Building Your Travel Budget

In planning any itinerary there are a number of expenses that are going to incur, with a large percentage being before you even leave for your trip!   When preparing a budget, it is imperative that all of the expenses that will occur are taken into account.  The last thing that anyone enjoys having happen is being faced with a $1,000 bill for electronics and vaccinations that was not budgeted for while working.


What Method Is Right For You?

There are two methods to building a budget that traveler's often choose. The first is amassing a large savings and figuring out travel plans secondly.  That is, having a fixed amount of money and figuring out what to do from there.  The second method is the reverse, or figuring out how much what you want to see costs, and then saving accordingly.  It is impossible to say whether one method is better than the other, just that the first method is focused more on trying to fit everything into a fixed amount, while the other is developing an amount to accommodate everything you wish to see.

Planning a budget around an itinerary is a good option for those who have a long time before the desired trip.  A budget can be created, and money made to ensure that you can go as long as you desire, cheaply, without missing out on any experience.  Planning an itinerary around a fixed budget removes some freedoms when trying to fit as much as possible into as long as possible.  Those who are wanting to leave straight away may find themselves in this category.   Regardless of the savings method you fall into, the less you understand about expenses, the more likely you will need to cut some travel plans due to not having enough money or time.

Items to Think Of and Example

In the first long-term adventure I was looking at undertaking, I was thinking of traveling for over 400 days throughout Asia, South America, and Central America.  The following cost topics and amounts were all researched in 2009 and are very reflective of the actual costs that would have been met while purchasing items prior to my planned trip and the expenses while on the road in those regions. Further descriptions into each topic can be read about by clicking those that are linked in the list.  

For your own trip, it is recommended that you go through and estimate the costs for each of these topics in your own situation, especially for the more budget conscious traveler.  Be sure to budget the averages for the expensive destinations (such as USA, Europe, Japan) with the more affordable places (India, Cambodia, etc) when figuring on the road costs which have a greater influence by your destination and currency conversions.

Pre-Trip

Vaccinations: Hepatitis A & B, Yellow Fever, Typhoid: Up to $200
Visas: Up to $850 at current values, could be less
Plane Tickets: ~$3500 - $4000
Health Insurance: $550 for a year, likely extended a few months to include the last few months
Trip Insurance: Up to $520
Pre-Trip Purchases: Clothes, Shoes, Supplies: Up to $400
Inflation: Estimated Price Increases, Emergencies: Up to $750
Netbook/Electronics: $400

On the Road
 
Hostel Nights: $15/night avg
Food: $10/day avg
Sight Seeing / Daily Transportation: $15/day avg
City to City Transportation: $5/day, travel 1 every 5 days
3 Week Japan Rail Pass: Current price, $575
Big Purchases: Scuba Diving, Day Tours, Shows, Cirque du Soleil in Tokyo/Macao. Up to $2000
Airport Transfers and Departure Taxes: Up to $500
Potential Tours with Companies: Everest Base Camp trekking up to $1000
Souvenirs: $1500 including shipping home occasionally. Likely purchases include shot glasses, shirts, and small display pieces from each country.
Bank Fees: 3% of CC/ATM transactions, about $500

This total for ~415 days would be approximately $30,000 or $72.29/day all included with $45/day going for daily expenses of Hostel Nights, Food, Site Seeing, and City-City Transportation.

Analysis of the Numbers

Measuring numbers by this method will likely either put you moderately high over what is necessary, or incredibly low.  In an effort to try and avoid being low, which would put you over budget while on the road, it is important to look at your destination list and determine the percentage of your time in more expensive and affordable countries than the daily expenses breakdown you propose.

An average daily cost of $45/day in this example balances a $100/day amount in Japan with a $30/day expense (or less!) in India.  So in the grand scheme of things, yes, Japan is expensive, but overall some of the more cost effective countries help in balancing out the figure nicely.  1 month in Japan and 1 month in India, for example, results in a daily expense of $65/day.   Unless wanting to travel as long as possible, the more expensive countries should not be avoided due to cost, especially when balancing them out with less expensive countries is a more attractive option to reduce the overall daily burden.  

Likewise, not all hostels are $15/day, in fact most of them are a lot less. Nor will would anyone likely spend $1500 on souvenirs or $2,000 on big site seeing purchases. These savings could be used to offset other unexpected costs along the way - or on the extreme off chance, help out in case you cannot save that proposed amount you desire. We've found it is always better to not go halfway while traveling, but work a little harder to afford more, just in case it might pop up.  You never know when that extra $2,000 is going to allow you to experience something magical.

Posted in: Budget