Eight months before Charles and I first started traveling back in 2002, I was a broke university grad with a student loan and almost no savings.
In those eight months I managed to save $17,000 and then travel the world for a year.
How did I save the money?
No, I didn’t have parents (or anyone else) who helped pay for the trip. My share came all out of my own pocket.
Honestly, it wasn’t easy, and it took a lot of hard work and hassle to figure out how to save enough money.
The first step is to find out where you’re pissing your money away.
A tough love, no-nonsense guide to saving money
I wish I’d had a no-nonsense guide to help me in the beginning, so I wanted to write this for anyone else wondering how to start saving money for a round the world trip.
Here it is: my tough love approach to saving enough money. Sure, maybe there’s a bit of a verbal spanking in here, but start with these tips and you’ll be well on your way to saving enough money to go on your own RTW trip.
Wonder where all your money has gone at the end of the month?
The first step is to find out where you’re pissing your money away.
Sit down at your computer and bring up the last three month’s spending on the accounts you use most often, whether they’re your checking accounts or credit card. Take a good look. Where is your money going?
What you’re looking for here are ways to cut back. You may be surprised by what you find. Are you spending too much in bank fees? Eating out? Starbucks coffees? Cable TV? Rent? Car insurance?
Once you know where your money’s going, you need to take a hard, merciless look at your assumptions. What do you REALLY need? What can you live without?
Not all of the ideas in this article are going to work for you, but the goal is to get you thinking.
Having a roof over your head isn’t cheap. Could you move somewhere cheaper? Get a roommate? Live in a motorhome? Seriously, get creative. Think out of the box. Waaay out of the box.
Could you live for free if you took a job as a live in caregiver? Could you move back in with your parents for a while in exchange for work around the house? Any local Caretaker-Jobs that might work for you? How about being a Housecarers?
If you own your own place, then you’re going to have to make a decision. Is it time to sell? Can you afford to pay your mortgage, taxes, insurance and the like when you’re away?
Do you absolutely want to come back to the same house when you return? If so, can you rent your place out when when you’re gone to help cut expenses. For that matter, can you rent out your place now and live someplace cheaper until you’ve saved enough for your trip?
“You buy furniture. You tell yourself, this is the last sofa I will ever need in my life. Buy the sofa, then for a couple years you’re satisfied that no matter what goes wrong, at least you’ve got your sofa issue handled. Then the right set of dishes. Then the perfect bed. The drapes. The rug. Then you’re trapped in your lovely nest, and the things you used to own, now they own you.” Fight Club
Eating into the budget
Eat in. This is always the absolute staple of lists on saving money for a reason. Making your own meals saves a ton of money, if done right. Even a ready made meal and a salad at the grocery store should save money over eating out. If you can manage it, cook from scratch to save more. No skills? Pick up a library book on cooking cheaply or find a local cooking class. You can find a simple recipes online to get you started.
Forgo your morning latte at Starbucks in favor of making coffee at home. A French press is cheap, and makes excellent coffee, even for a huge coffee snob like me. At the very minimum, switch from your expensive specialty coffee like lattes and mochas to a brewed coffee at your local coffee shop; it’ll save you a couple of bucks a cup and over a year that’s hundreds of dollars right there.
The evils of drinking
A few drinks out on the weekends can absolutely slaughter a budget. Cut down on alcoholic drinks any way you can. Invite your friends over to your place for a few drinks before you go out, or limit yourself to a single drink or two when you do go out. If you can’t cut back, then at least slow down the amount or opt for the cheapest option (usually draft beer) or switch to a non-alcoholic drink.
Cut the cable
Cable costs can be ridiculous. Subscribed to HBO, Showtime, Super Channel or any of the dozens of movie channels out there? Sorry to say, they’re probably costing you a small fortune. If you don’t have one already, get an Amazon Prime or Netflix account instead of the more costly cable subscriptions.
Most shows these days can be watched online for free and if you need it on the big screen there are hundreds of cheap options to get it there from a Roku to an Android stick. It might be a hard pill to swallow but you can save some major money if you just cut your cable addiction completely.
Movies, concerts and the like are expensive. Hit the cheap theaters instead or go on discount night at your local movie theater. If given the choice, forgo the more expensive 3D options. Try to find free alternatives to concerts and cover charges. Look into your local entertainment guide for ideas on cheap night outs.
Miss hanging out with your friends? You can invite them over for a potluck night and stream a movie on Netflix or hit up your local library and see if they have any classic movies you can borrow for free.
“This planet has – or rather had – a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.”
Douglas Adams, The Hitchhiker’s Guide to the Galaxy
Death by 1000 cuts
There are a lot of little things that could be killing your ability to save. Gym memberships can be expensive, and so can shopping for clothes, buying apps and music, paying for high end haircuts and buying expensive birthday and Christmas gifts. Let everyone know you’re saving for your big trip and that it’s important that you save enough.
Make like a squirrel
It’s old hat, but it’s amazing how much you can save by socking away your loose change. We use our loose change for splurges when we travel. Thanks to our change jar, we’ve gone sailing in the Whitsunday Islands in Australia, and got our PADI Open Water SCUBA diving certificates.
Car, life, home,tenant and all other types of insurance really add up. If you haven’t done this already, call around and get at least three or more quotes. You may be surprised.
See if your work, professional association, or university or college alumni association offers a discount. I saved about 20% per year (or $200) by spending 45 minutes phoning around for quotes on my car insurance last year. $200 is a pretty good wage for 45 minutes of work.
Do you NEED two cars, or could you live with just one? Does your car NEED to be so new, upscale, expensive on gas or sporty? Could you possibly live without a car and walk or bike everywhere? This may be doable if you live in a large city.
