Once you have a handle on what your trip is going to cost, you need to figure out how you are going to pay for it.
For all but the shortest trips, putting the lot on a credit card and paying it back later is not the way to go—you’re far better off saving as much as you can before you get going.
We suggest this for two reasons. Firstly, saving a little bit over a long time is relatively easier than saving a lot in a short time. Secondly, coming home from a trip to find yourself in hock to your credit card company for thousands of dollars is not the best way to finish a trip.
We’re going to take a hypothetical example of a solo traveller who decides, 10 months out, that they need to save $5,000 to be able to pay for a three-month trip to Southeast Asia. We’re trying to illustrate are some simple methodologies that can be used to squirrel away some money for those who are in gainful employment and have some disposable income. We’re not financial experts, but these are approaches are ones we've tried in the past and have been effective in helping us save more than we would have otherwise.
This is perhaps the most effective way to save money. Start a new savings account with your existing bank that is unlinked to any credit card. It will undoubtably come with an ATM card—cut that in half. Organise for your bank to do an automatic withdrawal from your the bank account into which your salary is deposited.
How much you can afford this amount to be will depend on your own financial situation. We’d argue that a good approach is to start with half your disposable income and then, closer to leaving time, increase it to perhaps three-quarters. By this, we mean if you are earning $1,000 per month (hypothetical!) and rent, plus bills comes to $500, food and drink comes to $200 and another $100 is allowed for everything else, that leaves you with $200 in disposable income. So send half of that ($100) to this new bank account.
The idea of doing this is that you’re squirrelling away the money before you see it—out of sight, out of mind—and while $100 a month doesn’t sound like much, at the end of the ten-month saving period, our example traveller will have saved $500 in the first five months and $750 in the second five months—equating to over a month's salary.
This type of forced savings is one of our two favourite methods for saving money. The second one involves buying a large aluminium money box—one that cannot be opened without cutting it open and ruining it. You’ve gone and got one? Good. Read on.
Frittering—aka buying crap you like but don’t really need—is best stopped. The frequently used example is buying takeaway coffee. Buying a fancy takeaway coffee every day might equate to a bungalow on the beach once a week; don’t get us started on having three takeaway coffees a day. But one person’s coffee is another’s beer or cigarettes, is another’s cheeseburger. Some people are already so tightly strung they don’t spend much in the way of incidentals. However, if you do, now is the time to take a look at cutting back.
Get a notepad (or an app) and dutifully keep track of everything you spend money on for a week. Collect all your receipts for a week and list them into three columns:
Non-essential but much loved/needed
Take to the impulse buy column with your budgeting chainsaw. We’re not suggesting going cold turkey on caffeine, but rather embrace the craft of the pleasure delayer. If you normally drink two takeaway coffees a day, reduce to one, if you normally have one a day, just have one every other day. Saving $3/$4 on a coffee every day doesn’t sound like much, but the cumulative power of these small savings is real. While they’re not totally painless (we do like our coffee), in the scheme of things, there are harder ways to save money.
All the money you’re saving in this manner needs to be put into that money box we mentioned up top.
If you’re in paid employment and not working in your pyjamas from the basement, chances are you commute to work every day. Take a look at how you get to work and see if there is a cheaper way to get there. Do you drive? Is there a public transport option that isn’t going to take six hours a day? If there is, use it. Running a car is two things: Convenient and expensive.
If you don’t drive, do you use taxis much? Taxis are an absolute bloodbath to budgets and cost plenty more than buses (when available). So if you can ditch a cab for a bus, do it. Another word on taxis: You’re out on the town and you know the last train home leaves in 10 minutes. After that your only option is a $50/$100 taxi ride (or an all-nighter!) Bid your friends good night and get the train. That $100 will go far further in Southeast Asia.
Savings from transport: Into the money box, please.
That loose change that accumulates in the bottom of your purse or the coin pocket in your jeans? When you get home each day, dutifully empty it into the money box.
It can be tempting to “pump up” the money box now and then by depositing a crisp $20 note now and then when you’re feeling flush, and this can be a good idea—just be wary of over-stretching yourself: You don’t want to put yourself in a position where you need to cut the money box open to pay rent, as once that money box is cut open all bets are off and you’ll be amazed just how quickly the contents vanish...just like they used to.
If you have an active social life, look at how you can cut back. If you’re normally heading our three or four times a week, cut back to twice. Regardless of whether a night normally sets you back $20 or $200, you know where we’re going to tell you to stick that money right? The money box!
Do you tend to eat out a lot just because you don’t want to cook at home? Stop it. Get into the habit of preparing food at home—it will save you money and probably be a lot healthier, too. Do you normally head out to a cafe for your lunch break? Make your lunch at home and bring it in. When we worked in London we used to ridicule a workmate who did exactly this, while we went down to the pub every day. It was funny right up to the moment when we ran out of money in India while he had enough to keep going for another month.
Well, you can if you want, but there is no need to withdraw entirely from society in order to save for a trip to Southeast Asia. Keep your perspective. Yes, it is true that a weekend away with friends is going to set you back $300, which would keep you in a hammock on Ko Pha Ngan for at least a week, but it will probably be a great weekend away, and you’ll regret not going. Just bear in mind that there's an opportunity cost involved.
Planning well is an integral part of getting the most out of your trip. Be it picking the right backpack, the right vaccinations or the right country, the simple decisions are often the most important.