How to Budget Your Round The World Trip

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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 expenses

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. 

Additionally, you must consider how many people are traveling with you? This can either help offset some of the cost, or add to it.

For example, it’s not the same traveling to Borneo with kids where you have to pay for their expenses too, vs traveling to Thailand by yourself where you only pay for your stuff, vs traveling to Bali with friends, where you could share some of the accommodation expenses.

Transportation

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.

Accommodation

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.

For example, let’s say you’re traveling to St. Lucia; you can do quick Google searches like “St. Lucia hotels,” “St. Lucia all-inclusive resorts,” Beaches Turks and Caicos,” “St. Lucia hostels,” and more to get a sense of the current prices.

Or, even better, you can head to Booking.com to see the largest accommodation inventory from across the world and book them at a discount.

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!

Food

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

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.

Hidden Expenses

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!

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Images 1, 2, 3, and 4 from Flickr’s Creative Commons.