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how we budgeted for our round-the-world trip


I've been thinking about budgets a lot lately because Patrick and I are in the midst of creating our budget for our 15-month European leg.  You would think that we would be pretty good at this budgeting stuff, considering that we budgeted for our 13-month Australia, Asia, and Africa legs and came home with way more money than we expected, but we're still nervous.  Budgeting is the point where we lay down the line in the sand and tell ourselves, "This is it.  If we don't save this much, then something has to get cut."  And, we don't want to cut anything, of course.  So, I'm going to talk you through how we created our round-the-world budget, the mistakes we made, the lessons that we learned, and show you how we're creating our European budget.

Our Round-the-World Goal Budget

You're going to laugh when you read how we created our budget for our round-the-world trip, especially when I compare our method with the folks who are going to be chiming in on Tuesday's Travelers Talk Back.  Our very impressive budgeting methodology:

We picked a number out of thin air.

Seriously.  We didn't know how much to budget and we were both making good incomes, so we picked $6,000 a month or $72,000 for the year (for both of us).  Why $6,000?  Well, we had a couple of reasons:

  • We had recently gone on a one week trip to Puerto Rico which, cost-wise, fell somewhere in between the countries we wanted to visit, and had spent $1,500 there for the week.  Multiply $1,500 by 4 and you get $6,000 for the month or $72,000 for the year. 
  • Most other travelers spent around $50,000 to $60,000 for a couple to travel 1 year on a trip fairly similar to ours, or somewhere around $2,000 - $2,500 per person per month.  We knew that we were going to spend a bit more because we were coming home in between legs to be with the puppies which would result in higher transportation costs. 
  • We thought it would be good to budget higher than average to have a nice cushion in case we wanted to splurge on nicer hotels or activities.
  • 6 is double my lucky number and half of Patrick's lucky number.

Looking back, I continue to think that this is the most ridiculous budgeting method EVER created.  But, it worked.

Why Our Ridiculous Budgeting Method Worked

Planned budget: $72,000. Actually spent: $66,000.

In total, we spent a little less than $66,000 for the two of us over 13 months (rather than 12 months), including four round trip flights back to the United States, which means that we spent about $5,080 per month, or $2,540 per person per month.  [Note: This figure includes vaccinations, airplane flights, daily travel expenses, and clothing/gear purchased for our trip EXCEPT for our electronics.  We replaced a computer, purchased a new camera, and several lenses in the last year.]

I think this is fairly in line with most other couples because we went to 12 countries over the 13 months.  Obviously, you could travel for less; because we had the money, we opted to get private rooms in hostels rather than staying in dorms, returned home every two to three months to be with our dogs, took one emergency flight from Thailand back to the United States, ate out at decent restaurants instead of the cheapest places, and participated in expensive activities like scuba diving

Mistakes Made, Lessons Learned About Budgeting

So, here's what we learned about budgeting:

1.  It is a good idea to budget more than the average person actually spends.  Because we had money left in our budget at the end of our trip, we were able to afford splurges like shark diving in Gansbaii and a ridiculously awesome lunch at Le Colombe in Cape Town. 

2.  It is possible to make money while you are traveling which will throw your whole budgeting process out of whack.  The reason we ended up coming back to the United States with way more money than we expected, resulting in us prolonging our trip to include the 15-month stint in Europe, is because Patrick and I both got consulting jobs while we traveled.  We didn't expect to get those jobs . . . it kind of happened (and I'll tell you how in my next post) . . . but it meant that, when we came back in October, we hadn't dipped into our savings all that much.

