Lets start with a quick exercise. Get out a sheet of paper and write down your monthly income. Now write down all your monthly fixed expenses such as rent/mortgage, car payments or transit fees, cell phone, insurance and student loans. Add all of this up.
Now record all your variable spending. This is what you spend on groceries, date nights, alcohol, water, coffee, shopping, sports tickets, snacks, and other miscellaneous goods. If you don’t know how you spend your money then you can check your bank as most banks have apps that categorise and track your spending habits.
Now add up all your variable spending and what did you get? Probably a large sum of money. I bet there will be many expenses you didn’t realise were there. People bleed money without realising it. A dollar here and a dollar there really adds up. Even a daily bottle of water or coffee can make a big difference over the course of a few months.
Extra money = Monthly income – Fixed Expenses – Variable Spending
e.g. $3000 – $1100 – $900 = $1000 (This amount can be distributed between your savings, Emergency fund and travel fund). No matter how frugal we are, travel requires money. In order to save for our holidays, we need to cut down on our expenses. Here are some simple and easy ways to cut your expenses, make money, and quickly build up your travel fund:
- Make your own coffee/tea – Love your daily coffee/tea? This daily expense will quietly drain your account without you noticing. That daily $5 coffee sets you back $150 per month. What’s more important to you: your daily cup of of coffee or spending more time on the beaches of Bali or backpacking through Europe? Brew your own cup and start saving big.
- Make your own meals – Eating out is a luxury and quickly adds to your expenses. Cook more often at home and put some of that money towards your travels. I learned to cook after meeting Olivia and I cut down my eating out to one time per week. You don’t need to be a top chef in the kitchen to feed yourself. Start with one recipe that you do well and go from there. Currently I spend about $45 a week on food which includes going out to eat as well.
- Use alternative transportation – Cars are crazy expensive to own, so get rid of your car if you can. Learn to love the bus, take the train, bike, or walk. It may take longer to get around but you’ll end up saving a lot of money every month. Download a car sharing app like Car2Go and use it when you really need it.
- Find a flatmate – You’ll see a huge gain in your savings by lowering your housing costs. Downsize your apartment or bring in some roommates. If you can, try to move in with family. Three months before I went abroad, I moved in with my aunt and I saved over $1,500 in rent as a result. If this is not an option for you, live with flat mates. If you are hesitant on a full time arrangement than Airbnb could be option for you.
- Cut your own hair – 2.5 years ago I decided that spending $18 every 2 weeks on a haircut (just to look fresh) was getting in the way of my travel fund. I bought a hair cutting kit from Argos for $40 dollars and asked my girlfriend to cut my hair. She had no experience in doing so but did a fine job every time. In the first year alone, I saved over $400 on hair cuts. For the past 1.5 years I’ve been mostly cutting my own hair (she does help out from time to time). By my estimates I have saved $1,170 on haircuts alone.
- Get rid of cable – In the era of Netflix there’s no reason for you to be spending $100 per month on cable television. I haven’t had cable in 5 years and no longer have to suffer through commercials. Get rid of it and just watch everything online for free (if you have family with a Netflix account, thanks Romeo!).
- Downgrade your phone – A new iPhone costs $1,099. My smart phone was a free hand me down that has all of the functionality that I need 🙂 Downgrade your phone and phone plan in order to upgrade your next holiday. This extra money will allow you to spend a few more weeks in Asia, dine out abroad, or learn to scuba dive in Bali.
- Get a new credit card – A travel credit card can give you free money, free rooms, or free flights.
- Online savings account – Set up an extra savings account (travel fund) solely for travel. Set up a savings goal that will allow you to go on more holidays next year. Putting away $100 a month will add up to $1200 over the year and be enough for a few budget holidays.
- Sign up for travel newsletters – I have a weekly mailing list where I find the best travel deals of the week and send them to you. Save up to 60% on your next trip by subscribing to our free flight club.
- Buy second-hand – Living abroad has certainly changed my perception on the value of new clothes. Check out your local charity shop to update your wardrobe and save a fortune while still looking stylish.
- Groupons – Not all Groupons are created equally but the website does offer some great deals. If you’re in Sydney you can spend afternoon whale watching with tea/biscuits included for less than $40.
- Sell your stuff – Before I moved abroad 4 years ago – I sold anything I could: turntables, golf clubs, snowboard, electric guitar, acoustic guitar and microphone. Instead of letting things collect dust, I decided to just get rid of everything. I sold it all and have used the money to travel. Craiglist, Gumtree and Facebook market are great places to hawk your items.
- Drink less – Alcohol is expensive. Sure it’s loads of fun but excessive drinking will have a big impact on your budget. Drink before you go out and cap your spending by only bringing a small amount of cash and leaving your card at home.
- Buy a water bottle – Buy a water bottle and fill up from the tap. Don’t waste your money on something that should be free.
- Quit smoking – Smoking kills not only you, but also your wallet. A $10 pack per day amounts to $3,650 per year. Even half that amount would still yield enough money for close to three months in South East Asia. If you don’t want to stop smoking for your health, do it for your trip.
- Reduce snacking – My typical daily snack combo used to consist of chips, chocolate and candy. Snacks are cheap but the costs add up fast. Eat fuller meals during lunch and dinner and reduce the snacks.
- Earn extra income on the side – The gig economy has made it easy to earn extra money on the side. You can rent your spare room out on Airbnb, drive with Uber, pick up odd jobs on Airtasker or create your own website/blog. There’s always a way to make extra income on the side no matter what skills you have.
Writing this post has been cathartic. My lifestyle has changed a fair bit over the past few years as I’ve been balancing living abroad and travelling the world. Cutting down your monthly expenses, being frugal, and downgrading to a simpler way of living will allow you to save money for your trip around the world without having to find extra sources of income.
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