Now I am no expert when it comes to saving, my mother will tell you I love to splurge all my money, but when saving for long term travel having a plan certainly helps. Despite my love of spending when it comes to something I really want I can work out where to trim the fat and where I can afford to keep saving. So here are my top tips for budgeting for your big trip.
Work out how much you might need.
It will be different country to country and person to person but getting an idea of how much it will cost to travel in your dream destination is always the best place to start. Australia is always going to be more expensive than traveling Thailand and certain European countries are more expensive than others so figure out how much you will need to keep you comfortable. Then build in some "rainy day" allowance to that figure, that way should you lose your luggage, have your passport stolen or miss your bus/train/plane you know you have an allowance so you don't become stuck.
Work out what you have coming in.
Working out your earnings before budgeting is a great place to start on any trip depending on how you are paid, basic wage or commission based you may need to adjust your method slightly. For myself being a hairstylist I have always been paid with a basic wage plus commission so where I started was to actually ignore my commission and work just off my basic wage, that way any I was only working with an amount I was guaranteed to receive each month. I also made sure when I entered the amount into my spreadsheet I worked on my figures post tax, so it was exactly what would go into my bank.
Work out what you have going out
An obvious step two is to work out what you have going out of your account every month that you MUST pay. This is not that new pair of shoes or trendy new lipstick but direct debits such as car insurance, rent, phone bill etc. that are unavoidable and will need to be paid up until your big trip. Add these to your spreadsheet and then create a formula that will work out the amount you come out with. Normally in Excel this comes via the Ʃ or ‘SUM’ buttons (see a simple formula below). I like to put all my outgoings in a line so that i can tally it all up and have a full amount of outgoing and a full amount of incoming.
Work out where you can cut back
The biggest difference you can make when saving is to work out where you can cut back without sacrificing your entire life. If you completely cut back on al the fun things you love doing you will just end up hating your time saving for your big trip but if you work out what you can cut back on and still have a balance this is your best option. It could be that you buy your work lunch out everyday, buy Starbucks coffee and go shopping on your lunch break, if this is the case maybe change to packing your own lunch but still treating yourself to that Starbucks coffee. If you like to party at the weekends leave your cash card at home and only take cash out, this way you can only spend what you have on you and not a penny more. Depending on the difference between your incoming and outgoing cash flow you may wish to cut out both to give yourself that bit of extra cash to play with.
Budgeting is Key
After your have followed the first two steps you should have worked out what your “Disposable Income” is. This is basically any money left over after all your bills have gone out that you would normally go and spend on whatever you please. I decided to then take most of this and put it to one side for my travels leaving myself a small budget for everything else, which is my case was clothing (always my downfall as I love fashion), which I then gave the smallest budget in favour of nights out with friends instead. You cant take lots of clothes with you or material goods so I would change perspective and look at making some good memories before you leave with people you may not see for a long time.
Stick To Your Budget
The worlds financial crisis happened partly because people were spending more than they earned so once you have set your budget stick to it. Don’t spend a penny, or cent, over and anything left over at the end of the month put to once side for your travels as a boost to your savings.
Keep It Separate
This worked best for me after I had sorted out all my budgeting, I created a new savings account with my bank, in my case online, so that once the money was in that account I knew it was for my travels and with it being online it wasn’t as easy to just see in my bank account and spend. Sometimes out of sight out of mind really works just don’t try hiding it in your mattress or sock drawer as is wont gain interest and you may get too tempted to spend it.
I hope you have found these tips helpful, if there is anything else you would like to know or for me to blog about to help you on your way to your dream trip let me know in the comments below or on twitter.