We are currently 4 months and 5 countries into our 14 month trip around the world. By far one of the questions we often get is a resounding “HOW???!!”
In other words, “how on earth did you save for your trip around the world?” Or my favourite, “you guys must be millionaires!” (HA!) Seemingly not many people can imagine quitting their jobs and living solely on savings for 14 months . Some ask how much we’re spending, other seem curious but are too polite and the social norms of not talking about money prevent them from doing so. So we’re going to put it out there – this post will detail how we saved for a year long trip around the world! In doing so, we hope to inspire others to let go of what may be holding them back from acting on the same dream.
While a trip around the world does not have to be as expensive as you would think, we don’t have our heads in the sand and know that it is going to have a significant cost. It goes without saying that taking a year off work without income and paying for flights, accommodations and food all costs money . In addition, we plan to do a lot of active adventures like hiking, cycling, and scuba diving, few of which are free. We know we can’t do it all but we’re not going to go to a country only to hang out in a hostel or city all day, we want to get out there and see nature and explore the great outdoors!
So, how did we save the money required to fund this exciting trip around the world?
1. Find a Job!
Let’s not kid ourselves, you need a job to travel. Some work while travelling, others save their income so their travel time is theirs. This is what we chose to do. We are fortunate enough to to call Calgary, Canada home which has a good economy and good wages. Although we both finished our studies with debts and graduated into the post-2009 recession economy, we eventually both found well paying, stable jobs that allowed us to sock away a ton of savings…once we paid our student debt off of course. The discipline that it took for us to pay our student loans off ahead of schedule also helped set us up for success as savers. We were used to sending large portions of our paycheques to the bank for loan payments, so when we no longer had to we continued to send our money to the bank for our future selves to enjoy instead!
Now if you don’t have a well-paying stable job, that doesn’t necessarily mean you can’t travel. We’re big fans of Nomadic Matt’s philosophy that is travelling the world is possible for roughly $50usd/day or $18,500/year. This is not an insurmountable amount of money to save and depending on where you travel to, even smaller amounts of savings can last a long time. The key here is to simply work and save! Furthermore, if you reside in a high cost of living area, you can actually spend less while travelling than you would on your day to day expenses back home.
2. Spent according to our values
Now that we’ve covered where your savings are coming from, let’s talk about spending. We started fantasising about a trip around the world during a 5 week adventure in East Africa in 2014. We didn’t really want to come back to work and would have preferred to continue exploring but we did the responsible thing and came back to our stable jobs. When we returned with a shared dream of a long term trip, we started some more disciplined saving and planning for extended travel.
Now that said, during those four years we still spent a lot of money on fun things like the odd expensive dinners out, ski trips, and trips to Mexico, Japan and the United States because we believe that life is meant to be lived. We also planned a wedding where we managed to keep to a budget and resist the wedding industrial complex as much as practicable. The point I’m trying to make is that we generally lived a normal life while steadily putting away funds for our trip. We never felt like we were missing out but were able to watch our savings accounts steadily rise and our travel dreams come closer to reality.
Essentially we spent money where we got the most happiness and limited spending in areas that weren’t important to us. We didn’t buy the latest iGadget, new skis, put new furniture on our credit cards, or drive a shiny car on an expensive payment plan, but we did buy some fancy camera equipment and go on ski trips with our friends because those are things we value. With our stable, middle-class incomes we could have easily spent more and more of our paycheques on buying nice new things or a $500,000 mortgage, but instead we valued the opportunity to have this incredible experience more and chose to both save and spend according to those values.
3. Saved straight off each paycheque
One of the main tenants of personal finance is to automate and save straight off your paycheque whenever you can. If you don’t have the option to save right off your paycheque, schedule transfers to your saving account each pay day. Humans have an amazing ability to adjust our spending based on the funds in your bank account. If you have more, you will spend more thereby succumbing to the travel dream killer that is lifestyle inflation. If you have less, you find a way to spend less.
