How to create a budget for a trip around the world

There’s one thing people ask me above all else: How much does it cost to take a trip around the world?

The short answer is: shockingly little.

No one believes that though until I explain that travelers have mostly the same routine expenses regular people do — food, shelter, insurance, transportation around town, entertainment, mobile service and so on — but they cost much less elsewhere. And while travelers do have to pay for trains and flights, we’re spared many everyday expenses that ordinary people deal with.

Making a skeptic a believer is as easy as showing them my credit card statement after a month abroad. I’m not doing that here but let’s make a believer out of you.

Before we get there, let’s establish that all expenses fall into one of three categories:

Travel expenses

These are the things you need to pay for that non-travelers don’t. They include:

With one exception, visas and travel insurance, there are clever ways to reduce the cost of each. And if you’re gone long enough, travel insurance — for me about $250/month — covers your health insurance mandate, which costs far, far more than $250/month.

All are easy to estimate with one exception, intercity transportation, which varies widely. Fortunately, the reason it varies is that so many alternatives exist, some very cheap.

You can research that up front and give yourself a sense of the high end — it’s always good to overestimate costs while planning. Hostel workers and fellow travelers though will suggest better and cheaper ways to get to your next destination — ride-sharing, buses, hitchhiking, etc. — than you’d find online, so be sure to ask.

Routine expenses

Routine expenses are life’s basic necessities. In other words, it’s the stuff you’d spend money on at home.

Again, these are necessities, so there’s no way to cut them entirely. Take comfort in two things:

First, you’d be buying them at home anyway. Second, they cost far less abroad. My suggestion is to budget the same amount of money you’d spend in the States, then giggle and pocket the difference when you save on the road.

Daily expenses

These are all the things an ordinary traveler would spend money on every single day, and they’re a mix of necessities and recreation. Daily expenses are hard to estimate, because they vary widely and entirely depend on how you like to live and travel. Here’s the full list of them though:

Again, these are necessities, so there’s no way to cut them entirely. Take comfort in two things:

First, you’d be buying them at home anyway. Second, they cost far less abroad than you pay at home. My suggestion is to budget the same amount of money you’d spend in the States, then giggle and pocket the difference when you save on the road.

budget-bangkok-module

When I’m on the road, my daily estimates look like this quick budget I’ve drawn up for Bangkok

Night’s stay at a hostel

$12

Cheap breakfast prepared at the hostel

$2

Four trips on public transit

$4

One cultural activity (ex. museum)

$14

Street food for lunch + iced coffee

$6

Bicycle rental (where appropriate)

n/a

Modest dinner

$8

Drinks with new besties

$6

budget-bangkok-module

There are a dazzling number of ways to save on each of these things and travel cheaply while still traveling well. I’ll speak about that in more detail later and link it all here.

One important thing to note is that no website could ever create an exhaustive list, so speak to the hostel staff and your fellow travelers about how they’re eating, partying and getting around town without getting their pocketbooks emptied.

Planes? Cheap?!

Domestic American air travel is a racket run by three major companies and a few smaller ones who effectively collude on prices to screw passengers and support their bloated executives and corporate structures.

Even regional jets, which are technically independent, are fucking death traps that I literally never, ever fly.

It’s not this way in other countries, because most people are sensible and see transportation as akin to a public utility. It’s therefore common to find flights on foreign carriers for under $100. I frequently see fares less $50.

Booking far in advance is therefore unnecessary, except of course in places where tickets sell out. Avoid the temptation to book months or weeks out if you’re just trying to save money. Not only will doing so lock you into dates you might regret, you may end up paying. Why? Booking sites now sniff for your computer’s location and display higher prices for foreigners.

Rude, right? Blame the mirror. We invented that.

How to rent a car overseas

First, some bad news for most Americans: automatic transmissions are as rare overseas as manuals are in the US. Unless you want to seriously overpay, make friends with someone who owns an old Miata and learn.

Second, anyone who wants to rent a car should obtain an international driver’s permit. This is easy — just 30 minutes at AAA.

When it’s time to rent, don’t get tempted by lower prices with small, local companies. Go with a big multi-national.

Understand your insurance situation through-and-through. Know the limits of your credit card’s automatic coverage and have a printout of the policy. If you can get a translated copy, even better. If you’re still in doubt after all that, just pay for their coverage.

Research the scams. Before you drive off the lot, walk around the vehicle and video record it. When you return the car, do the same. Also record yourself locking it and depositing the key in the night box if you return after hours.

If you get a notice from the rental company later saying you owe for damage or not returning the car, you can send them those videos with an E-vite to go get fucked. You might also copy tourist law enforcement, so they get fined to oblivion.

Know and obey the local laws and signs

It’s tricky, but you need to basically study each country’s road laws and signs like you’re getting your student driver’s permit again. Most places have tricky rules, and they love to fine gringoes like us for violating them.

