The Basics of Travel Budgeting
Why You Need a Budget

Whether you’re hoping to travel for three months, six months, or for 12 months on an adult gap year, this guide will help you answer critical questions that might be on your mind:

Is $20,000 enough to travel for 6 months in South America?
Is $10,000 enough to travel for 3 months in Southeast Asia?
How much does it cost to travel to Europe on a budget? (Psst… It depends on your travel style!)
How much does it cost to travel to… Vietnam? Or Rome? Or Thailand?

The answers to these questions depend heavily on your travel style. Are you a budget traveler who only does free activities, takes public transport, and eats street food? Or you ready to live it up as a full-time traveler ready to enjoy business class international flights and expensive safaris in national parks? But getting down to hard numbers – ones you can rely on, not ones you pull out of your you-know-what – is critical if you want to enjoy full-time travel for whatever period.

Figuring out what your travel budget looks like and what should be in it is nuanced. For that reason, this guide is MASSIVE.

To keep things simple… well, simpler, we’ve organized it into multiple posts with sub-sections so you can jump to the questions most relevant to you.

If you’re curious to get specific guidance on what it costs to travel in specific locations, check out Part II of our Ultimate Budget Guide: How much it costs to travel around the world – our take. There, we cover how much we spent in all of these locations: Southeast Asia (including Indonesia, The Philippines, Vietnam, Thailand, Cambodia, Laos, and Singapore); Europe (including Italy, Ireland, the UK, and Spain); Africa (including East Africa and Southern Africa); and South America (including Patagonia, and Argentina).

One shameless plug – We’re very good at building accurate and realistic travel budgets for long-term travelers. When we took our own adult gap year in 2023, our total travel spend came within a few percentage points of what we forecasted. (That’s crazy good.) Now, we help people who hope to travel around the world figure out what a realistic budget (and savings plan) is for them, based on their own spending habits. If you’d rather skip the nitty gritty details and simply get help, schedule time with us here.

Why you need a budget for your world travel costs

Let’s start with WHY you need a budget. You might be thinking – well, I just need a rough sense of how much this trip will cost so I know if I can afford it, or so I know how much to save.

But you need a budget for so many more reasons than that:

Without an accurate budget, you might over-spend… which could mean having to go home early. This is especially true because building a budget is a great way to think through your long-term travel costs comprehensively. If you spend too little time thinking about what your trip will cost, you might overlook expenses and underestimate the total cost.
Without an accurate budget, you might run out of money and… put the rest of the trip on your credit card. That’s a problem for “Future You,” right? Yikes.
Without a budget, you might spend your whole trip worried about every dollar you spend. Why spend your trip anxious??
Without a budget, you might never feel ok “splurging” on life-changing experiences when they come up – and they will! You’ll be stuck saying “No, I can’t afford that…” even when you might have been able to! A good budget does a number of really positive things for those enjoying long-term travel, the digital nomad life, adult gap years, travel sabbaticals, and mini-retirements. (Man, there are really too many terms for these breaks.)

Let’s break down the benefits. A good budget will:

Show you when you can splurge, so you can make the most of your trip
Make sure that you can travel for as long as you planned to travel
Make sure you don’t go into debt because of your trip
Keep you feeling confident about your finances, which will make your trip more enjoyable AND will make you more confident as you look for a new job afterwards (if you so choose.) You don’t want to be desperate for cash when you’re looking for a job!
Capture at least 80% of your expenses, including the things you might not be thinking about right now – like health insurance or travel insurance, the cost of sim cards or e-sims, the monthly bills you’ll need to keep up with at home, bank fees like foreign transaction fees (which you will hopefully avoid), and more. Full-time travel has all kinds of hidden expenses, but with good planning beforehand, you can catch these in advance and budget accordingly.

All that being said, having a good budget is only part of what you need. A good budget is accurate and realistic, but to stick to it, you need a plan to track your expenses against that budget.

Why you also need to TRACK how much money you spend while you travel

Yup! That’s right. You need MORE than a budget. You also need a good tracker. The budget tells you want you can spend, and the tracker… keeps you on track!

No matter what you do, unexpected expenses WILL come up. From the exchange rate making your expenses more or less expenses to getting a cold abroad and realizing cold meds are WAY more expensive than you thought, you need a way to see if you are staying in line with your budget.

A good tracker isn’t a nag. It’s often a source of happy news. Frugal travelers who diligently track their expenses often find that they are in fact spending far less than they budgeted, which means they can splurge on nicer places to stay or experiences they didn’t think they could afford. That doesn’t happen unless you have a good tracker telling you how you’re doing against your budget.

How to track expenses on your long-term trip

No, you do not need to write down every single euro that you spend on espresso, but doing so is a great idea. It will help you keep up the habit of tracking your expenses diligently.

I strongly recommend using one of the below travel spend tracking apps so that you can quickly jot down your day-to-day expenses. While you might be tempted to simply reference your credit card statement, keep in mind that:

Cash is still king in many parts of the world – and when you’re spending cash very regularly, you need to track where it’s going
You might not have regular access to wifi to access your credit card statement in the first place.

