Let’s Go: Budgeting

[singlepic=1239,250,,,right]Budgeting – the fine art of determining how much you have, how long it will last, and how can you stretch it. I come from a business background, and I have managed million dollar budgets for fortune 500 companies, but sitting down to plan my travel budget for a year was quite a task. Somehow it’s easier when you are planning with other people’s money.

There are many different ways to plan a travel budget, and the key is to adjust it as you go and test your assumptions. Before I took off for my 16-month journey I sat down and tried to create a rough budget of what I thought I would spend. The problem was that I had never really traveled long term before, so I had a hard time determining where to start when I didn’t know where I‘d be staying from one day to the next for a whole year.

In Excel I made a worksheet with a list of each country that I had planned to visit. I decided I would apply a simple equation and not get too detailed since I really didn’t know where I would be every day/week/month, but I did know a few things in general. Here are the elements of information that I collected:

1. Average Daily Costs per Country

  • Begin by outlining the number of countries you plan to visit and for how long.
  • Factor in the average cost for daily necessities like lodging, food and drinks. You can find this out by doing country-specific research on the web. You can also get an average idea by visiting: http://www.solotravel.org/travel-budget-calculator.htm

2. One-time Country Costs

  • Once you have arrived in a country, how do you plan to get around, and how extensively? Factor in the costs of internal flights, buses, boats, trains, etc…
  • Include the pricing of any tours, classes, or activities you plan on doing. In some cases these may include lodging and food, so take that into account as well.
  • Many countries require that you get a visa (either before or upon arrival) and these costs vary. You can find out visa requirements by visiting the country’s Embassy website or visit Travisa for easy access to all country requirements: http://www.travisa.com/
  • Plan on shopping? There is a difference in budget from Paris to Luang Prabang, so realistically think about how much you are going to spend and carry!

3. One-time Trip Costs

  • Whether you are on an Around-the-World ticket or flying on various airlines, this is a big chunk of your upfront budget.
  • Medical and trip insurance is an invaluable budget item.
  • Include items you plan to purchase before departing such as a backpack, camera equipment, and clothing.

4. Miscellaneous Costs

  • Depending on your situation, there are a variety of line items you might want to incorporate into your budget, such as storage facilities and cell phone bills. You will also want to factor in the cost of living upon your return home, such as rent/mortgage and COBRA insurance.

Be sure to revisit  your budget often during the planning process as this will evolve over the period leading up to your trip. Plus, one of the most useful things about a budget is that you can run various scenarios, even while on the road.  When I landed in Europe and realized that my money didn’t go very far there, I re-analyzed my budget and ran new numbers to see what it would cost for me to get out of Europe and go to Northern Africa instead. After I ran the numbers, I realized that I could travel for 3 more months if I simply stayed out of Europe – so I changed my plans and went to Morocco, Egypt, India, China, and Japan.

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