Now that I’ve quit my job, stopped paying rent, and jetted off to Southeast Asia, I realized I need to sit down and figure out exactly how much it costs to travel the world. As my investments get to work, I get to relax. Well, as long as I don’t go on a spending spree. I need to figure out exactly how much I need to fund my new lifestyle from a 9-to-5 worker bee to full-time unemployed nomad.
While it’s tempting to forget about budgets and rock back on the beach for a while, I want to set myself up for success. So, the first thing I want to do to plan is break down my daily spend. This helps me plan out where I can afford to stay, as hotels and Airbnbs charge per night. Money that used to go towards rent can now go towards villas by the sea or hostels downtown, all depending on whether or not I have enough money to travel the world.
How Much Can I Afford To Spend Per Day Around The World
Using the 4% rule (the recommended amount a retiree should withdraw from retirement savings each year) as a baseline, I can calculate what my portfolio can sustain.
Note that this is simply a guideline based on historical simulations and more traditional retirements. I expect to adjust drawdowns as needed over time.
In the first year of retirement, I should aim to spend less than 0.04 * $670,000 = $26,800. Based on my previous spending, this should be achievable. All in all, I should aim to spend about $2,233 per month, or $74 per day, including hotels, meals, cabs, entry fees, SIM cards, everything! I like switching to thinking about spending by day because it helps when I’m looking at the cost of accommodation.
While living in Amsterdam last year, I spent about $51/day on rent and utilities. I can target this number, or preferably a bit lower, for accommodations abroad. That leaves $23 for meals (easy to do in Asia where most meals on the street are $2-3), tickets to attractions, and other daily expenses. Of course, in pricier countries it gets difficult to stay on budget, but I hope everything will average out. When I’m travelling in more expensive places I stay in hostels and cook where I am staying to keep costs down.
It’s sometimes comforting to remember that while vacations can be expensive, travel in itself doesn’t have to be. I was shocked to learn that Kristy and Bryce from Millennial Revolution realized that they spent less while full-time travelling than if they had stayed in their hometown in Toronto. Kristy just wrote a related post about how they save money while travelling. It can be helpful to remember that having a roof over your head will cost you, whether you are in one place or many. You get to decide where the roof will be.
Do I Have Enough Money To Get Started?
Before travelling, I had to purchase a couple of things. First was travel insurance. I picked SafetyWing for low-cost nomad insurance (and I double checked it covers driving a scooter!). That was $48/month. Another preventative measure I took health-wise was to visit the travel clinic in the Netherlands and get a few vaccines up-to-date for travel. The bill for that totalled €117, but luckily the vaccines are refreshed for another 10 years.
I also bought a travel backpack, narrowing from several options down to the Cotopaxi Allpa 28L. New it comes for $170, not cheap! (Stay tuned for an upcoming post on how I picked this pack and how it’s been working for me so far.)
When I left work, I received a gift card for a Dutch website. I had to use it before leaving because the company only delivers within the Netherlands. I opted to get a STERIPEN UltraLight UV Water Purifier. It was relatively expensive (~$95) but used up most of the gift card. Now I can reliably have safe drinking water while traveling. It’s neat as it’s quite small, rechargeable, and has glowing reviews.
The largest expense was the ticket to Bali, ringing in at $587. Not bad for a ticket across the globe. I know it’s possible to go even cheaper with credit card rewards and extra finagling.
Total Upfront Costs: $1,020
These upfront costs were important, though not all of them necessary. I could have been a bit more frugal here, but I’m happy to feel prepared.
How I Plan To Keep Travel Costs Down
Stay in Hostels
My first stop in Thailand is a hostel where I will be paying $12 per night. This should help offset higher costs when I travel to more expensive countries. I will be keeping track of my monthly spend to make sure I’m not blasting through my cash cushion too quickly. Here’s the description of my booking:
I chose a hostel even though there was an option at the same price for a private room. Why? As a solo traveller it is easy to meet people at hostels, the staff can help set up excursions and tours, and they are generally located in prime spots downtown.
Another trick to keep costs down, if you’d rather avoid bunking with strangers, is to book for longer. Month-long stays typically have discounts. I generally don’t plan in advance quite enough to do this, but maybe someday. I try to book for at least 3 nights at a time. Any less and travel to-and-from each spot gets tedious. This is one difference between vacations and globetrotting vs. slow travel: the ability to hang out and really get to know a place for a while.
Balance Time Between High-cost and Low-cost Countries
My first stops are in low cost countries in Southeast Asia. I plan to eventually migrate over to New Zealand and Australia, where things will get a lot pricier. Keeping costs down now will help fund other countries I’d like to visit. I am encouraged by the fact that a hostel in an expensive country like Copenhagen was just $35 a night. However, there may times when I expect to go way over budget, so it’s good to stay under budget when possible.
Try Out TrustedHousesitters
Based on recommendations from All Options Considered, I signed up for Trusted Housesitters. I have yet to use it, but I hope this might be one way to keep costs down. They have managed to get housing all over the world in exchange for taking care of peoples’ homes and pets. What a great way to slow travel!
Book The Ticket Home In Advance
One of the highest costs of vacations is the airfare. Luckily, I don’t have a job to determine when I must be home, so I can be flexible. I can set up automated alerts to track prices, and find something affordable to get me back to the States. I also recently signed up for a credit card (Chase Sapphire Preferred), knowing that I would be spending a lot while moving. The points from sign-up rewards should cover a flight or two.
So, Do I Have Enough Money To Travel The World?
According to IndieTraveller, a backpacker can expect to spend less than $50 a day in most places in SE Asia, at least as of 2019. I’ve noticed that prices have increased after COVID, presumably to make up for the couple years no tourists visiting.
Of course, it will be more expensive to travel in other spots like New Zealand and Japan. Nomadic Matt suggested a budget of ~$52 (85 NZD) per day for a backpacker in New Zealand, and $65-75 per day in Japan. This tells me I should be okay, as long as I keep track of my spending.
So to answer the question: Do I have enough money to travel the world? Yes! I can travel indefinitely, as long as I stick to a daily budget of $74. Any more than that, and I have to ramp down the international romp.