My recommendation is to track your expenses in an app (I used the TravelSpend app, which worked great, but you can even use the Notes app on your phone) and then transfer those details into your budget tracker about once a week. This will take you no more than 30 minutes, and it will leave you with the peace of mind that you’re on track (or give you an early warning if you’re spending too much).

Download my free budget template

If you want a short-cut for building your budget, you can copy my budget template HERE. Make a copy of the document and edit it as you see fit!

A few quick notes on the content:

Cells in yellow require your input
Cells in grey have built-in calculations
You can toggle what level of “miscellaneous budget” you want to include. Options range from adding a 5% to 15% buffer to your total expenses to account for things you forgot.
Add in additional costs as needed (you'll see a spot to do this on the spreadsheet)

The goal of the template is to be relatively exhaustive, so you may see plenty of categories where you choose to budget $0. That’s OK! The goal is to make sure you overlook as few costs as possible, with your “miscellaneous budget” ready to catch anything left.

This template includes the vast majority of categories that any good budget for full time travel will have, including:

Transportation costs – for local transportation and inter-country transit (like international flights and trains)
Accommodation costs (hotels, Airbnbs, etc.)
Food
Activities
A “miscellaneous” budget (more on why you need this below)
Tons of other expenses you might overlook – from visas to expenses you’ll incur at home to credit card fees to travel insurance

Starting with this exhaustive template should set you up for success regardless of whether you are planning a road trip through North America or are planning a grand adventure through central America or eastern Europe or a big world trip.

Building your budget from scratch? Don’t overlook these important things.

If you don’t want to use my template budget, that’s OK. I promise, I’m not offended. Just make sure you build a budget template that is set up for success.

In my experience, that means:

It’s something you can keep with you – because if you make your budget before your trip and then leave it at home…. well, how are you going to know if you’re on track?
It’s easy to reference – you can clearly see what you’re supposed to be spending in each city on your trip
It has space to input “actuals” – because the best budgets are both a function of how accurately they’re made and . You’ll need to track your expenses against your plan, and that’s easiest to do if you have a designated spot in your budget sheet to input your actual spending.
It’s easy to update – because if it’s time-consuming to update, you might not keep up with the updates

Here’s a sample of our actual budget with our actual expenses in Morocco from when we took an adult gap year. The section in green was what I planned in advance, and the section in grey was where I inputted our actual spending during the trip. (We turned lines grey once they were finalized.) The last column auto-calculated based on the different between total forecasted spending and total actual spending by city. That way, I could easily see where we were ahead of or tracking behind our forecasted spend in each city.

How do you start building a good budget for long-term travel?

Before you can begin building your budget, you need to have your itinerary in a semi-solid state. No, you don’t need to be 100% sure about all the things you plan to do and all the places you plan to go. But, unfortunately, the difference in cost in going to Vietnam versus going to Botswana is profound. As is the difference between going to Italy in peak tourist season versus the low season.

Given that, you need to be about 80% sure of all of the following before you start building your budget:

What countries you want to visit
A general idea of when you plan to visit each country (i.e., in what month or approximate season)
How long you want to stay in each country

You also need to think through the expenses you might overlook. We walk through this comprehensively in Part II of our budget guide, so keep reading! For convenience though we’re adding a list of commonly overlooked travel expenses you need to add to your budget if you’re building it yourself!

Here’s our quick list of commonly overlooked travel expenses to include:

Storage unit fees & insurance
Any costs you’ll incur from maintaining your home or your car at home (like insurance or taxes)
Your annual tax bill (if you’re traveling during that period)
Credit card fees
Mail forwarding costs
Recurring or subscription expenses, like your Netflix account, any paid apps you subscribe to, your Amazon or Costco membership, and so on
Things you need to buy in advance for your trip – like these 10 products we recommend including in your packing list
Gifts you might send home (birthday presents, mother’s day presents, Christmas presents, etc.)
Travel vaccine costs (often not covered by US medical insurance policies, and these are EXPENSIVE)
Medical expenses – from OTC medication to trips to the doctor’s office
Phone bills, including the cost of sims or e-sims
Visa fees
The cost of shipping items home occasionally (which can add up to hundreds!)
The cost of replacing gear or clothing while traveling
The cost of returning home – from putting down a deposit on an apartment to paying for first month’s rent before you restart work

Once you’ve built your travel budget, you might wonder what’s next! Well, for most people, saving up for your trip is next. And that means building a savings plan.

How to build a savings plan for your trip around the world

If you have a total dollar value for your trip, then it’s time to figure out if you can save that amount.

Take your total number -- let’s call it $70k for two people to travel around the world for a year. Divide it by 24 (1 year of semi-monthly pay periods), 48 (2 years of semi-monthly pay-periods) and 72 (3 years of semi-monthly pay-periods) to figure out how much money you need to set aside per pay period.

