This is the third post on a RTW planning series.
Figuring out how much a round the world trip is going to cost is one of the most important things when it comes to planning a realistic and fun trip.
While there is no single way to address this, since everyone travels in a different way, there are a few things that most, if not all travelers, should consider when putting a dollar value on their dream trip.
The most important thing when it comes to budgeting is to be realistic and flexible.
It is common to try to cram everything you want to do in your first RTW, and while it would be great to accomplish everything, it is unrealistic to do it all.
You have to decide where to go on your RTW and what activities are the ones you want to do the most.
Also, are you sure you can on a dirt-cheap budget by sleeping in hostels and shared rooms for a whole year? Who knows if after a few weeks you’re tired of it and want to treat yourself to a private room or something a bit more upscale?
Do you think you can do all the activities without burning out after a few weeks? Are you sure you can live for a long period of time eating the cheapest street food possible?
These and similar questions will help you convert your dream trip into a realistic travel plan with a realistic budget.
In the end, the purpose of the trip is not to do it the cheapest possible, but to have fun living your dream.
Preparing Your Travel Budget
There are two main ways to approach RTW budgeting: have your maximum dollar amount to be spent and adjust your trip to fit that sum, or plan the trip and then assign a budget to fit the trip.
Whether it is one way or another, here are some of the expenses you should take into consideration at the time of budgeting.
Just so you know, this list won’t give you exact amounts as budgets vary greatly, but it will list the things that need to be considered, like:
Planning is half the fun of travel, so doing this correctly will help make the other half (the actual trip!) be more enjoyable.
Among the things that need to be considered in the planning budget are vaccinations (check with your local travel clinic which vaccines are needed for your destination, if any), travel insurance, guidebooks, visas (these can cost from a few dollars to a couple hundred), travel gear (like a backpack, camping equipment, travel clothes, energy converter, gadgets, camera, etc.), among others.
Here’s where you set the fixed cost of airfares, trains, buses, and other means of transportation that will be taking you from point A to point B. This part is easy and often done through booking engines and other travel sites.
Now, what some travelers forget to budget is local transportation like airport transfers, subways/metro fares, taxis, public transportation, among others.
To get an idea of these local transportation prices, do a Google search with “destination + transportation” or “destination + subway” or any other combination and research the available methods of transportation.
Then look through the local transportation sites to find about the fares and prices.
In Europe, for example, you could travel most of the continent on a budget with a Eurail Pass.
On the other hand, if you’re planning on flying, this post shares all the travel hacking tips you need to know to always get the cheapest airfare.
How much you budget for this depends highly on your style of travel and the destinations you’re visiting. If you’re into hotels, you’re going to have to budget more than if you decide to stay in hostels or guesthouses.
Accommodation prices are very dependent on season, destination, amenities, and location.
Figure out what your accommodation minimum standards are and work from there by checking prices on booking engines.
In addition, it’s always a good idea to add a little extra padding since prices can fluctuate.
Check out the accommodation page to see most accommodation options from the expensive to the completely free!
A big part of traveling is tasting the local dishes of each destination. In Spain it might be the Tapas, in Peru, it could include Lomo Saltado, in Southeast Asia it’s the street food.
Depending on where you stay, there’s the possibility to have meals included, like breakfast, or if you’re staying at a hostel, there’s a chance they have a kitchen, where you could cook your own meals to save money (essential on destinations where food is expensive).
A good way to eat out without spending much is to ask the locals for recommendations. They will usually recommend the best and least expensive places.
Activities and Entertainment
If you go to India, you’ll definitely want to see the Taj Mahal; in Peru, Machu Picchu; and in Egypt, the Pyramids of Giza.
The point is, that wherever you go, there’s something beautiful or important to see, or there are incredible activities you shouldn’t miss doing (like bungee jumping!). And most of the time, they cost money.
While it is usually cheaper to buy tours once at your destination, it is always good to have an idea of prices beforehand and to reserve them if they are popular and get fully booked in advance.
Shop among various tour operators or directly at the museum/sight website to find the best prices. I recommend checking Viator to get a good idea of the tours available at each destination and have a price range. Also, if it’s high season, I recommend booking ahead.
