Most people never make the leap into extended travel because they don't think they can afford it. They envision needing tens of thousands of dollars to travel well -- a daunting number to save for most. I remember when I began saving for my first trip around the world. I got a rough estimate of how much money I thought I needed and thought, "Woah. How will I ever save that much?" If you also fall into that same category of thought, here are some tips for saving money for your trip around the world:
Eat In! Eating out is easily a big expense for almost everyone. Instead of having $10 lunches and $20 dinners, brown bag it to work and cook dinner at night. Even if you still go out once a week, a person can survive on groceries for around $60 per week. That's a lot less than eating out every meal. This is the biggest D'uh! Tip, and while it may be inconvenient to cook all the time, the truth is that if you really want to supercharge your savings, changing your eating habits is the best way to do it.
Cut the Coffee. Love your Starbucks? Well, Starbucks doesn't love you or your bank account. Your daily cup of coffee averages out to $150 per month ($5 for a coffee). That's enough money to travel around Southeast Asia for a week! If you drink more than one cup of coffee a day just think of quickly it all adds up. Give up coffee, switch to tea, or brew your own java. Coffee is the little thing that quietly drains your bank account without you ever noticing.
Drink Less. Alcohol is expensive. Heck, even on the road, the biggest money suck is usually a night out. It may not be appealing to spend nights inside and not out with your friends, but spending a hundred dollars or more a week will really add up. Try to cut down on your evenings out. Have friends over, see a movie, watch TV, create a travel blog, or read a book. It's not exciting but the goal is worth the sacrifice. And if you aren't a big "going out" person, you're already half way there!
Lose the Car. Cars cost a lot of money. If you can, get rid of yours. You 're probably spending hundreds of dollars each month on gas and insurance. That money can be used while abroad and it's not like you are going to need your car when you're backpacking India. Learn to love the bus, ride the subway, or walk. It might not be feasible to get rid of your car completely, but you can certainly cut down on the amount of driving that you do. Not having a car may be inconvenient or make your commute longer, but it will save you lots of money. Plus, walking is good exercise after all.
Move Out! Get rid of that apartment or bring in some roommates. Lowering your housing costs will allow you to see huge gains in your savings. If you can, try to move in with mom and dad. Then you'll have no housing costs! It may kill your social life but, hey, a social life costs money anyways and you're trying to save. If moving in with the folks isn't an option, bring in a roommate instead. Turn your living room into a spare room and have a housemate! If you're spending hundreds per month on rent, cutting that in half or reducing it to zero will give you the biggest whole number jump in your bank account.
Switch Your Bank! This is more a tip for the road but it still helps. Get a bank account at Bank of America and use their ATM partners to avoid ATM fees when you travel. Get HSBC and use their worldwide ATMs and avoid fees. Get a Capital One account and never pay fees. Fees just drain money out of your bank account. Moreover, in Schwab Bank has no ATM fees at all. As you can see, there are many ways to avoid bank fees!
Get a New Credit Card. Get a travel credit card that gives you free money, free rooms, or free flights. It's less money you'll have to spend later on. Travel credit cards usually give you huge sign up bonuses and they provide easy ways to rack up frequent flier miles, which can give you free flights or get you into business class. I received over 100,000 miles last year from credit card bonuses.
Get a High Yield Savings Account. Now that your savings is going up, make it work for you. Don't leave it in a savings account where you get .5% a month. Even though interest rates are low, you can still get 2% with some accounts. Get an online money market and actually make some money. It won't be a lot but a little free money is better than no free money. For online banks, I like Emigrant Direct. Capital One and Discover bank also offer good rates.
Keep the Change. One thing that really helped me save money quickly when I was saving for my trip was putting my change aside. At the end of every day, I put my change into a giant container. By the end of the year, my change had accumulated into over $500 USD. That's a lot of change. I knew a friend who used to do it with dollar bills and had over $1,000. Everyday we "bleed" money. Stopping that bleeding can get us a lot of savings that we can use for travel.
While most of these tips might have you living like a hermit, the real way to save money is to not spend it. You'll want to have some excitement in your life while you're home, but the trick is to find the cheap alternative. Moreover, you should always make your money work for you. When I was home, I invested my savings, I used high interest savings accounts, cash back cards; whatever it took because every extra dollar was more money on the road. At the end of the day, the more you save, the longer you can be on the road.