Even relatively small amounts add up when you save steadily every single pay period. If you can’t afford to save a huge amount each pay start with something small and if you aren’t feeling much pain, try bumping it up at a later date. When you get a raise, add that increase to your savings rather than spending it.
As an added bonus, when contributing to tax advantaged accounts (IE. A RRSP in Canada) you can reduce your tax at source, compounding your saving power.
If you’re not already saving off each paycheque, or haven’t looked into automating your saving, I would recommend you consider it even if you’re not planning to travel the world. This isn’t a personal finance post, but you should have an emergency fund and savings to begin putting towards your retirement before working towards a trip around the world, and taking those funds right off your paycheque is one of the best ways to do it.
One of our favourite tools for savings is the Robo-Advisor Wealthsimple.com where we keep our Pension, RRSPs, and TFSAs. They are simple to use and have low fees so that you get to keep more of your savings. (Use this link to get $10,000 managed for free!) As an added bonus, if you reach WealthSimple Black status, you can get free Priority Pass Airport Lounge Access which is a perk we have loved taking advantage of on this trip.
4. Saved anything extra
One of the ways that you can grow your savings is obviously by increasing the amount that you save (duh), but it doesn’t have to hurt. I already mentioned that when you get a raise you could consider putting those extra funds towards your savings and that’s exactly what we did.
Any time I received a year end salary increase or a promotion, I’d increase my savings at the same time. You don’t have to put it all towards savings ( go on and treat yo’self once in a while), but even if you increase your savings by a couple percentage points each time it will add significantly to your saving power.
We applied the same principles to any “surprise” money. When we received bonuses at our jobs, those would go to savings. When we got money for Christmas or a birthday, we added that to travel savings as well. Tax return? You got it, put it in the travel fund and dream about your next trip abroad.
5. Lived off one income
After the wedding we started to work towards combining our finances to optimize a bit further so we decided to save one income and live off the other.
Knowing that we were planning a trip around the world, we took it one step further and lived off the lower income, saving 100% of the larger income. (ok, maybe 85% or 90% we’re not perfect!) At times it was tight but we always knew we had the funds to pay our living experiences and could raid a bit of the other’s income if it was a particularly expensive month. Also, it was good practice for us since only Lady Zen got a leave of absence from her job and I had to quit. When we return from travel, we will go back to living on one income at first and since we’ve already done it, we know it’s both possible and not scary.
6. Cut recurring expenses and asked for a better rate
Anything you pay on a regular basis adds up over time, even if it’s not a large expense. Where possible we reduced, or cut the regular, recurring expenses.
- Rent vs. Buy – We lived in a nice, but not fancy main floor house in Calgary’s inner city before leaving for our trip. We looked at what it would cost to buy a similar house in the same neighbourhood and a 20% down payment would be around $100,000 and our mortgage payments would be close to double what our rent payments were. We determined that renting was more advantageous financially, nevermind that it would be challenging to deal with renters from abroad, and there was no guarantee that we could charge enough rent to cover our payments. Renting also allowed us to avoid surprise expenses for home maintenance or appliance repairs. This of course depends on the rental market, but landlords are often looking for stable, long term tenants and are willing to reduce rent if you’ve proved yourself to be reliable. They don’t want the hassle of having to list the place, screen applicants, or risk having a vacancy for a couple months. With this in mind, during our time in this lovely little house, we negotiated our rent down twice. Further to the point above, we put those savings straight into the travel fund.
- Cell phones – Thanks to limited competition and a large, relatively un-dense area that carriers have to provide coverage to, Canadian cell phone plans are some of the most expensive in the world. You can easily pay $100 per month so we spent time trying to optimize that plan. We scoured the internet for deals (thanks www.redflagdeals.com) and managed to get on a legacy plan (that you can’t get now without jumping through some hoops) for $50/month. 4 years, $50/month saved vs what the plan would normally cost and that’s another $2,400 for savings. Just for one of us. We also bought unlocked phones without the 2 or 3 year contract commitment so that we had the ability to negotiate or move carriers for better deals when required.