3.  Don't get too hung up on your budget.  At the end of our first month in Australia, we freaked out when we realized we had spent $9,000.  But, when we got to New Zealand, we spent a lot less and even less when we went to Thailand.  We've found that the best way to save money is to cut back on accomodation expenses wherever possible because we don't need all that much: WiFi, air conditioning, and a clean room are more than sufficient for us.  If we go to an expensive country one month, we go to a cheaper country in the next month, which is why we traveled to China after Japan

4.  At the same time, keep a very close eye on your budget.  I track all of our outflows and inflows in Quicken and then Patrick does a second run at tracking travel-related outflows and inflows in Excel for tax purposes.  (I personally prefer Quicken to an online management system because I like being able to check and work on my financial transactions offline, while we are on trains and buses, but I know that some people prefer online solutions.)  Because we know exactly how much we have in the bank and how much we have left in our budget, we can make snap decisions about whether a particular activity, accomodation, or transportation is too expensive.  For example, at the end of our stay in China, we considered going to Borneo to scuba dive but decided against it because we were a bit over budget after our Japan and South Korea segments.

What We're Budgeting For Europe

$7,000 per month.  In the most expensive countries we traveled in this last year---New Zealand, Japan, Australia, and South Africa---we spent about $7,000 - $9,000 per month.  Western Europe is expensive but we'll be keeping costs down by renting apartments, driving throughout the entire continent with our own car (I'll tell you how another time), and cooking quite a bit since we will have apartments and access to those awesome European markets.  We'll be gone for 15 months which means that we want to have $105,000 in the bank when we leave the United States.  

Here's the kicker: we know that we will both be working part time while we are in Europe and expect that our salaries should fund *most* of our trip, which means that we shouldn't have to dig into our savings too much.  But, we still plan to get the $105,000 in the bank before then.  Why?  It's pretty obvious, really: the more money we have saved, the longer we get to keep traveling.

What About A Re-entry Fund/Emergency Fund/Back-Up Plan?

Absolutely.  A reentry fund is a very good thing to have because you want to have money when you get home.  It may take some time to find a job after your travels and having a back-up fund is important for your own peace of mind.  We took almost all the money we made from the sale of our home and locked it away in a CD so we aren't tempted to use it.  If we buy a house, it will be a perfect down payment, or if we ever have difficulty finding jobs, than it will sustain us for quite some time. 

Read More From Other Travel Bloggers:

*How We Budgeted For Our RTW Travels is a post in the RTW Travel Planning in Retrospect Project, a weekly community project that seeks to gather insights and advice on round-the-world travel planning from those who have been in the metaphorical trenches.  Stay tuned because, on Tuesday, some very fabulous travel bloggers will join in the discussion and reveal how they budgeted for their trips (and there may even be nifty spreadsheets.)  And, if you are a current or recently returned RTW traveler, we would love to hear your thoughts so get in touch with me if you would like to be featured via the comments or at theroadforks [at] gmail [dot] com.

02/17/2011 12:10
What a great budget breakdown. I do think that Jack and I are very conservative when it comes to budgeting and saving for re-entry fund. I hate cutting it too close and have to constantly worry about money on the road.
jill - Jack and Jill Travel The World's recent blog post: 25 Strangers, 1 Cabin, and A New Reality Show (not really)
02/18/2011 12:39
Thank you Jill! We are very conservative, too, because we hate being pinched for cash when we REALLY want to do something (whether it's at home or abroad). We prefer always having extra cash in our budgets if we can.
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02/17/2011 12:36
Great post. I don't have any plan to do RTW trip just yet but it's also useful for planning yearly vacation as well. I have to say this is by far the best post I have seen that talk honestly about budget and how to plan your trip. Love love this series, Akila! (Ok. And Patrick too.. :) )
Amy @ The Q Family's recent blog post: Huntsville With Kids: Space Camp with Cub Scout
02/18/2011 12:55
Thank you so much Amy! I agree with you - I think budgeting for a yearly vacation is just as important as budgeting for a long-term trip. Both require careful planning.
02/17/2011 12:37
I think about as close as I get to budgeting for my trips is some back of the envelope calculations. But they work! Great post... The main thing I forgot is a budget for setting up when I arrived in Canada to live. It's been a bit of a struggle.
Claire's recent blog post: Finance 101
02/18/2011 13:11
Claire - We have definitely done the back-of-envelope thing before! I think so many people forget about the reentry fund because we get so caught up in planning for the trip that we don't think about what we'll do for money when we get home.
02/17/2011 13:12
I love the honesty of these posts, and I think they're going to be wildly helpful for others planning similar adventures. I've read so many backpackers' "travel the world on $15 a day!" type of posts, and simply put, that's unrealistic (especially when you factor in plane and train fares). You can't even get a hostel anywhere in Europe for that! When I was backpacking Europe eight years ago, $22 was the least I found for a bed in a dorm room. Maybe in Asia, but definitely not "the world."