In this example, the per person / per-pay-period savings required are:

For 1-year of saving: $1,459 saved per person per paycheck
For 2-years of saving: $729 saved per person per paycheck
For 3-years of saving: $486 saved per person per paycheck

Whatever numbers you see might inspire… some hesitancy. Long-term travel can be expensive! But if you’ve made it this far, you’ve probably weighed the pros and cons of long-term travel and decided it’s worth the cost.

All that being said, if your number feels intimidating or like they doesn’t fit into your financial plan, you have some things to consider:

You can travel for a shorter amount of time than you originally planned
You can travel to cheaper places than your current itinerary includes
You can save more slowly (which will reduce transit costs and allow for discounts on some accommodations)
You can consider working during your travel sabbatical to defray some costs
You can do some combination of the above

What I would strongly, strongly advise against is assuming you can travel for less. Unless your budget number is completely out of whack with what you’ve seen online from other adult gap year travel bloggers or read in this book, you may end up budgeting for “Aspirational You” and not the “Real You.” (More on this below.)

So that you have one point of reference, I’ll share that my husband and I spent about $75k to travel for a year. This included some expensive places like Europe and Africa, where we spent ~$222/day and some very cheap places like Southeast Asia where we spent $148/day (for two people). We very rarely stayed in hostel dorm rooms and instead stayed in private AirBNBs, which drove our costs up a bit, but we also spent very little relative to most people on flights because we took advantage of credit card points (more on this in a moment).

Each total budget number comes with plenty of caveats, and you don’t need to justify them to anyone. You just need to make sure the overall number is one you can truly adhere to.

I would also caution against developing a savings plan that will take more than a few years. That introduces too much time for you to give up or for life to get in the way. Instead, go back to the bullets above and think about shortening the trip or changing locations so that you can go on a sabbatical, even if it isn’t the ideal sabbatical you’re hoping for.

If the amount you need to put away each pay-period feels reasonable, it’s time to think about how to make sure you achieve your savings plan as quickly as possible. We decided on a list of things we were willing to sacrifice to help achieve our savings plan.

This included:

Any bonuses went straight to the sabbatical savings
We avoided some major purchases
We stopped giving each other presents (sad, but worth it)
We spent 6 months living with our parents to save on rent
For our last two months of working, we stopped contributing to our 401ks and put that money in the sabbatical fund instead.

We kept our savings in cash, instead of investing it, because we were planning on traveling within 2 years and didn’t want to deal with any market volatility that could shrink our savings.

To be clear, we are not a financial professionals and cannot recommend how you should or should not save money for this trip. We also can’t advise on if you should keep funds in cash or invest them. Just because we took these approaches doesn’t mean you have to or should, and we strongly recommend consulting with a qualified professional before making investment decisions like the ones I’ve shared above.

Budgeting for your REAL travel lifestyle

Before you finalize your travel budget, you should take time to reflect on it. Have you planned for budget travel when you’ve been a luxury traveler your whole life? Are you assuming you’ll maintain a significantly lower cost of living while traveling than you do at home? Assuming you’re going to spend less money in a foreign country is a recipe for disaster.

That’s why – of anything on the trip – accurately assessing your travel lifestyle is the most important thing to get right. This is the moment to ask yourself questions to make sure you’re budgeting for the Actual You and not the Aspirational You.

If you have budgeted based on the assumption that you are going to change some major, current behavior, think again. Are you really going to stop drinking? Are you really going to stay in a hostel when you have only ever stayed in nice hotels before? Are you really going to skip out on buying souvenirs?!

When we work with clients, we don’t just budget for the logistics that come with visiting a slew of different countries. We get to know our clients so we can understand their travel lifestyle and spending habits at home. That helps us assess what the cost of their digital nomad lifestyle (or adult gap year or travel sabbatical) will be. If you’d like to get our help, connect with us here to get started.

Ready to start filling out your budget? Check out Part II of our budget guide to find out what we actually spent in countries around the world, what additional costs you should include in your budget beyond day-to-day travel expenses, and how we recommend estimating your travel costs. Part II will help you get down to the hard numbers of what your own journey will cost.

We strongly recommend referencing our real budget numbers when you assess what your world trip cost will be. They’ll help you assess how your trip budget may vary from the trip budget of the average person. A back-of-the-envelope calculation can help you figure out if a trip like this is even feasible, but a detailed deep-dive into what your long-term travel budget will be is critical for making sure it’s accurate and comprehensive!

And of course, if you’re worried about doing this on your own, you can always reach out to us for help or to do it for you.

Sample budget image - showing accommodation, food, daily transportation, major transportation, and miscellaneous expenses. The budget shows forecasted numbers and actuals

Read Part II

why budget for world travel costs

how to track expenses on your long term trip

why track travel expenses on long term travel

download free travel budget template

build a savings plan for your trip around the world

how to start building a budget for long term travel

what not to overlook in your long term travel budget

budgeting for your real travel lifestyle

The Basics of Travel Budgeting Why You Need a Budget