Figuring out how much money you need in order to travel the world can be a daunting task. There are so many things to consider and take into account, where do you even begin?
The last thing you want is to run dry half way through your trip because you burned through all your cash sooner than expected.
We surveyed over 200 millennials dreaming about travelling long term and found that money was mentioned as the main roadblock on their quest to travel the world. No wonder! Money is indeed the most important factor for being able to sustain your travel life.
So how much money do you really need to travel the world?
As traveller you’ll have 3 basic expenses: shelter, food, and transportation.
Estimating these expenses will help you to figure out how much cash you will need for the duration of your trip.
In this post we will walk you through the 5 steps to calculate the budget you need for your world trip.
Step 1: What are your travel preferences?
The first thing to consider is how you like to travel and what your priorities are. We have written a detailed post explaining the implications of your travel preferences on your travel budget, but here’s the gist of it.
Here are the key questions you should ask yourself:
Do you tend to be a glamorous or rather penny pinching traveller?
Do you prefer to travel slow paced or fast paced?
Are your travel plans typically motivated by FOMO or JOMO?
Understanding and considering your travel preferences is essential when doing the research for your world trip and determining your travel budget.
If you are interested to know more about how your travel preferences impact your world trip travel budget check out our post over here.
Step 2: Make a rough route
While travelling the world and being a nomad for a long period of time can be a dream in itself, you do need to have an idea of where you would like to go.
We are not asking you to make a day-by-day plan of where you will be for the next 365 days. However, try to think of the regions and countries you would like to visit.
Write down the destinations and draw out your rough route in a note, or even better, on a world map. This will help you in the next steps.
Bouncing from one side of the world to the other every two weeks is not only harmful for your wallet but also for the environment. Attempt to cluster your destinations so that you can move around in a geographically logical order.
Lastly, don’t worry about unforeseen changes in your route. The idea is to have a rough outline of your itinerary so that you can use it in your research to estimate your budget. You can always adapt your plan on the go, when necessary.
Step 3: Do the research
Once you have determined what kind of a traveller you are and where you’d like to go, you can focus your research on finding out the costs of your travel.
Here are the things you need to research when calculating your world trip budget.
Figuring out the prices of accommodations can be tough. Prices change according to occupancy rates that are usually determined by the seasons and major events like national holidays at the destination.
It is important to keep in mind if you are a glamorous or penny pinching traveller, as this will give more focus to your research.
There are three ways you can estimate the cost for your accommodation.
1. Check travel sites
The first is checking websites like Booking.com and entering your destinations you will visit with dates during the high season. Checking for high season will show the highest you could expect to pay and ensure you are covered for the unexpected price hikes.
Note down the most common price and use that as the average for this country.
2. Use travel guides
Another less tedious method is to check in travel guides such as Lonely Planet. They usually have an estimate for 3-4 classes of travellers, ranging from budget to luxury. Make sure you are using the latest edition of the travel guide, as prices in tourism tend to change quite frequently.
The down side of this method is that you will need to get many travel guides to cover your entire trip. Try to get aggregated guides such as Lonely Planet’s Southeast Asia on a shoestring, which covers 17 countries in Asia.
3. Use travel blogs and online info
There are so many people writing about their experience traveling around the world. For almost every country you want to travel to, you will find a blog post with estimated budget for the travel.
Be critical of your sources. The blogs can be written by anyone, and are often based only on the experience of the blogger themselves. Check what kind of traveller they are and if they match your preferences and travel style.
Food and drinks costs
Besides having a place to lay your head down at night, you will need to keep your tummy satisfied. Forecasting cost for food and drinks again depends on the type of traveller you are.
Do you usually eat local food, or are you very picky about what you eat? For instance, in Asia, local food is often much cheaper than international food (pizza, burgers, etc).
To figure out the average price of food, you could use either travel guides or blogs. Usually travel guides and blogs mention the average price of different types of meals and drinks, so you can estimate based on your needs.
After preparing a rough route of your world trip, you can now estimate your transportation costs. As mentioned earlier, if your route has a logical flow to it, you could avoid taking expensive flights and move over land or water between most countries. Also, short-distance flights are of course cheaper.