In Cyprus, for example, you can be fined for eating or drinking anything behind the wheel, even a Snickers. In Denmark, you’re legally required to look under your car before you get inside to ensure no one is underneath. In Spain, drivers with poor vision have to carry a spare set of glasses. Dirty cars are illegal in Russia, as is splashing pedestrians on a rainy day in Japan.

In some places, driving is really difficult. I pity any fool who tries to drive in Cairo. You can also very swiftly kill yourself on a German highway if you’re untrained. Driving at 120 MPH is far more complex than simply pressing the accelerator further.

The skinny on fare classes

Fare classes are highly inconsistent.

First class in one country is generally different to first class in any other. The same is true of second, third and so on. They vary wildly by country and system.

If it’s fiscally reasonable, I choose first for early mornings and overnights. They really are better, even just for security of your belongings.

The one time I settled for a second-class overnight, I had to physically fight a mouth-breathing Russian girl who was sweating vodka and wouldn’t stop burying her face into my lap to huff my underpants like Whip-Its. I wish I was making this up, but it’s true. I arrived sleepless, angry and ugly. It ruined my first day in Lisbon and I only had five. First class would have been worth the cost. Second class is my usual go-to. For shorter trips or anything after 9 a.m. I go second.

If I want an adventure, I go even lower. Some agents won’t sell those tickets to tourists though unless you insist.

Plane considerations you need to remember

Nomads and backpackers who don’t do the travel hacking thing usually buy cheap flights. Be careful of taking that too far.

For starters, you need to observe weight limits on baggage. In the US, no one gives a shit, but elsewhere they care. The care deeply. Never buy a ticket that forces you to pay weight overages.

Seats are also important, but not for comfort. I never take bulkhead or exit-row seats unless I pay for early boarding. Both offer less (or zero) under-seat storage, so being in a later boarding group puts you at risk of having nowhere to put your carry on — or as you’ll hear them called “cabin bags.”

I’ve even been on a flight where the attendant nearly made me check my personal item. I shut that down by threatening to create a scene and de-board, but I could have avoided it by paying $8 for priority boarding.

Around the world tickets

Countless people have asked if I used an around-the-world plane ticket for my first trip.

My simple response: Don’t ask dumb fucking questions. Also, no, I didn’t.

Why around-the-world fares suck

ATW tickets are nearly useless. They typically require you to book your stops in advance, so there’s too little flexibility. The fine print is also brutal and changes constantly.

Last time I researched them, the price was based on allotments of miles. The number of stops also changed the equation. All of them required you to choose a direction (east-to-west, for example) and none permitted travel in the reverse direction even slightly. Some airlines even insisted all departures had to occur from the same point as arrival, meaning if you traveled by land elsewhere, the airline penalized your mileage allotment.

I said airline there, but ATW tickets come come from a single carrier. Instead, you buy into an alliance, of which I believe there are still only three. Quite the lack of competition there.

When are around the world fares good?

ATW fares do lend themselves marvelously to itineraries where you go to a different city each month and make it the base from which you explore the region. This is something we’ll talk about later when we discuss hub-and-spoke travel.

If you have status with a particular airline, you may want to consider their ATW option — emphasis on ‘may’ — but be warned that flying everywhere robs you of some great experiences.

Planes? Cheap?!

Domestic American air travel is a racket run by three major companies and a few smaller ones who effectively collude on prices to screw passengers and support their bloated executives and corporate structures.
Even regional jets, which are technically independent, are fucking death traps that I literally never, ever fly.

It’s not this way in other countries, because most people are sensible and see transportation as akin to a public utility. It’s therefore common to find flights on foreign carriers for under $100. I frequently see fares less $50.
Booking far in advance is therefore unnecessary, except of course in places where tickets sell out. Avoid the temptation to book months or weeks out if you’re just trying to save money. Not only will doing so lock you into dates you might regret, you may end up paying. Why? Booking sites now sniff for your computer’s location and display higher prices for foreigners.
Rude, right? Blame the mirror. We invented that.

Doing hub cities right

The beauty of hub cities is the slow pace. How slow you take it will vary according to the number of side trips as well as your pace. If you commit to a month though, this introduces the possibility of renting an apartment. Even if you don’t plan to stay the full 30 days, apartment rental is generally very cheap. It can also make cooking easier, which also saves cash.

Cooking for yourself doesn’t have to mean eggs for breakfast and chicken dinners. You can dial up the adventure full throttle if you sign up for a greenmarket food tour and a cooking class right after you arrive. Not only will you know what to do with the local ingredients, you’ll eat better. Plus if you know what you’re doing, the vendors may screw you less, which will offset the price of the guide.

File Name

CREDIT