- TV/Internet – We cut our cable TV coverage and made do without. Most of what we wanted to watch could be done online and we did eventually break down and get a Netflix account. We also had an over the air antenna that allowed us to pick up a few channels for free.
- Vehicle & Home Insurance – I went through a broker and was able to easily compare the rate from multiple companies. I ended up getting the best rate through an Alumni Association discount but it was amazing to see the difference in monthly rate for essentially the same plan. Sometimes up to a hundred dollars a month.
- There’s lots of other items you can cut or reduce so look at your subscriptions. Don’t hesitate to pick up the phone and ask for a better rate. What’s the worst they can do, say no?
Of course, spending less makes a big difference in terms of being able to save more. We’ve both always been fairly frugal with our money and tried to minimize expenditures. When we had a big purchase we would generally try to wait and make sure it’s something that we really did want. We’d watch sales and use sites like camelcamelcamel.com to track prices on Amazon. But we don’t consider ourselves to be cheap. When we bought stuff we tried to buy quality because it’s better to spend more and buy something that works and lasts than something you have to replace in three months.
One of the biggest expenses for most families is vehicles. They’re needed in many cities (although that’s starting to become more debatable) and can be a massive money pit. For these reasons, we only had one car between the two of us and we drove our first car (a 2003 Monte Carlo) into the ground. When it finally got to the point where it wasn’t safe to continue driving it and it would have cost too much in repairs we replaced it for a reliable, fuel efficient used car (Kia Soul!). We negotiated what we thought was a pretty good deal and paid in cash rather than going on a payment plan. When it was time to leave, we sold it for close to what we paid for it and had even more money in our travel fund.
It’s amazing what you can save when you don’t need the latest and greatest “stuff”. Not only is it better for the planet to buy less but it’s good for your wallet too.
Not only was our car used, but most of our furniture was used from Kijiji and was sold on Kijiji before we left. We bought matching sofa and loveseats, a whole pine wood bedroom set, and a kitchen table and chairs on the site and were able to resell them for more travel funds. When we return, we’ll be looking to buy used again. Buying used is also a great way to help both your wallet and the planet.
So, how much money do you need to travel the world for a year?
We don’t know for sure yet (but we’ll report back!) We expect to spend $100 USD/day on average for our 14 month trip. Some destinations will cost significantly more, others will be cheaper, but that’s our starting point and from all of our research, we think it’s a pretty reasonable one. It is more than a shoestring budget, but less than a luxury one too. It means we’ll cook meals for ourselves and take buses instead of planes whenever we can, but we’ll also spend a lot of that budget on activities because we’re not the-stay-in-the -hostel or only-see-the-city-from-the-boring-suburb-where-the-house-sit-is type of travellers. There are lots of blogs out there about extended travel on a shoestring budget but that’s not our style. We’re going to have some nice dinners out, a few bottles of wine, and we’ll be going on several guided trips. This of course, is one of the advantages of travelling in your thirties instead of your twenties – you have more money to spend!
Also, because we’re travelling for the next 14 months we have the luxury of time and flexibility to reduce our costs by taking our time to travel slowly. When you go on a standard vacation, everything is a rush because you likely only have a couple weeks or maybe a month if you’re lucky. If you want to try to do everything on your list, you will often you have to make a trade-off of time for money, which makes sense. For example, perhaps you’ll book the organised tour ahead of time with a company based in your city which will cost exponentially more than taking a few days on location to walk around and book with a local agency.
Of course, we know that we were both incredibly fortunate to have good, stable jobs with competitive salaries in Calgary that allowed us to save a lot. But the principles work no matter what you earn or where you live. Whether you are planning a trip around the world, want to have some more funds for travel, or just want to see your bank account rise this advice will help. And when you start to look into it, you will be surprised at how little it takes to make your dreams come true once you commit yourself to reaching them. They are within your reach and you don’t even have to be a millionaire!