People often ask how I’m able to afford to travel for months at a time. You can read my response here.
Today I’d like to focus on one incredibly important aspect of funding travel: budgeting. Whether you’re in the process of saving for a trip or making your money stretch while away, budgeting is absolutely essential.
I have lived in a jungle hut eating nothing but rice and beans for weeks and quite contrastingly splurged on expensive flights all over Europe dining at upscale restaurants and buying exotic textiles. In the process I have learned to balance my travel lifestyle between one of frugality and one of decadence.
The key is to spend with intention.
For this reason, I have found that tracking my expenses is the only way to stay on budget. It is the only way that I am fully aware of how much I am spending, and where I am investing my money.
Some of you may know my history working as a Project Manager. Today you will see that crazy OCD spreadsheet-loving nerd unleashed.
Without further ado, here is my full-proof budget tracking process:
Ok so bear with me. I realize this is A LOT to take in.
Let me break it down for you.
We begin the month with our set budget. I set a budget of $1500 which I felt was feasible for a month of backpacking in more expensive Central American countries like Costa Rica and Panama. Based on a thirty day month, that equals $50 per day.
The first few columns track expenditures, as well as the category each expenditure falls into. The purpose for this is that later you can analyze what percentage of your spending is going towards which category. For instance, if you want to lower your budget, look and see how much you’re spending on average dining out and see whether you can decrease that expense.
Then we analyze whether we went over budget each day or not and what our remaining balance is as a result.
You will see that in the last column I put a daily budget. Why do we have this column if we already know that it’s $50? Well, I believe that budget is not a static figure. For me, it is a dynamic amount that changes with every dollar we spend. Suppose you decide to take an expensive tour one day. Now, because you broke your budget for that day, the daily budget for the rest of the month has now gone down. You can spend less each day following because you spent more one day. However, you can bring back up this daily budget by living frugally for the next couple of days.
At the end of the month I look at what my average daily expenditures were, to see if my budget was realistic or not. As you can see, I spent about $43 dollars per day. I can decide for the next month whether I would prefer to continue to save money and set my target around $40-45 per day, OR if I felt like I was deprived that month of certain luxuries (dining out, nightlife, tours, etc.) I can decide to keep the budget at $50 a day and remind myself to splurge a little more often.
While geeky, I have found this to be incredibly helpful in allowing me to both stay on budget and get an accurate gauge for exactly how much I should plan to save for my travels before I depart on my next adventure.
Please let me know if you have questions, I realize this can be confusing. Also, if you would like me to share the actual spreadsheet with you, equations plugged in and all, I am more than happy to do so. Please just send me your email address.