Regardless, even though I'm not planning a RTW trip (and probably won't ever), I love the methodology and planning information you've been sharing.
Camels & Chocolate's recent blog post: The Garden Route: The Monkey Who Ate Our Lunch
02/17/2011 13:21
While I agree that $15/day is unrealistic for Europe, it *is* pretty realistic for pretty much anywhere else (South America, Africa, Asia). Sure, it's not a *nice* life, but it's certainly possible. Even Europe can be done for around $30 a day (I lived in Switzerland for 6 weeks on $1000), which is considerably less than the $150 figure I usually hear people quote me when planning their travels.
Kelsey's recent blog post: Evolution
02/18/2011 13:51
Kelsey, I can't speak to South America since I haven't been there but I definitely think it would be possible to spend $15/day in certain places in Asia and Africa [definitely not Japan, though], especially if you rent a scooter or take public transportation. I am quite impressed that you managed in Switzerland for $30/day because it seems like a somewhat expensive country to me! At the end of the day, I think it all depends on what we are willing to compromise on. As we get better at traveling and seeing the world, we are learning our own limitations and requirements for accommodations, food, and transportation. In the old days, we would have scoffed at using public transportation but now we often prefer it and it saves us a lot of money!
02/18/2011 13:45
Kristin, thanks! I've been surprised by how differently all of our fellow travelers budget/spend. We certainly don't live off $15/day . . . like Kelsey says, it might be possible . . . but that's not our style. We like clean rooms, air conditioning (or at least a fan), WiFi (essential!), and we love eating out. And, we have come to accept that we hate sharing rooms with strangers and prefer private hostel rooms (though we are perfectly fine with sharing a bathroom). We have scrimped in certain places when we knew that we were going over budget, but as a general rule, we are willing to spend between $40-50/night on a hostel room. In our 13 months abroad, we only spent over $60/night on three occasions: for Patrick's birthday, my birthday, and the last two nights of our trip. I think it's all about knowing your own style and how you like to travel to figure out a budget.
02/17/2011 13:17
Wow. What jobs do you two have that you're able to save that much?!?
Kelsey's recent blog post: Evolution
02/18/2011 13:34
Before we left, I practiced law but I am currently working as a technical/legal writer. Patrick is a software architect/project manager. We make decent salaries BUT I think that my figures above might have been a bit misleading. We aren't planning on saving $105,000 before we leave . . . when we got back from Africa, we still had over $70,000 in our travel fund, so we need to save about $30,000 before July. We are living super cheaply while we are back in the States so are able to set aside almost all of our incomes toward our travels which helps a lot.
02/17/2011 14:25
Skott and Shawna
Sweet post... We are going to try stick to a budget of about $3,000/month, but we will have a buffer that will allow us as much as $4,500/month. That's a far cry from your 6K/month but here's hoping...of course we do not intend on having to fly home, so that will help...and our budget doesn't really include vaccinations, first flights, or anything we needed to prepare for the trip...We start with a clean slate on day one, landing in Mexico.

I guess worst case scenario we just hope we can find similar consulting jobs....eager to read your next post!
02/18/2011 14:12
Skott and Shawna - I think you can absolutely do it for $3,000/month but you'll just have to be a bit more careful with money and the places you go to. I would consider avoiding Australia which is quite expensive. The people who are chiming in on Tuesday have a wide range of budgets, as well. I think we're a bit on the top end but there are others who traveled for about $3,000/month.
02/17/2011 19:01
I love reading about travel budgets, but Kali and I aren't very good about sticking to them! Over the last six months our expenses have really varied month-to-month, and when we take this circus abroad I imagine it will be quite similar.

