We quit our jobs and began a new life as full-time travelers about a year and a half ago. But this wasn’t a spur of the moment decision. It took several years of preparation, and the most important task was to get our finances in order to save money for long-term travel.
If your entire paycheck goes toward your living expenses then you may not think it would ever be possible to save enough money to travel the world. Well, we’ve got some good news for you: it is possible, and we are living proof! There are several things that we did to help us reach our financial goals, and we’ll share with you just how easy it is.
Tip 1: Say “No” to Credit Card Debt
Credit card interest rates are ridiculous. If you can’t pay your credit card balance at the end of the month, then you are buying too much crap that you don’t need. And definitely don’t plan to fund long-term travel with credit cards and then pay them off when you get home.
Tip 2: Say “Yes” to Making a Budget
You first need to determine how much money you make in a month. Then you need to decide how you’re going to spend it. For example, determine how much you will spend on eating out in restaurants for the month. Once you’ve spent your determined amount, then you stop going out to eat, no exceptions! Part of your budget should be saving for future travel. We saved about 40%-50% of our income for several years before we quit our jobs and started traveling.
Tip 3: Say “Maybe” to Investing Your Savings
Should you invest the money you’ve saved for traveling in the stock market? It depends. If you plan to start traveling in the next few years, then the stock market is probably not a good place to put your travel savings.
But if it’s going to be 5-10 years before you start your new life of long-term travel, then chances are you’ll be better off investing your money. If that’s the case, we suggest opening an account with Vanguard, Charles Schwab, or Fidelity and using some of your savings (maybe half of it) to buy a Total Stock Market Index ETF.
Tip 4: Say “No” to Big Purchases
If you’re planning to begin a new life of long-term travel soon, then it makes no sense to buy stuff that is designed to last several years. You don’t need a new sofa; make the one you have now last another year or two. If your car dies and you need another one, get a cheap used car instead of an expensive new car.
Tip 5: Say “No” to Impulse Buying
If you do need to make an important purchase, wait a week or two and think about whether or not you really need that item. No, you don’t need to buy that electric asparagus peeler that you saw on advertised on television. And you certainly don’t need to hire a professional photographer to get Christmas card shots of your pet goldfish.
Use the logical part of your brain, not the emotional part. Oh yeah, and make out your grocery list before going to the supermarket and stick to it. Otherwise you end up wasting money on candy, potato chips, ice cream, and a bunch of other unhealthy stuff that you don’t need. (Bonus tip: buy those groceries at a discount supermarket like Aldi).
Tip 6: Say “Yes” to Selling Your Stuff
About 20 years ago I bought four Disneyland Haunted Mansion wall tapestries for around $100. Before throwing them out, I did a quick check on eBay and found out that they were selling for around $2000! We also sold an old stamp collection, DVD’s, figurines, and other things that we thought would be worthless. And even if you think it’s going to be a few years before you’re ready to start full-time traveling, start selling your stuff now. It will be a lot less stressful than waiting until the very end.
This all sounds easy, and it is easy as long as you stay disciplined and self-controlled. Focus on the future reward and not present gratification. You’ll be glad you did.
And once you start traveling, you’ll want to keep your expenses down so that you don’t run out of money. In Part 2 of this article we’ll discuss ways to save money after you’ve started your new life and are traveling around the world.
What are your suggestions for saving money for long-term goals such as travel? Leave a comment below to share your tips with others.