Welcome back to our many-part series about the nuts-and-bolts of meandering minimally. If you’re not ready, or not yet, we offered alternatives. First, Part 1 asked if you like travel. Part 2 encouraged you to think through obligations. Part 3 talked about potential travel companions. Then Part 4 talked about health and health insurance options, and Part 5 talked about having less stuff, theoretically and practically. Part 6 encouraged you to think about how mobile your lifestyle is, especially in terms of fun, Part 7 encouraged you to think about the routines in your life and how they might become mobile, and Part 8, was about language anxiety. Today – in time for U.S tax season! – we cover financial planning for travel. This is a huge topic, and we’re just getting started. We hope this umbrella-post helps you to start conceptualizing a life of travel from a financial perspective.
Change your Mindset about Travel: Long-term is Not the Same as Short-term
When most people think about travel, they think about vacations: they are going to stay in nice hotels, eat at restaurants, do a lot of fun and expensive stuff. Because, well, they’re on vacation! Long-term travelers, excepting the very rich, are not on vacation. We’re just living our lives wherever we are. We stay in modest apartments, walk a lot, and mostly cook at home. Most importantly, we do not carry other costs somewhere else – no house, no golf membership, no nothing. (With one exception; see below!)
Two Options
There are two sorts of long-term travelers, monetarily speaking: workers and non-workers. Some workers have regular jobs, and some work from anywhere. There are plusses and minuses to each. The category of jobs that can be done remotely has magically increased recently (thanks, COVID!), and even if this isn’t you, you might be able to work something out. There are also those in-between, working, taking time off to travel, and working again. (This is not just twenty-year-olds!) We are not experts in this, but many other people are: Transitions Abroad is a great place to start, and there are any number of websites for digital nomads. We wholeheartedly recommend Tim Ferriss’ Four Hour Workweek to help you think this through. Updated editions include stories of people just like you, with kids and careers, who have switched to a fully or partially nomadic lifestyle.
Easier, but also harder, is to save up enough money to have your pension, or investments, fund your travel. Again: this is not only for rich people. We have found that a lifestyle we can enjoy is well within our budget in most places in the world. And that’s mostly because we don’t have to pay for another life back home. But we also have a fall-back plan that includes both ways we could bring in more money and ways we could spend less. Just about one year in, though, we’re the tiniest bit under our budget. Yay us! Let’s hope it holds.
So How Much is Enough?
Obviously, but also disappointingly, we can’t give you a number. And that’s because this isn’t just about travel, it’s about your whole life. How much money you need depends on you. For instance: how long are you traveling for? Is it cheap or expensive to get there, to live there, to eat there? How will you deal with medical costs? Will you move around or stay in one place? What do you want to do while you’re there, and how much does it cost? What else do you need to fund while you’re away (e.g., college educations, mortgages)? If you will be looking for a job or starting a business, how will you support yourself until then? And that, incidentally, is why we’re writing about finances last in this series, because there are many questions to think through before you start counting your pesos.
In sum, financial planning for travel is just like financial planning for life: things happen that you didn’t expect. So it’s also important to play out some scenarios and to be very conscious of your tolerance for risk. Do you need travel insurance? What if you have to fly home in an emergency? Etc. etc.
The first and most important thing, whatever your plan, is to get out of debt. Ideally in a way that also doesn’t make you feel sorry for yourself. Apparently the best way to do this is to focus on the positive goal, rather than the deprivation.
Our Five-Step Plan
Here is how we planned our trip from a financial perspective (although we hope you agree by now that money is intertwined with everything else, so it’s artificial to pull this single piece out). We have lots more to say about each of these topics, but here’s an overview.
- Big-picture: envisioning the life you want, thinking about how you like to travel and what is important enough to spend money on. Be honest, especially if you are planning with someone else. And recognize that there may be real conflicts to resolve. This step is harder than it seems, because most of us only ever travel for vacation.
- Reality check: how much money do you spend now, and on what? How much do you save? Are you willing to give up the life/stuff/jobs you know? Where will the money come from? Also, how much does it actually cost to live in the place(s) you’re considering? Paris costs more than Bangkok. (Numbeo is handy as a general guide, and lots of websites offer city-by-city comparisons.) Maybe you need to scale back.
- Putting a price tag on it: what are your most informed guesses about how much all of the previous will cost? What is and is not negotiable? How close are you to your goals? Where can you tweak?
- Worst-case planning: what might go wrong and what will you do if it does? Some of our fears were: health crises; getting worn out from moving around; getting bored; being wildly wrong about costs. The point is not to terrify yourself; it’s to assess how bad it might get, and what you’d do if it did. This step helped us to decide what to keep (in our case, not much!), and also to maintain long-term health care insurance in the U.S., even though we’re not sure if we’ll ever live there again (that’s the one cost we continue to pay).
- Do it again, more than once: the first four steps will clarify a lot. And so, they’re worth repeating. Things might change on you, or new information might come up. You might discover that you really do want to go home once a year. Or that it’s not worth it to you to live in a hut in Central America and eat nothing but plantains, although that’s all you can afford. Laurel had been assuming she’d have another job eventually. But after we went through this process a couple of times, we decided not to factor in that potential income.
In Sum
Financial planning for travel will take a lot of time if you do it properly. Take each part seriously, track your expenses and income, and think creatively. Also, remember that the goal is sustainability: if you can’t afford to travel in the way you want to, shorten the trip, make more money, or find a way to cut down on expenses, rather than simply spending more than you have.