You can use services such as Skyscanner to figure out how much flights cost on average. Play around with some dates to get an idea of how the prices change. With flights, there can be price fluctuations of more than 50% at some points.
Another way to figure those costs out is again through travel guides and blogs. Prices and length of different modes of transport between places are often mentioned in travel guides.
Don’t forget any additional activities you would like to do. Think about sites you would like to visit. It is not uncommon for national parks, waterfalls, temples, or any other touristic attraction to have an entrance fee. Try to figure out some costs of major sites so that you can include it in your budget.
Other extras may include a PADI Open Water Diving Course or a Yoga Retreat for instance. These can be major additions to your budget. Just look for institutions offering these in your destinations and take those prices into account.
Step 4: Average everything out to make a budget
Once you have collected all your data, the next step is to work with it and create a budget that you can use for your world trip.
The formula for a 1 day budget is:
Day’s budget = average shelter costs + average cost of food and drinks per day
Below we will go in to more details of how these values can be calculated.
Average Shelter costs
The average accommodation costs of your world trip is the sum of all average prices for a night’s stay at each of your destinations divided by the number of destinations. This will give you a rough indication of what you can expect to spend each day on accommodations during your trip.
There may be some outliers, where some destinations would be much more expensive than others. You might want to exclude those from the average and note them separately. Consider those outliers when you decide how long you would like to spend at those destinations.
Average cost of food and drinks per day
Use the data you have gathered to make an average of the food and drinks costs per day of all the destinations you will be visiting on your world trip. Add the food costs per destination and divide that value by the number of destinations.
This will give you a good estimate of what food will cost. Mind the outliers here too, and note them separately to keep in mind for those special destinations where costs are much different than the rest.
IMPORTANT: Day’s budget for different regions
Different regions will have different day’s budgets. For instance, the average accommodation and food costs in South East Asia (SEA) will be much less than in Europe. Therefore creating an average across both these regions will yield a day’s budget that is too high for SEA and too low for Europe.
While such an average would be good to calculate your overall trip’s budget for the long term, it will not be so useful on a day-to-day basis. Try to group regions together and create separate budgets for them. Then you could use these budgets to determine your overall world trip budget and know how much you can spend when you are there and stick to your budget.
For instance, if your budget per day in Europe is 100 Euro and in SEA 50 Euro, and you plan to spend 3 months in Europe and 9 months in SEA, your total trip budget will be much lower.
Transportation costs and extra activities
We would recommend keeping those separate from the day’s budget and calculating the transportation cost on a monthly basis. After all, you won’t be moving around every day of your trip. Therefore adding them to the day’s budget will not be as useful, and would make your daily budget higher than it should be.
Step 5: Keep to your budget during your trip
Once you are on the trip, it is important to stick to the budget. Make sure that you have a rough idea of how much you are spending every day on accommodation and food. Also watch out on a monthly basis, how much you spend on extra activities and transportation.
We are not saying you should record every cent you spend in the trip. This is simply annoying and difficult to keep up with.
We tried it and it didn’t work for us.
But do have a rough idea of how much you are spending on a weekly or at least monthly basis.
Some days you might go a bit above budget and other you might go below. By keeping an eye on your expenses you can make sure that you don’t go over budget too often, to avoid jeopardizing your trip.
A Travel Budget will make your dream a reality
Through creating a fair estimate of the budget you need to have for your trip, you will be more likely to turn your dream of traveling the world into reality.
Through understanding your travel preferences and doing research on how much it will cost to support this travel style, you will have a money target to save up to.
Your overall budget for the trip is the target that you will need to work towards when choosing how to finance your trip.
Whether you decide to finance your trip through savings or through online jobs, you’ll need to know how much money you need to support your round the world trip.
The work and effort involved in setting your budget will pay off as you will be able to work towards a goal. And even more importantly, once you set off on your trip, you will have a good idea of what you can spend, which will give you the confidence you’ll need to travel for as long as you wish to.