Would it be cheaper to sell your car and rent or borrow one for the few weekends you need it, given the savings on parking, insurance, gas and repairs? At the least, can you cut down on its use and save money on gas and wear and tear?
Love to read or watch old movies?
Get familiar with your local library. Books and DVDs can really add up. Libraries are almost always completely free and many even have ebooks for your Kindle, Nook or e-reader. If they don’t have what you want, is there a local reading group that you could join that shares books? Do you have any friends or relatives that you can borrow from instead?
Banks and credit card fees
ATM fees are a killer. Switch to an account with a low monthly fee. Or even better, open a Charles Swab account (and no, we don’t get a cut if you open an account with them), which doesn’t charge any fees, even internationally, and use the card to save money on bank fees when your trip starts.
If you have a credit card, switch to a no annual fee card, or consider getting a card that pays you cash back or travel rewards points on your purchases. If you don’t want to switch your card, call the company and ask for a reduction on your interest rate or ask them to waive the annual fee. I asked my credit card company to waive the annual fee on my travel rewards card for three years in a row, saving me about $99 a year for 10 minute’s work.
Similarly, be careful with fees for things like international money transfers, currency exchanges and even Paypal fees. You can save a lot of money by making sure you’re not being gouged on wire transfers, and asking the sender to absorb any Paypal fees.
“It doesn’t matter about money; having it, not having it. Or having clothes, or not having them. You’re still left alone with yourself in the end.” Billy Idol
You know what I’m going to say here. Oh my God, stop! At $5 to $10 a pack, smoking is one of the biggest roadblocks to saving. If you can’t stop, cut back.
If you have a long term cell phone contract, look into how you can cut your bill. Can you cancel the plan, or sell it to someone and switch to a cheaper pay as you go plan? While you’re at it, make sure that you have an unlocked phone that will work anywhere in the world. You’ll save a fortune wherever you travel by buying a pay as you go SIM card at your destination rather than paying outrageous roaming fees.
Credit Card debt
This one’s an absolute killer when you’re trying to save. You need to pay off as much of your debt as you can, as quickly as you can. If you carry a credit card balance, switch to a card with a lower interest rate, or a zero percent introductory fee.
If you’re carrying a large credit card debt, talk to your bank and get a low interest loan or open up a line of credit and move your balance to that. Maintaining a credit card balance at typical credit card rates (18 to 22%) is one of the worst financial mistakes anyone can make. You’re smarter than that. If you can change it, do it. NOW!
“Wars in old times were made to get slaves. The modern implement of imposing slavery is debt.” Ezra Pound
If you have a student loan, it’s worth a look to see if you qualify to defer, cancel or consolidate your loan. There are programs that offer some degree of loan forgiveness or deferment for US student loans, student loans in Canada, UK student loans and student loans in Australia. We’ve known people who halved their student loans just by applying. If you qualify, that can severely make your life easier.
Can you change your job to bring in more money? Can you pick up an extra job in the evenings? Can you offer to babysit, pet sit or cut lawns? Could you rent out your couch on Airbnb? Or rent out your car on GetAround or RelayRides?
Even better, look into making some money when you travel. Check out our article on 45 Great Jobs You Can Do While Traveling The World And How To Get Them.
Sell your things
We all have too much stuff. It’s almost a guarantee. Is it time to lighten the load? Clothes you no longer wear? Furniture that’s just in the way? An old car parked in the yard? An expensive antique someone left you that has no business in your modern flat?
Not only can you make some decent money clearing out some of your things, it’ll make it one less thing you need to pack up and store when it’s time to go. If you’re looking into selling some of your things, check out how to get more money selling on Craigslist or Kijiji.
Death by taxes
Think long and hard about ways to save money on taxes. Read online tips. It may be worth a couple of bucks to get your taxes done if you don’t have a clue how to file them, but there are also a lot of free tax filing options for those more who are more experienced. Is there any way you could qualify for small business or self employment deductions? If you get a tax refund, don’t spend it – put it in your travel fund instead.
“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” – Will Rogers
Automate your savings
Set up an automatic transfer from you main account to your travel savings account. This way, the money will be out of your account before you get a chance to spend it. While you’re at it, get a high interest savings account. While interest rates aren’t especially high right now, every bit helps. If you’re Canadian, we like the free online savings accounts at Tangerine (they used to be called ING Direct). Use orange code 28025017S1 to get a $25 starting bonus.
Also try using a cashback credit card for purchases, and use a company like eBates to save money as well!
Having trouble sticking to these tips?
I like to keep myself on track by remembering what the money I’m saving can buy on the road. If a dinner out is going to cost $30, I try to remind myself that $30 could buy me a night’s stay in a very nice beach hut in Thailand, or a half dozen breakfasts of a fresh croissant and espresso in Paris.
Tell your friends, family, co-workers and even the weird guy down the road about your dream trip. Let them know you’re doing everything you can to make your trip a reality. It will help keep you on track and at the very least make them understand why your shopping habits have changed and you’re opting out of the $180 concert tickets everyone is talking about.
Keep a photo of your dream travel destination as your computer background or as your phone’s backdrop. Set a goal, whether it’s time or a set amount of money and do everything in your power to reach that goal.
Read Your Money or Your Life by Joe Dominguez . This is the most hands on helpful book on money management I’ve ever read. There are great practical tips in here, but I love this book because it’s probably the only book I’ve ever read that teaches you how to make money your bitch.
It was originally written in the 1970s, and it can seem a bit hokey at times, and some of the investing advice is outdated, but it’s still well worth a read. I have an Amazon link here so you can check it out, but pick it up at your local library if you feel like saving a couple of dollars.
Pick one thing on this list and do it. Then next week, pick another.
Do you have any tips for saving for a RTW trip? We’d love to hear them.
Photo by Jhong Dizon on Flickr.