know how much money she will need for her travel.

Jack

Jack is a graphic designer who wants to make his dream of working as a digital nomad come true. He would like to work remotely as a freelancer (ideally on the beach), staying for a couple of months at different digital nomad hotspots around the world - from Chiang Mai over Hong Kong to Mexico City.

Rule 1

Create your own budget - don't rely on other people's numbers

Some say its 50$ per day while others say 30,000$ per year. If you do not want to risk your money on gambling then don't rely on such information. Traveling the world is a life-changing event and different people have different travel goals, different lifestyles, and hence different costs. The key to a realistic travel budget is to have clarity on your own travel wishes and objectives.

​

See the example

Cycling through different countries and cultures, Hannah has to take whatever accommodation and food she finds on her way. She, therefore, considers almost all prices ranges equally in her budget. Going by bicycle, of course, she does not expect high expenses for transport.

​

Living the life of a digital nomad, Jack plans to go for medium price ranges most of the time and whenever he finds himself stable in his freelance job, go for premium options. As he wants to explore the areas, he considers all forms of transport equally in his budget.

Rule 2

Your travel gear needs a budget, too

Depending on your travel style and prior travel experience, a significant part of your travel costs may occur even before entering that plane - do not underestimate the split of travel gear on your overall budget. While there are not only plenty of different travel gear items for different purposes, the very same item often is available in different price categories. Better plan your gear shopping list wisely.

​

See the example

Hannah's gear requirements can be summarized in one word: lightweight. The fewer items she takes with her, the easier it will be on for her on her cycle. She packs a bivysack and a sleeping bag as a backup in case she does not find accommodation on her way.

​

Jack wants to level up his electronic devices to be more productive when working remotely. A new laptop, headphones, smartphone and a smartwatch are on his shopping list.

Rule 3

Make the achievement of your travel budget your number one financial goal

After setting your financial goal (= your travel budget), it is time to make a plan on how to achieve it. Remember: a goal without a plan is just a wish. Hence, make a detailed plan of how much money you want to keep aside each month to save for your travel and keep track of your progress. Find out when and how long you can travel with your savings.

​

See the example

Noting down her foreseeable incomes and expenses for the coming months, Hannah is able to extrapolate her savings into the future and find out that she will have enough savings accumulated after twelve months from now to start her trip. 

​

As Jack plans to earn money while traveling, he only needs to save as much money before his trip as is needed to cover his extra cost. In his finance simulation, he, therefore, assumes a monthly income during his trip of 30% of his trip expenses in the first six months, 50% in the next six months, and 70% in the following. With this approach, Jack finds out that he already has enough money to start his digital nomad life immediately and travel on his budget for two years.

Rule 4

Keep adjusting your travel budget to your travel goals

Your travel goals might change as you plan your trip or even while you travel, not only in terms of duration but also in terms of destinations and travel style - that's perfectly fine. With Leap, it is easy to find out what a change in your travel goals means for your budget.

​

See the example

Hannah's goal is to turn her dream into a reality as soon as possible. She, therefore, checks how much sooner she could travel if she changed her route by replacing high-cost countries with low-cost countries. She starts writing her gap year application letter as she found out that after three more months of her 9to5, she will be able to start her travel.

​

Jack wants to travel as long as possible. While he might not be able to fully cover his expenses with his irregular income from his profession, he wants to experience a nomadic lifestyle for at least three to four years before thinking about settling down and having a family. He performs a sanity check on how much longer he could travel if he worked as an employee with a regular income for a few more months. He finds out that after six more months he will have enough savings accumulated to travel for four years.