This post is part of a series of articles focusing on personal finances for a round-the-world trip; however, the savings and budgeting tips herein should be of concern to anybody with an in personal finance! The series comprises the following articles: Constructing a savings plan for your travel fund, Saving For a Round-the-World Trip and Budgeting for the return home. Have any budgeting or savings tips that didn’t make the lists herein? Please contact us!
After more than a few requests, today’s post will focus on the tips we employ for keeping money in our wallets—and, hence, our travel fund. We’ve dished out a few savings tips here and there in the past, and also posted about paring down and keeping things simple (which also helps top up the ol’ travel fund). And since we still can’t help but cling to our pennies, we thought sharing a few more of the things that save us the most money might help our readers, too!
Be forewarned, however. If you were hoping for an easy list of small tweaks you could make in your spending to save for your round-the-world trip in a short timeframe. Sorry.
The reality is that round-the-world trips (even those constrained by low budgets) cost a lot of money. And saving for such a substantial investment in one’s self usually means making significant changes in the way one thinks about savings and the areas where one spends the most. To squirrel away enough coin for that round the-world trip, you’ll need to reduce your three largest expenditures: housing, transportation and food. Herein we include some ideas to make that possible. Moreover, we provide some food for thought that may help you to revaluate the small things you spend your money on every day.
Saving for a round-the-world trip is not something that most people can do in short order, but it can be done if you choose to make it a priority. Here’s how!
Write down your goal
A written goal represents a real commitment. Without this commitment, your savings goal remains but a dream. And dreams are easily deferred—a dream is something we would like to have happen but are unwilling to make the sacrifices necessary for their realization. Any worthwhile goal has its price! It’s next to impossible to save without measurable goals concrete goals. If you don’t have a goal, you won’t be able to measure success and you won’t be able to chart progress.
Chart your progress
Progress charts are an effective means of recording effort and improvement in savings and provide concrete evidence of progress. We’re all motivated by extrinsic reward, and since saving is a complex act that requires long-tem dedication, savings progress charts lend themselves to the element of reward and to the recording of successes. Kathryn and I chart our progress on our blog’s sidebar with ProgressFly—a handy plugin for WordPress blogs.
Pay your round-the-world trip first
If it seems like all of the money you is consumed by bills and other expenses, consider a reasonable monthly amount that you could start to save as yet another monthly bill. Paying your round-the-world trip first and treating it as another expense helps to establish saving money as a lifestyle habit. Moreover, it concretizes and legitimizes your “dream”. It may be difficult at first, but once you get in the habit, you will find it isn’t as hard as you thought. Kathryn and I automatically transfer cash on a bi-weekly basis from our chequing account to a high interest savings account. Most financial institutions should allow you to set up automatic transfers.
If you live in an urban centre, odds are the idea of giving up your car to save money has popped into your mind. Next to rent or mortgage expenses, the costs of running a car generally comprise the next largest monthly expense (depending on where you reside). However, it may be possible to save hundreds a month—thousands a year—simply by making the choice to go without a vehicle. Not only would it augment your RTW fund, but it would be an environmentally-friendly choice! The annual costs of running a car include insurance, gasoline, maintenance—and if you use your vehicle to travel to work—parking. According to a recent study by AAA, the cost of owning a car is approximately 52.2 cents per gallon. To put that in perspective, a new car that is driven approximately 15,000 miles per year will cost a whopping $7,823 per year. Can’t ditch your car? Check out Dave Ramsey’s Drive Free, Retire Rich for alternatives. Kathryn and I are currently reasessing our car situation—but we haven’t made a move. Yet.
In these leaner times, there have been a number of articles on frugality extolling the virtues of cutting costs by cancelling cable TV service. Kathryn and I cancelled our cable subscription six months ago and haven’t looked back. In the age of broadband internet access, with the myriad ways of connecting with content online, ie Hulu, Boxee, Bittorrent, cable is fast becoming an overpriced relic. We’ve been able to save ~$70 per month.
Cut the phone line
If you’re paying an exorbitant amount for landline home phone service, there are plenty of low cost alternatives to consider. For example, as mobile companies roll out all-you-can-eat calling plans, many people are ditching land lines entirely in favour of cell phones. However, ditching your landline isn’t the only way to save money. If you want to hold on to it, you can save by switching to a VoIP (Voice over Internet Protocol) service such as Vonage or Skype. These VoIP phone services are much cheaper (or absolutely free), and all you need is a broadband connection. We’ve been able to save ~$45 per month.
Drink (tap) water
This might seem obvious an obvious—and often repeated—suggested, but the costs of alternatives quickly mount. Writes Liz Pulliam Weston on MSN Money: “If you drink one bottle of soda (at $1.25 each), and your weekly consumption includes a latte ($4), an alcoholic beverage ($6) and a case of bottled water ($5), you can save more than $1,200 by drinking plain tap water—even considering the $30 you blow on a purifying pitcher.” Check out her article here.
What’s your Latte Factor?
Not unlike the prior suggestion, The Latte Factor® is perhaps a concept that isn’t foreign to you. It was coined by David Bach, author of The Automatic Millionaire. The Latte Factor® is based on the simple idea that all you need to do to build a great deal of wealth is to examine the small things you spend your money on every day and see whether you could redirect that spending to yourself. Using his example, saving the average cost of a daily latte and a muffin properly over the course of five years and investing at a 10% rate of return yields $30,727 dollars in five years—more than enough to sustain someone travelling the globe for a year! For more information, check out the Latte Factor® at Finish Rich.
Now, we’re not advocating a spartan lifestyle—it’s okay to occasionally indulge in life’s pleasures, but we believe that, with some tweaks to your daily routine you can begin to make that dream deferred into an achievable goal. Of course, saving more doesn’t have to be a drag. There are plenty of ways to continue to do the things you like to do at a lower cost. Share your best ideas below!
About the Author (Author Profile)For nearly ten years now, Daniel of Two Go Round-The-World has explored how travel captures our imagination and engages our deepest emotions. One half of the duo that maintains the widely read Two Go Round-The-World blog, Daniel treats his subjects not only as works of art but also as symbols of the cultural and political forces that inspire them. His latest book, The Physics of Flocking, gathers his favourite writing featured over the past two years on Two Go Round-The-World in columns like 'Looking Back' and 'The Whole Picture'—along with new reflections.
Sites That Link to this Post
- The Career Break – Your Definitive Moment to See the World | AirTreks Travel Blog | September 23, 2010