Budgeting for a Round The World (RTW) Trip
IT DOESN’T HAVE TO BE THAT EXPENSIVE
One of the reasons I put off a round the world trip for so many years is that I kept convincing myself I wouldn’t be able to afford it. In reality, that was a convenient excuse. I hadn’t done any research on the real costs of others who had done it, the price of transit, or lodging. Like all my other reasons, I was just coming up with a post-hoc justification for something deeper that was going on in me - a sense that I wasn’t worthy of it. Not only because society lays it on thick that not working is a moral corruption, but because I had to do years of self-work to convince myself that my wants and needs had enough value to be honored.
When pen hits paper, a year of budget travel comes out to much less than a year’s tuition at most universities (and for me, personally, less than a year’s tuition for my MSW program when I get back). Many blogs suggest $50 a day - which comes out to about $20,000 for the year. I’ve set aside $30,000 for my 16 months - though my actual budget targets come in closer to $29,000.
THINK OF THE BIG COSTS SPREAD ACROSS THEIR PERIODS
One of the most intimidating parts of planning a trip like this is looking at flight prices. It’s true that if you take long flights often, it will break a RTW budget quickly. With long travel, it’s more helpful to think of everything in terms of cost per day.
So my flight to Lisbon was about $600. I plan to spend about 180 days in Europe and the surrounding countries before I take another long flight - so the cost per day of that flight is $3.50.
The same runs true for travel between cities, which is usually cheap by train and bus (and sometimes by budget airlines too). But, when I’m about to click pay on a $60 bus ride, it does make me panic that I’m about to break my bank. If I’m going to spend 4 days in that city, though, then it’s $15 a day - and that I can manage.
For me, some costs will unavoidably stack throughout the period - like flights (probably 600 every few months), insurance (40 a month), SIM cards (20 a month), health and wellness materials (let’s say 30 a month). Because of that, I’m setting aside $10 of my daily budget toward these big ticket items.
LET THE OTHER COSTS BE DAILY, AND KEEP A BUDGET
For lodging, food, tickets, and any social expenses, I think it’s best to think of spending on a daily basis, as that’s where those expenses tend to accrue. If you plan daily, you will know how much your necessity costs (transit and lodging) are before you head to a city, so you’ll know how much discretionary money is left.
In much of the world, you can get a dorm bed hostel for under $10, and a private room in a hotel, hostel or Airbnb for under $20. In Europe, you can get a dorm bed for under $25 in many countries, and under $40 in most places; in many European cities, you can also get a private room Airbnb for under $30. European hotels will quickly make a trip pricey, though.
MY BUDGET
With inflation, I decided to increase a bit from the general blog guidance of $50 to $55 a day for most of the world. Having spent a lot of time in Asia, I knew this would be workable for me.
For Europe, however, this felt too austerity (and unrealistic for me). My target in Europe is $75 a day.
Europe Daily Budget
Fixed Costs: $10
Transit Goal: < $15
Lodging Goal: <$25
Discretionary (Food, Tickets, Social) Goal: < $25 if I’ve hit the other goals, remaining balance if I haven’t
Rest of the World Daily Budget
Fixed Costs: $10
Transit Goal: < $15
Lodging Goal: <$15
Discretionary (Food, Tickets, Social) Goal: < $15 if I’ve hit the other goals, remaining balance if I haven’t
As I go, I’m going to try to stay under budget most days. I know I’ll hit expensive regions, or cities packed with entrance fees, or sometimes want a private room, or sometimes want a nice meal out. I want to have the discretion to have a splurge day without stressing too much, and have a sense that it will “come out in the wash.”
I’m also tracking my spending every day, and I’ll be monitoring it consistently to know if it’s balancing out or not.
THE IMPORTANCE OF SELF-AWARENESS, SELF-KINDNESS, AND REFLECTING ON THE POSITIVE
This kind of budget can be quite strict - and it’s easy to let it start to feel like scarcity. American vacations are traditionally about getting everything you want - all the convenience, all the comfort, all the food. A strict budget requires that you consistently prioritize what is most important to you - and that’s going to lead inevitably to mistakes.
When I started my trip, I knew it’d take an adjustment. I went about $7 over budget each day in Lisbon as I figured it out; it took a few days for me to realize this wasn’t a “vacation” but that this is my day-to-day life. I splurged too much as I tried to “have it all.” It took a lot of self-kindness to not let this slip into panic, or “what the hell” thinking where I just blow out my budget worse. Humans make mistakes, and the mistake I made is fine. When I was in Coimbra, I ended up below budget - having learned a lot about what spend was high value and what wasn’t. By time I was in Seville, I was fully back within budget.
Every day I face a trade off. Do I want to pay entrance to a castle, or do I want to eat out? Do I want a beer or do I want a pastry? It does require a level of vigilance about what matters most. To help confront that and avoid moving toward a scarcity or FOMO mindset, I consistently try to practice live gratitude for how amazing each experience that I’m choosing to have is.
I have a few basic rules for this trip to make those decisions easier. I know I don’t usually like museums or the interiors of ornate buildings (like palaces), so I’m unlikely to pay for tickets for those experiences; I greatly prefer seeing ruins, gardens, and the grounds and architecture of buildings - so I will often pay for those. I won’t buy coffee unless it’s really necessary and a dollar or less; I won’t drink at a bar unless there’s a really good reason. I won’t buy diet soda. I won’t take public transit if it’s under an hour walk. These kinds of self-aware default rules help immensely in keeping the creeping “have it all” costs at bay.
HOW I’M KEEPING TRACK
I use YNAB for my budgeting, so I decided to keep using it. I split my living expenses into four categories - lodging, transportation, tickets, food. I have a supplies category for anything that would fall into the fixed expense pool. For cash, I estimate the exchange rate for each transaction, knowing sometimes I will go too big and sometimes too small as I round to more whole numbers, hoping that in the end it will wash out.
I also keep a spreadsheet for each city. I put in the totals of those four categories for each city, and divide the total by the number of nights to see if I stayed on budget.
THERE ARE OTHER COSTS I’M NOT INCLUDING IN THAT
I bought quite a bit for this trip - including an iPad Pro and new clothes. Because of how I generally budget (which is I assign money monthly into a category and it builds over time), I largely had enough in my general budget to cover the supplies. So, I didn’t include it in my budget for this trip as it was money already bucketed to be spent on electronics or clothing.
I also have costs to maintain some things back home. I have a house in Philadelphia, and I’m only renting two of the three bedrooms (leaving one for me for when I return, and in case something happens and I need to go back early). Because I’m not renting out the entire house, the rent doesn’t fully cover my costs. I have to contribute about the full capital payment of my mortgage each month. For me, I was OK with it, because I’m essentially shifting savings from one envelope (cash) to another (house equity).
I also decided to keep my car, so I have to maintain insurance on that. My parents were nice enough to watch it to make sure it runs when I get back. This is a true expense for me - not a shifting of savings or a repurposing of already budgeted money. Looking at current car prices, I decided it made more sense to bite the bullet on this expense than to sell my car and get a new one when I get back.
Last, like all other decisions, there are huge opportunity costs. Not only am I spending quite a bit of savings, I’m not working, so I’m forgoing the chance to build new savings. If I factor in my savings rate before this, the true cost essentially doubles.