6 Ways We Prepared Our Finances to Travel the World

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A bit over a year ago we left our jobs behind, sold most of our belongings, gave up our house in Calgary, and set off on a once in a lifetime 14 month trip around the world. Now that we’ve returned and are settling back in to real life, one of the questions we often get is how we managed to save and pay for a big trip like the that. And no, unfortunately neither of us is lucky enough to have a big fat trust fund.

1. Set a daily travel budget

To start saving for travel, we followed the same approach you would for any financial milestone. We set a goal and determined a budget, evaluated what we had already, and put together a plan to address the gap.

Inspired by travel expert Nomadic Matt who tells travellers that you can travel around the world for $50 US a day, we set our combined budget at about $130 CAD. This would cover all of the travel and living expenses for two on a 14-month journey.

$130/day for 14 months works out to about $55,000. This is definitely a lot of money. But this trip was something we had been thinking about and dreaming of for a long time.

Considering that this budget was for two people, that works out to about $30,000 per person. That might seem like a lot, but with the right planning it is often attainable!

2. Save for travel ahead of time

Being responsible adults, we didn’t want this trip to financially ruin us. While theoretically we could have as soon as we started considering the trip, we didn’t want to come back home to our retirement savings or rainy day funds raided to pay for plane ticket.

There are many that leave for gap years right after school with no money in their bank account and no plan, but that wasn’t us. We were already several years into our careers, which gave us more saving power but a bit higher standards too. We didn’t plan on staying in grungy hostels the entire time.

3. Keep spending low

It wasn’t giving up lattes and avocado toast that allowed us to meet our savings goal; it was saving on the big picture stuff such as housing and cars. We didn’t purchase a lot of stuff, because we knew that we would end up having to store it or sell it when we left.

Knowing that this big adventure was on the horizon helped to keep our spending down.

We packed lunches for work (most of the time), negotiated hard on our cell phone bills, bought used furniture on Kijiji, and were generally more thrifty than our incomes would have allowed. In general, we avoided lifestyle inflation, opting to keep things simple and avoiding expense creep as our careers and incomes grew. We had our fair share of fun splurges (generally on trips and the great skiing near Calgary rather than things) but for the most part we lived well below our means and padded our savings accounts.  

In addition to the “big things,” we aimed to keep our recurring expenses low. Those could be easy additions to our savings each month!

4. Manage your assets

In hindsight, one of our smartest decisions was to continue renting a home, rather than purchasing in Calgary. Not only were we able to negotiate our rent down during the downturn which added further to our savings, but we weren’t tied to a declining asset that would eat up all our savings or something we would have to worry about while we were abroad.

We avoided the debt trap of car payments by first running our old beater into the ground. When we eventually had to replace it, we bought a newer, but used car that we could afford outright without payments. 

5. Pre-dedicate your surprise income to save for travel

Another strategy that we used was whenever we received a surprise income. Whether a small birthday gift, a tax return, a three pay month, or a bonus at work, we would save it for travel.

Eventually, we reached a point where we lived off one person’s income and saved all of the other’s. This allowed us to further stack our travel funds. Our mindset was “why buy new toys when instead you can put that savings in your TFSA and buy freedom for a year and countless adventures around the world?” 

6. Keep day-to-day expenses low

An interesting thing about travelling around the world is that your expenses are probably going to be lower than your day-to-day expenses both at home and during your typical vacation. For instance, our entire hike to Machu Picchu was on budget, as was our time in the Galapagos Islands.

This of course depends on the destinations that you plan to visit. But typically, when you’re travelling long term you don’t need to pay rent or a mortgage, there are no car payments, furniture isn’t necessary, work clothes aren’t needed, and you probably don’t need to worry about picking up more stuff because you won’t have room for it!

You can travel slowly, so you don’t need to rush and spend money to get every single adventure in. Of course, you’re probably not earning much if anything while travelling, so it is important that you have enough set aside to cover your expenses until you get home.

We did benefit from situational advantages

Of course, we also recognize that are very lucky to be in a position to make this trip around the world happen.

We are both University educated, have good stable careers, and live in Canada, one of the richest countries in the world. While not as strong as our neighbors to the south, the Canadian dollar goes a lot farther when travelling than some currencies.

Thanks to preparation, we returned (mostly) unscathed 

We finished our trip close to our budget. Our biggest cheat that we decided to exclude from our budget calculations was a last minute cruise to Antarctica, but we had dreamed about that and hoped it was something we could make happen while on the road. It was a once in a lifetime opportunity that we had to take advantage of!

We could’ve gone for even cheaper!

If our travel budget numbers frighten you, we met many likeminded folks on our trip around the world, and quite a few were on much smaller budgets than us.

It’s not unheard of to travel on a shoestring budget and there are ways of earning an income on the road, trading work for accommodation, or keeping expenses low. In our case, we didn’t do any of these as we had done the hard work of budgeting and saving for our trip. But it’s possible to travel long term on even the smallest of budgets!

This post is by Zen Travellers Phillip & Thea: two DIY adventure travellers and outdoor enthusiasts finding our Zen through exploring this big, beautiful world, whether home or abroad.

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Money After Graduation Inc. is a financial literacy website dedicated to helping Millennials and Gen Z pay off debt, invest in the stock market, and afford the life they want!

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