“I wish I could travel, but I just can’t afford it.”
If I had a dollar for every time I have heard that excuse…. I could probably fund my travels for the rest of my life!
You don’t need to be rich to be able to travel. Just look at me. I am certainly not rich. I don’t even have that great of a paying job (when I do work). But I have been to more than 30 countries in less than 6 years, and you could do it too.
Analyze your spending
Before you can start thinking about saving, you need to think about spending. How much do you make each pay period? How much do you spend each pay period? Hopefully the second figure is lower than the first, but if not, we can still work with that.
Spend a week or two, or even a month, tracking your daily spending. How much do you spend on food? How much on rent? How much on entertainment? Do this for as long as it takes for you to develop an accurate picture of your spending habits.
Analyze it some more
Now look at your first budget breakdown you created. Can you break it down some more? For example, sub divide your food column into “groceries”, “eating lunch out”, “eating dinner out”, and “coffee.” Are any of those columns higher than you expected? Could the simple action of spending more on groceries and taking your lunch to work instead of buying it make a big difference to your budget? How about those coffee expenses?
Last year I wrote a blog post called “the good, the bad, and the ugly.” Basically in this exercise you analyze your budget using the good, bad, and ugly approach. For example – cooking dinner at home for your friends – good. I mean, you still need a social life right? Going out for dinner with your friends – bad. Much more expensive than a dinner party at home, but it is something you will still want to do every once in a while if you ever want to get out of the house. A night on the town filled with endless tequila shots and trips to the ATM – ugly. One night on the town can blow your whole budget, and you will probably feel like crap the day after anyways.
By using this approach you can help yourself to eliminate the “uglys” from your life, and limit the bads. The result – a lot more money in your travel fund.
Research how much you need to save
Saving without having a concrete goal in mind can be really disheartening. If you don’t have something to work towards, it can be really easy to relapse back to your former spending habits. Spend some time researching how much money you will need for flights, visas, transport and accommodation. Also, don’t forget other expenses like travel immunizations or doctors visits before your trip. Guidebooks and other travel blogs have a wealth of information about what the daily spend in countries around the world looks like, so use this to create your savings goal
Now add about 25% to that saving goal as a “cushion” for any travel mishaps, or those large one off expenses that sneak up on you once you arrive back home (like… rent…).
Open a separate savings account
Most banks charge no fees for savings accounts, so there is no harm in opening up another account. Sometimes you can even find accounts with higher interest rates than normal transactional accounts. The best type of account for saving are fixed rate bonds – these are accounts which give you higher interest, and which don’t allow you to access your money for a certain fixed rate of time. These are the ones to go for. If you can, try to not have the savings account linked to your debit card, so that you are not able to dip into your savings during periods of temptation.
Create a savings plan
Now go back to your spending analysis. Once you cut out all those ugly expenses, and start limiting the bad ones – just how much money can you save each pay period? Don’t just limit yourself to the bare necessities for life while you are saving either– you still want to enjoy your life even while you save for the trip of a lifetime. Give yourself a budget large enough for the necessities as well as a bit of extra cushion as well – and then all the rest goes into your savings account. If you are on a regular pay structure then you can even decide in advance the exact dollar figure you will transfer to your savings account each pay period. If you work casually it can be a bit more difficult, so just transfer over a certain percentage of your pay instead.
Celebrate savings milestones
The last thing you want to do is start feeling disheartened about your savings. You may feel like you are cutting back all you can, but it is still taking forever to reach your goal. Don’t let this get you down. Celebrate each saving milestone. For example, for every one thousand dollars that you save, treat yourself to one of the “bad” things on your budget as a treat – just don’t go overboard.
Buy less stuff
Believe me, the travel bug is extremely contagious. It is very likely that once you return from your first trip, you will immediately start dreaming up your second. This isn’t a bad thing – this is a great thing! As the travel lifestyle becomes more and more important to you, you may realize that all that stuff you have been accumulating over the years is losing a bit of it’s value to you.
A great way to save more money (and help out the planet) is to simply buy less stuff. Do you really need the latest and shiniest new gadget? Is that new pair of jeans really going to enrich your life in the long run? If the answer is no – then don’t buy it.
Reduce, Reuse and Recycle… but mostly Reduce
But what about all that stuff you already have? If you want to spend extended times travelling or backpacking, all that extra stuff will soon become a burden to you. You will have to pack it up, organize it, and store it somewhere. And if you don’t have good friends or family nearby, you may even have to pay for that storage.
Start examining the things in your life. If you don’t really need it – then sell it! Sites like ebay and gumtree make downsizing your possessions easier than ever – or heck – you could even have a good old fashioned garage sale. And all that money you make from selling your stuff can go straight into your savings account!
Downsize your living arrangements
Now that you have less stuff, you will find you also have a lot more room! This is a good time to consider downsizing where you live. If you are renting this is fairly easy. Look for a new, smaller, and cheaper apartment. All that money you save in rent can go straight to your savings.
Really attached to where you live? Or do you own your house? Well why not start looking for a roommate to rent that extra room to? If you own your own house as well you can consider renting it out during the time you are away for some extra cash.
Sell your car
Unless you really need your car for your job, then get rid of it. If you are like the majority of the human population, and live in a city, then likely you will have some sort of public transportation network at your disposal. Once you cut out petrol costs, parking fees, insurance and registration payments, and car payments themselves, you will suddenly find yourself much, much richer.
And if you live in an urban area where parking is scarce, you can now use that empty space in front of your home as a new form of income. Rent out your parking space! I used to live near a university campus and could easily make a pretty penny renting out my parking space to a student.
So go on, start your savings now
All of these tips are common sense, and can be easily adapted to your life – no matter what your particular situation. So go on, what’s stopping you?