When I am telling friends or colleagues that we are planning to take one year off to travel the world, one reaction is standing out: “I wish I could do the same!” Naturally I will ask “why aren’t you doing it?” .. and I get it! The gap between fancying the idea of traveling the world and actually packing your bag and get on a plane is huge. It’s clearly something that is not for everyone and that’s fine. I am not writing this series to tell you that you really just should just give up everything and hitchhike to Coachella. But IF you want to go on this adventure and feel that the only thing that is holding you back is your wallet, read on.
I strongly believe that traveling is in most cases rather a question of priorities than possibilities. Traveling It’s a mindset. No matter if it’s your number 1 priority or just a priority. If you made the choice that traveling is what you want to spent time and money on than go for it! Make your travel project the guiding lead for all your actions. Take that trip.
So that’s set. Travel is your priority now, nice job. But you’re still not having the funds. I am unfortunately not having a magic wand. But we found a way that actually helped us saving enough to take a year off to travel the world with our children. In this article (and the 2 to follow) I will share with you our method that empowered us to to take this decision.
Read on and know how we came up with a solid plan to pursue our travel ideas and gained back control about our finances.
First Step: Make a Saving Plan
I know that sounds boring. But truth is, it’s essential to know where you stand and where you’re reaching for if you want to make it work. You need to commit to a number and you need to be in control of your finances. It is basically impossible to efficiently save money when you have no clue about what you actually have and what you need.
Before we had a budget plan, we tried month after month to put a little bit aside. Mostly money that was left at the end of the month. Honestly, we were not even too bad at it – until a certain point. That point would be marked by receiving the tax assessment for our apartment. A 4-digit-number that ruthlessly would soak up every cent we grindingly saved up and put us right back to where we’ve started.
Begin with creating a complete as possible overview of your yearly expenses and incomes. The overview below is obviously not complete but can used as guideline. Assess your cost as a pessimistic realist and not as an optimist. It won’t bring you any step further to your goal if you underestimate your expenses. If your phone bill is usually between 20€ and 40€, use the latter as reference.
Know your monthly grocery expenses
To identify your average grocery expenses, sum up everything spent within 3 months and divide it by 3 to get your monthly needs on average. Depending on your life style and possibilities, you may or may not include take outs, restaurants and beers with friends. This being said, it’s easier to do this calculation if you are paying by credit card as you just have to go through your bill. If you’re more the cash kinda person, you might need to keep record a bit.
However, you have two numbers now and ideally, the first one (yearly income) is higher than the second (yearly expenses). If this is the case, congratulations! If not, don’t ditch all plans just yet.
I made you add exceptional payments and one timers to your income list, but it was for your personal high level overview. Remove those exceptional financial injections from your income, take the difference between income and expenses, divide the number by 12 and create a standing order with this amount to your saving account right now! By transferring this shiny untapped amount directly on payday to your savings, you increase the chances that it will stay in your vacation piggy bank.
If you have expenses due that are just bi-annual, put the prorated monthly amount aside on payday as well. Everything that is gone from your account will less likely be spent. Also, you will be able to pay those bills later without worrying about it.
Evaluate your finances and your travel plans
Well done, you set up your minimum saving plan base. But more important, you know now how much you will be able to save in 1 year, 3 years or 5 years.
Now it’s time for the fun part! Plan your trip! Or better: get an idea on what kind of trip you want to take. What it costs and how much it is deviating from the amount you’ll be able to save. Consider your situation realistically. Will you be able to save up for one year New Zealand or rather 2 weeks in Laos? Or maybe something in between? Also, after evaluating your situation, ask yourself the question if it’s worth postponing that trip and extend the saving period to come financially closer to your idea? It’s a balance and you need to find it.
You successfully established now your minimum saving capacities. Being aware of your financial position and knowing your goal is the first step of realising your travel adventure. It’s also a solid starting point to figure out how to maximize your savings and live up to your priority: Travel.
There is more I can do, you ask?! Hell, yeah! Stay tuned for part 2 of this series an put this saving scheme to the next level! We will provide you with some hands-on tips, habits and proven ideas. Learn how you can increase the amount you put aside each month..