Usually things balance out, though - if we spend more in one category (like camping fees), we'll spend less in another (like gas). And I'm currently having sticker shock looking at places in London for this summer, but I know we'll save a TON of money when we go to India.

So I guess we have a general idea of our budget constraints, but try to flexibly stick within those on a longer-term scale.... if that makes any sense. :P
Christy @ Technosyncratic's recent blog post: Want to Learn More About Us?
02/18/2011 14:14
Christy, That absolutely makes sense because we do the same thing. We try to switch out the expensive places with the cheaper places in the hopes that it all evens out! We're also looking at London/France this summer and my jaw hit the floor when I realized how much people want for a simple apartment in that time of year. Eek.
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02/18/2011 00:05
You have a fantastic budget for Europe. With that sort of money, you can do practically anything here!
Will you be stopping in Switzerland as well? I'm curious about the countries you will travel to.
02/18/2011 14:15
Denise, thank you! That was our goal for our Europe budget --- to set aside as much as we can so that we can have a lot of fun while we're there. We probably will spend much less than we planned but we prefer to over-budget than otherwise.

And, yes, we will definitely be in Switzerland! Probably for a month sometime in September. Where are you in Switzerland?
02/18/2011 02:03
Louise Smithers
Thanks for the tips. I am in the midst of budgeting for a 3 month trip to Thailand myself. It's daunting trying to break every little thing down. I just hope we over budget instead of under-budget!
02/18/2011 14:21
Louise - Good luck and let me know if you need any specific help on Thailand in particular. Luckily, it's one of those countries where you can easily end up spending less if you need to ($2 dinners are often as good as, or better than, restaurant meals there).
02/18/2011 03:34
Great post! Some fantastic tips here for first-time RTW travellers!

We used to budget tightly when we were young backpackers, setting daily limits, and if we went over limit one day we'd cut back the next. As a young backpacking couple, I remember our limit was $60 a day in Europe around 13 years ago, and in Mexico around 20 years ago it would have been closer to $20 a day. But then, when we were older and earning much more money and eating lunch and dinner in Michelin-starred restaurants, it very quickly escalated to, gulp, $500 a day.

It's interesting to see how our budgets change as our incomes and tastes change. While I can understand how travellers like Kelsey might be able to get by on $15 in some countries, it's just not something I would want to do now, having done it when I was young. And that's why I think it's important for people to decide what their priorities are and how they want to travel (do they want to eat out three times a day, or cook in for two meals, and splurge on one great meal a day, for instance) and you make that point well.

Now, ironically, as travel writers, while we budget projects, we don't set ourselves daily spending limits, as the experiences we're paying for we write about, so we need to spend money to make money, but we know we're going to make back whatever we spend.

Once again, great post with lots of fantastic tips!
02/18/2011 14:28
Lara, Thank you so much Lara! You make such a wonderful point here. Our tastes and incomes have changed and, therefore, our budgets have changed over the years. When we first started traveling, we didn't think anything of eating ramen noodles in a hostel room but, nowadays, we want to stay somewhere clean and eat out at nice dinners. And, those Michelin starred restaurants are killers! We ate out at Le Colombe in South Africa and that one meal was about three times the price of any other meal we had in that country.
02/18/2011 07:15
I budgeted 50 a day knowing that I would spend about 30 a day which is pretty accurate. But you bring up a very important point, few people realize they need a re-entry fund to get them by for the first few months. Not all of us can move back home with our parents :)
Ayngelina's recent blog post: Peru seduces with pisco sours
02/18/2011 14:29
Your budget of $30/day seems pretty close to what I've seen others budgeting for South America/Central America. And, that reentry fund - critical!
02/18/2011 08:02
I love budgeting posts because at the beginning, I was always like, yeah, that's great that you're living the dream, but how much does it all cost? Every time someone talks about a great new souvenir, a good hotel room, a fun activity, etc., my mind always jumps to the price.

This will be very helpful for people looking to gather some data, because it explains the numbers. We, too, pulled a budget somewhat out of thin air. We're still traveling so the jury's still out on how we'll do. I hate budgeting with a passion, but without an income, you have no choice.