Also, activities are not only tours; they also include nights out, movies, parties, and other fun stuff that might come unexpectedly along the way.
Make a buffer budget for random activities depending on your “night out style”. Of course, if you like to drink a lot, your budget should consider your alcohol consumption. Just saying…
Miscellaneous costs are often forgotten in most budgets. In these, you should include things like laundry, toiletries, souvenirs, internet connections, communication/phone, medicines, among others.
Oh, those hidden expenses that aren’t much, but when you add them up they can consume a decent sum of your budget. Among those are foreign transaction fees, ATM fees, currency exchange fees, tips, and others.
Regarding ATM fees, try to get the largest amount of money possible in a single transaction to reduce the fee impact.
Avoid exchanging money at airports and touristic places, and try getting a credit or debit card that charges no foreign transaction fees.
To avoid ATM fees, I have a Charles Schwab Checking Account that does not charge any international withdrawal fees. If you’re in the United States, you should check it out. It has saved me hundreds of dollars in fees!
In the end, these expenses can give you a general idea of what your trip may cost. At first, you may get scared of the total sum, but that’s ok.
Now you either adjust the trip or do more research to do the same things in a cheaper way.
A good site to look at for a general budget overview based on your destination is budget your trip.
Now that we know how much it will cost, we need to save the money… which we’ll cover in the next post!
Images 1, 2, 3, and 4 from Flickr’s Creative Commons.
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Really useful post, and I should have really planned out a budget before I left… I’ve been away for two months now and I’ve only just sat down and worked out how much I’ve been spending – and it’s a lot more than I was expecting!
ufff… I’m almost about to leave on my RTW and I’m hoping to keep thing in budget. I think the key is to constantly monitor your spendings to know where your money is being spent and what to modify in case you’re overspending.
One suggestion about foreign transaction and ATM fees — with a little planning beforehand, you won’t have to pay them!
Get a credit card (like Capital One) that is travel-friendly and doesn’t charge a foreign transaction fee.
Then open a bank account and get a debit card at a bank that also doesn’t charge foreign transaction fees AND doesn’t charge you for using ATMs not in their network. The best U.S. national chain I know is Charles Schwab (they just rock in general), but we’ve also found that a lot of local smaller banks do this as well (we use San Diego Trust because we can also open a business account there).
Unnecessary bank fees drive me batty, but in this case there isn’t any reason you should be paying them! 🙂
Christy, I’m so glad you brought up and recommended the Capital One credit card and the Schwabs account. I actually have the Schwabs bank account and I love it! Especially for the fact that they have no foreign transaction fees and no atm fees… just like you mentioned. I will have to check out the Capital One credit card and apply before I head out on my RTW… in just three weeks!
I think the most important thing is to be realistic here. Back in my days as a travel agent I used to hear it all the time.. “I’m just going to eat noodles and cheap stall food all the time”, well let me tell you that you can’t always find these options but it gets boring after a while.
My rule of thumb is the opposite of the way I pack. When packing I put all my stuff out on the bed (then remove at least 50% of my clothes). With budgeting I work out a budget then add 50%.
One of the worst things you can do is start travelling but miss out on all the cool activities you want to do just because it doesnt fit your budget.
By the way I love the pic of your camera gear…. you are stocked 🙂
Michael, I love how you put it in terms of planning a budget and how it is the opposite of packing. I totally agree! Packing… 50% out… Budget… 50% in! Like you mentioned, the key is to be realistic and have a decent buffer zone to allow for unexpected expenses.
Oh, that’s not my camera gear in that photo, but it is somewhat close to it! Just missing that extra lens.
Thanks for the post! I think our planning is a combination of post styles…. we know where we want to go – and we will see what from that list is actually possible with what we manage to save
Yes, I think in the end it comes down to combining different methods to get that ideal trip on that ideal budget.
I couldn’t agree more that travel vaccinations should be on the list. I can’t believe that some travellers don’t get their vaccinations before they travel, or not even aware with it, what’s worst is, if they travel with their kids!
It’s aways good to travel safe and be protected with the proper vaccinations.