This post is all about money when planning an around the world trip. Often I see posts on The Lonely Planet’s Thorn Tree Forum about people who want feedback about their around the world trip plans. One of the top criticisms is not enough budget for their big plans.
Planning A Realistic Budget
I know…yuck, a budget. But if you don’t begin to budget as soon as you start your plans you may not even go on your trip for fear you don’t have enough money; or you may run out of money on your trip. Unless you plan to work along the way, a budget is important.
Planning a budget for transportation is easy by just doing a few Google searches on Skyscanner, Travelocity or Kayak to your pick cities. And make sure you check the numerous discount airlines like Ryanair, Easyjet and AirAsia, etc. that don’t participate in the big booking engines. If you are planning to visit a lot of countries, airfare will be your biggest expense. (I’ve written about the pros & cons of an around-the-world ticket and how to use airline miles to fly for free.)
Plan for the cost of a railroad pass if you are traveling in western Europe, or taking any lengthy train trips. But if you are planning to take mostly buses and ferries, you can probably simply add $50 because it’s rare a single ticket would be more than that. I’m simplifying the process because you can get bogged down in budgeting for each penny when it’s the big stuff like airfares that really matter.
A Realistic Per Diem for Each City
Estimating a realistic budget per day for each city you visit is the next big step in planning.
Your accommodations will be the biggest portion of this per-day budget. I use HostelWorld to estimate how much a room is going to cost in each city I plan to visit. I like HostelWorld because I can see the rating of travelers like myself to decide if a hotel or hostel is going to be nice enough. I have read lots of posts about travelers who plan to couch surf their way around the world but I really don’t think that’s realistic for most people. I’m older now but even when I was young I liked my own space. And when I say “nice enough” for me, it means bare-bones basic is o.k. but not dirty. I will pay extra to be in a clean place. So when I read reviews about bedbugs, dirty sheets, etc. I know I have to increase my budget to stay in a more costly place.
I’m not suggesting you actually book a room in advance. I’m simply saying use your projected dates and a type of accommodation you think you would like to get a rough idea of the cost. Regarding booking in advance, sometimes we do but often we don’t. If we are going to a city or town that is pricey and there aren’t too many budget options, we book in advance. But if there are lots of budget options we prefer to wait until we get to the city and check it out in person before we commit to it.
Meals are really easy to budget. I plan $2 per breakfast no matter where I am because I can always get fruit and yogurt or a pastry and coffee for that price almost anywhere in the world and quite often breakfast is included in the room price. Lunch is $3 per day for a sandwich, street food item or a picnic thrown together from the market. For dinner, personally, I like to go to a sit-down restaurant. I usually go to a local place but I do like to have a glass of wine or beer and a decent hot meal. I do a quick Yelp search to determine how much a moderate restaurant is going to cost per night. Usually it’s less than $15 per night. In general, that’s about $20 per day per person which is plenty in most countries–I spend less that that often but at least I budget for it and don’t run out of money. (In pricey countries we do quite a bit of cooking ourselves if we have a nice kitchen but don’t budget being able to do that all the time.)
We try to do some sort of sightseeing almost every day, whether it’s visiting a church, museum or taking a walking tour. There are tons of free things to do everywhere, so that’s what we do first. Where there is a “must-see-before-you-die” site we budget for it. For example, a pass to Petra in Jordan, Angkor Wat in Cambodia, a boat ride through the Milford Sound in New Zealand are quite expensive and need to be planned for in your budget.
Fun Money and Emergencies
I budget about $25 per week for fun money to spend as we go if we discover something cool to do that we didn’t budget for. I also put $1000 in an emergency budget just in case we need to fly home unexpectedly or get terribly sick–thank God neither has ever happened.
Expenses at Home
When we travel, we still have to pay for health care insurance, car insurance because we store our cars, we’ve had furniture storage, at times we’ve had a mortgage payment, cell phone costs, etc. Budget for all these necessary expenses while you are gone.
Start Up Costs When You Return
We budget a few months living expenses when we return home. This includes a rental deposit, turning on utilities, getting furniture out of storage, etc.
Budget or Just Wing It
It all may sound daunting but I guess it depends on your personality. I enjoy planning and I like the peace of mind knowing we will be able to take our trip and have a good time without worrying about money. However, the very first long-term trip I ever took I had a plane ticket and $5,000 without much of a plan and it was great, too.