Financial Tips for Long-Term Travel
Traveling long-term offers a lifestyle many dream of, but it also comes with its own set of financial challenges. Being smart with your money can determine the longevity and quality of your travels.
Picking a Destination
One of the biggest financial considerations to keep in mind is simply where you go. It seems obvious that some destinations cost more than others, but sometimes it's hard to understand just how large the gap can be until you experience it yourself. What you spend on a simple cheese sandwich in some countries in Scandinavia or Switzerland might pay for an entire night in a decent hotel in Southeast Asia.
In addition to overall price differences, various locations offer more favorable pricing for specific goods or services. For example, London is very expensive for rent, but its museums are free. Southeast Asia can be a fantastic place to buy t-shirts, but certain imported goods can actually cost more than in other locations.
Some people choose to alternate between more expensive places with more affordable ones, so that costs balance out over the year. Spending some of your time in less expensive places can substantially offset any higher cost locations. You can use tools like Numbeo.com to compare cost of living between locations.
For most people, the most expensive essential costs while traveling are rent, food, and transportation. If you can keep these three categories low and reduce ongoing expenses back home, you will go a long way towards making long term travel affordable.
Housing Considerations
Staying in apartments for a month or longer can substantially reduce costs in several ways, compared with hostels and hotels. First, monthly rates can come at a large discount compared with nightly or weekly prices. Second, apartments typically allow access to a kitchen, which means cooking meals rather than relying on takeout every day. Cooking a quick stir fry or heating up some pasta and sauce can cost a lot less than sitting down in a restaurant. Third, access to an apartment often comes with stable wifi, so you may not need to rent coworking space or spend as much time at cafes. Lastly, moving between places entails costs such as a flight or train ticket, along with the occasional need to stock up on some new basics when you get to a new place. Furthermore, apartment prices on Airbnb and other sites are often negotiable, especially when booking longer time periods.
Other options to consider for housing on a budget include woofing (working on a farm in exchange for stay) and house swaps. Camping and staying in RVs can also reduce some costs. (Camping in Europe often comes with amenities such as showers and cabin.) Finally, you can also look into Couchsurfing.
Food and Drinks
When it comes to food, the best way to keep costs low is by eating as the locals do. This often involves cooking and simple takeout meals from delis, rather than daily sit down meals as one might do on a brief two week vacation. In France, a baguette from a bakery and some cheese and meats from the local deli, eaten outdoors by the river, can make a delicious local lunch. In Vietnam, you might eat noodles from street food vendors for some meals. In general, wine is very affordable in Europe, but costs more in Asia where it's likely to be imported; in some countries, beer is known to cost less than water!
If you have access to a kitchen, preparing some meals at home is typically more economical than eating out three times per day. Some nomads opt to eat breakfast and/or lunch at home most days, and go out mainly for dinners. Being able to prepare some basics (eggs, sandwiches, salads, pasta, beans and rice, stir fries, etc) at home can lead to substantial savings in areas with more expensive restaurants.
Transportation
Transportation costs also vary greatly depending on where you are and how you choose to travel. Public transportation is often the most cost effective option, when available. If you plan to take taxis and rent cars, expect to spend more.
Sites like Rome2Rio are useful for understanding how to get from A to B. Make sure to compare all of your options, including trains and buses.
Activities
Choose activities wisely. While some activities might be expensive, others like exploring the city or hiking might cost next to nothing.
The activities you choose to do will also influence your budget. Spending your free time wandering around cities taking photos, relaxing on the beach, and hiking in the mountains won't add much to your costs. However, if you want to go scuba diving or visit bars regularly, you'll need to budget accordingly. In some places, museums can be quite expensive, but in others, such as London, they are entirely free.
Local Customs
Learning some basic phrases in the local language can help you negotiate better prices and connect with locals. It shows respect for the culture and can lead to more authentic and cost-effective experiences.
In some countries, bargaining is a cultural norm. Don't hesitate to negotiate prices at local markets or for services like transportation. Politeness and a friendly demeanor can go a long way in securing discounts.
Getting Cash and Transferring Money
You'll also want to minimize expenses related to getting cash and transferring money. Traveler's checks are a thing of the past; most long term travelers rely on the ATM to get cash.
When using ATMs, you’ll be offered the option to withdraw cash in the local currency or in your currency back home. You should always choose the local currency (for example, choose Euros if you are using an ATM in Europe). This avoids foreign transaction fees. Additionally, there’s a flat fee that the ATM itself charges each time you use it (often $3-5), which can vary substantially from one ATM to the next. Be aware of those fees and consider taking out more cash at once to avoid extra charges.
If you’re coming from the US, some banks (such as Charles Schwab and Fidelity) offer an ATM card that refunds all ATM charges. Not all countries have banks that offer this option, unfortunately.
You may also want to get a credit card that has no foreign transaction fees to use for purchases in stores. Of course, some countries (such as those in Northern Europe) are very plastic-friendly, while in areas such as Southeast Asia, almost everyone uses cash for basic purchases. (One exception is that almost everywhere in the world, big hotel chains take credit cards.)
If you need to transfer money between currencies, some options to look into include Transferwise, Revolut, n26, and Curve.
Expenses Back Home
You will likely also have ongoing monthly expenses, such as subscriptions to Netflix and other online services. Minimizing these can go a long way to reducing costs. If you're in Thailand, where a meal can often go for under a dollar, $12/month for television starts to feel quite expensive, and can make a real difference towards affording more local activities.
In addition to your costs on the road, you'll have to account for some longer term expenses. For example, are you paying for a storage unit somewhere? What about budgeting for health insurance and annual trips back home?
Planning and Tracking
If you are just getting started with long-term travel, you might want to start by doing a detailed and honest assessment of their current monthly expenses. Doing that bit of homework will allow you to analyze what expenses will go away and what remain with nomading. Some people find it useful to use Mint.com or Personal Capital to track spending by category for budgeting. You can also do it yourself in a spreadsheet, although it does require some work.
For more complicated situations, a tax accountant that knows the ins and outs of international tax law can save you a lot of time and money.
Final Thoughts
Travel Slowly: Instead of rushing from one destination to another, consider slow travel. Spending more time in a single location not only reduces transportation costs but also allows for a deeper exploration of the local culture.
Peer Recommendations: Seek advice from fellow travelers and digital nomads. They can provide valuable insights into affordable accommodations, local deals, and budget-friendly activities.
Tracking your Money: Knowing where your money goes is crucial. Tools like Mint.com or spreadsheets can help keep track.
Emergency Fund: Generally speaking, you'll want to keep an emergency fund at all times just in case. As a rule of thumb, you should keep a minimum of three to six months cash, plus enough to get back home safely.
Overall, many travelers find that if they are mindful of their costs, traveling doesn't have to cost more than living at home. In fact, for some nomads, it can cost a lot less. Of course, just like at home, any cutting back can come at some cost in terms of experiences. Exactly where you draw that line is something you'll have to decide.
Do you have other financial tips for digital nomads? Send us your suggestions here.
