Since announcing that we leave in July to travel around the world for a year, the two most popular questions we've heard are how much does it cost and where are you going? When people ask how much it costs, they want to know how much money we saved for the trip and HOW we actually managed to save that much.
Jesse and I started our savings account in the summer of 2015. Two of my friends were about to embark upon a round the world trip of their own which you can read about on their travel and education blog here. Even though Jesse and I had researched how much a year long trip would cost, hearing a number in person made it more real. They saved about $25,000 per person to travel for a year. From everything we have read, a RTW (round the world) trip can be done on the cheaper end budget of around $15,000 per person, the mid range of $25,000 - $35,000 per person, or the high end of $40,000+ per person for one year.
When we started saving, we didn't really know how much our trip would cost, and we still don't know for sure, but by the time we receive our last paychecks, we will have saved around $30,000 per person for a total of $60,000. This amount will cover everything from gear, renovating Jesse's parents' shed into a storage unit, a moving truck, travel and health insurance, flights, food and accommodations, all local adventures, and hopefully a cushion to help us reestablish our lives when we return. Not included in this: new laptops and a camera. Our tech. was from the dark ages and would have been half the weight of everything else we were bringing, not to mention it barely functioned... insert new shiny toys. Since it was time for new technology, we aren't including that in our trip costs. We also had save enough money (not included in this amount) for us to continue making student loan payments while we are gone.
Our goal is to live off of $50 a day (per person) which would put us at $18,250 and leave a good bit for bigger purchases and adventure splurges that we make along the way.
It's still amazing to me that we saved this much in three years and we are really proud of our ability to stick to our budget to make saving this much possible. Really though, it was never a question of if we could save the money, but how long we would need to save it. Traveling is our dream and we want the world to be our home. So how exactly did we save this much?
We picked a year to leave and worked backwards. We (by we I mean mostly Jesse) looked at the total amount we would need to save, then budgeted by year. We (yes, still Jesse) knew that saving this much would be an adjustment, so we planned to save less in our first few months. We also knew that we would need to purchase items for our trip, so we planned to also save less in the last few months to allow for extra money to make trip purchases. I guess technically this means we saved more in the last few months total on our trip.
Here is how much we saved per person per month since we opened our savings account:
This would allow us to each save $25,000 and then we each put all of our bonuses (and extra summer paychecks for me since I work in education and am able to earn a little extra money during my time off) into our RTW savings account, landing us at $30,000 a person and enough money to pack up our lives and make some trip purchases before we hit the road, or the sky since we can't exactly drive to our first destination.
We set up automatic withdrawals from our checking account to our savings account for these amounts at the beginning of each month so we didn't have to worry about it or be tempted to spend some of it if we needed (or wanted) more money that month. Saving this money was only half of the big savings plan though. In order to save this much and be able to not spend more than we had left in our checking account, we set up a strict monthly budget using the goodbudget app.
Goodbudget - This is where I really became invested in budgeting and saving. This is a free app that lets you track your spending, lets you know how far ahead or behind you are in a category, and keeps you accountable for what you purchase. We looked at our income, subtracted how much we wanted to save for our trip, subtracted our fixed costs like our mortgage, utilities and bills, and divided what was left into four categories: Groceries, Eating Out, Gas, and Fun Money.
Make a spread sheet to document all of your fixed costs and your estimates for each spending category. This way you can look back on your budget and make changes if you need to. We have relied on our fixed cost spread sheet more than once.
This is a sample of what the app can look like:
What do I like about the Goodbudget app? In the first image, you can see how the app tracks your spending in each category. The black line tells you where you should be in that category for the month. For example, this is a snapshot of someone's budget around the middle of the month (the black line is in the middle of the gray bar.) They are behind on a few categories like groceries and gas and on the right it tells them how much they have left out of their total budget for that month. If you were to click on groceries, it would tell you how many days to stop spending in that category to get back on track. This budget is ahead in eating out. If you click on that category, it will tell you how much extra you have to spend.
I like that you can share your account with someone. Jesse and I have the same account, so when he spends money in a category, it automatically updates on my app and visa versa.
Another cool feature is that it carries over month to month. On this snapshot, the budget is negative in entertainment by $12.45. So next month, when you add your paycheck, it will carry over that -$12.45 automatically so that you have less entertainment money the next month.
My favorite thing about Goodbudget is that it keeps me accountable. Every time we make a purchase, we manually enter it into a category. Some people might think this is tedious, but it really helps me to be conscious of what I am spending money on, and how I need to adjust based on where I am that month. Yes, it's a commitment, and the app only works if you stick to it. Commit to it though, and I promise you will become a budget queen like I consider myself now.
We have been able to stick to our savings plan for our RTW because when we are done with our eating out budget for the month, we don't eat out. If we are getting low on groceries, we buy cheaper food. Saving as much money as we did is just as much about your daily spending as it is on your monthly savings, and Goodbudget is the perfect tool to help!
If you need more help setting up budget, You Need A Budget is another fantastic budgeting app. It is more in depth than Goodbudget, but they have free budgeting seminars online and help to bring all your finances into one place. Even if you do not think that a RTW trip is for you, a tight budget gives you the power to follow whatever your dreams are instead of always playing catch up.
Lastly, in 2015 we opened multiple savings accounts to unexpected costs from blowing our budget. Ally is our bank of choice. They (and many other banks) offer free savings accounts with little or no minimum amount. Each month we have lots of little automatic transfers to the named accounts. Our small savings accounts include travel (for weekend trips we have made over the years), car repair, house repair, car savings, Christmas savings, car insurance and most importantly our rainy day fund. These specific savings accounts let us know where our money is allocated and help remind us of its purpose. So when I went to get an oil change last week, I pulled from our car savings account instead of taking money of out one of our monthly categories like Fun Money, which would have killed half of my "fun money" for the month.
Do we know exactly how much it is going to cost us to travel around the world for a year? No. But we have saved more than enough money and hope to have some left over if we budget the next year as tightly as we have saved over the past three.
If you are thinking about traveling for a year, a few months, or even two weeks, start saving now! It's not cheap, but if traveling is a part of your soul like it is ours, the real question is how can you afford not to?