Depending on how the euro is doing vs. the dollar, and how much time you spend in Western vs. Eastern Europe, I think you'll be pleasantly surprised with costs in Europe. We averaged $153/day (some more specifics are over at our site). I think we have similar tastes in lodging and eating, and you'll probably do even better because you won't be moving so much. Of course you will use much more gas than we did and gas is outrageous in Europe!
02/18/2011 14:35
Amy, You're absolutely right! I always wanted to know how much people's trips cost because I wanted to know if we were even in the right ballpark. I think it tends to be the first post I look at when I go to other people's RTW sites. Then again, it could be just because I'm nosy. :)

$150/day sounds fairly close to what we were guesstimating so I'm glad to hear that it sounds right. We have a couple of BIG transportation expenses, including the cruise over there (about $4,000 for the 4 of us), shipping the car (about $1,500), gas in Europe (ridiculously high), and then the return. But, I'm hoping that because we won't be taking trains, planes, and only a few ferries, the transportation costs will average out, too. Our biggest hurdle is that we can't go to many of the eastern European countries because we'll have to quarantine the dogs (a headache to be described another day), so we're going to be staying more on the western side with a few mid-eastern countries thrown in (Croatia, Bosnia, Hungary, Czech Republic).
02/18/2011 08:24
Fascinating and inspiring read. Definitely food for thought.
02/18/2011 14:48
Thank you very much Joan!
02/18/2011 08:28
This is super helpful for RTW'ers, bravo to your honesty!
Andi of My Beautiful Adventures's recent blog post: Chile, Argentina & Uruguay: Day 10 (Part 2)
02/18/2011 14:51
Thank you Andi! The honesty is easy to come by in these parts. :)
02/18/2011 10:52
I LOVE this post, Akila! Thanks for sharing your experience! This is just valuable info for me, as this would help us plan a family (of 4) RTW trip!
Jen Laceda's recent blog post: Swiss Night
02/18/2011 15:04
Thank you Jen! I didn't realize y'all were considering a family RTW trip. That sounds wonderful.
02/20/2011 03:59
Wow, I really hope we spend less money than what we budgeted for this year. It's difficult to know how much you need and, like you, we rent private rooms, eat out a lot and do some expensive activities. We try not to scrimp when travelling because then we miss out on things we really enjoy.
02/21/2011 11:20
Andrea - Absolutely! It is very hard to figure out exactly how much you'll spend though if you know that you prefer staying in private rooms and eating out a bit, then you'll probably roughly be in the $2000/$2500 price range per person per month because that's what most couples we saw ended up spending who traveled similarly to us.
02/21/2011 16:55
Great advice. We sort of picked our RTW budget out of thin air as well. We don't yet know if we'll spend it all (or spend more) but it seems to be about what others end up spending.
Kim's recent blog post: Dreams Are Free
02/22/2011 11:14
I think it's a standard method to pick a number out of the air but, usually, the number ends up working out which is a very good thing for us!
Akila's recent blog post: travelers talk back: budgeting
02/22/2011 00:20
Great post, thanks for sharing. My husband and I are currently on our first RTW trip and we have also shared recently how we got to budget and save enough money for our trip:


We did our maths in a slightly different way, but like you we have also thought of a back-up fund for when we come back.

While on the road, we are keeping an excel file with all our daily spend and for now everything is under control - hopefully we will spend less than budgeted too :)
02/22/2011 11:09
Romana, thank you (and thank you for introducing me to your blog.) That Excel file is critical - we're finding out how useful it is now as we're getting ready to do our taxes for last year!
Akila's recent blog post: travelers talk back: budgeting
02/22/2011 00:24
ohh and if you are planning a trip to Portugal or Sicily, while you are in Europe, let me know. My husband and I can give you some tips :)
02/22/2011 11:03
Thanks Romana, I will, because I think we'll be going to Portugal at least for a few weeks to a month.
Akila's recent blog post: travelers talk back: budgeting
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