Wanderlust Without Financial Wreckage

May 4

Travel can be dreamy, exotic, exciting, relaxing… but how do you keep it from wrecking your finances? After decades of round-the-world travel here are some ways that I keep my spirit of adventure balanced with financial responsibility.

The Glamour vs. the Reality

Instagram is full of perfect paradise images and influencers trying to make you believe that a company paid them to go on this vacation “and you can too!” But the reality is that most travelers are footing their own bill and trying to save money however they can. Free trips are rare, so how can you be a responsible adult and fulfill your wanderlust without breaking the bank? The truth is that nothing happens on a whim if you want your travel finances to be sustainable. The truth is that the people you hear about always leaving for a trip have amazing financial strategies and planning habits. Their budgets are realistic, their expenses are thoughtful, and they have become a freak in the spreadsheets (hellooooo Excel!).

The Not-So-Sexy Side of Trip Planning

After I make the decision of where I’m going next and have a rough idea of how much I can afford to spend on a trip, the next things that hit my budget numbers are the big ticket items- flights and accommodations. Sometimes this can be a hard one to swallow; spending thousands of dollars on a trip before you even get off the couch. Not to mention all the fees like baggage, seat selection, cleaning fees, and Airbnb fees can certainly add up. The upfront costs can be hefty but the good thing is that you can chip away at that credit card balance for months before you actually depart. If you’re smart about it you can even create your own payment plan to cover these expenses and have your credit card paid off before you board the plane. It’s definitely wise to have your credit limit freed up while you are on the road in case of emergencies.

In addition to flight and accommodation line items, I make sure to calculate a per diem budget for food. Fun, entertainment, and entrance fees are added last to my budget because if something were to go awry I could always skip some of these niceties to get back on financial track. Eating and having somewhere safe to sleep is essential and should come before the tickets to see “The World’s Biggest (whatever).”

A lot of people forget about the hidden costs of travel so I also like to have a “Boring Stuff” line item on my budget. It’s easy to concentrate on the highlights and fun excursions of a destination, but these other hidden expenses can blow up your budget by hundreds of dollars if you’re caught off guard: visas, luggage fees, foreign transaction fees by your bank and credit card, poor exchange rates, unexpected transit, expensive airport food.

Emergency Funds: Your Invisible Lifesaver

Just like you need an emergency fund for your house or if you lose your job, you need to have an emergency fund while traveling. Things can happen quickly and unexpectedly when you’re in a foreign place and you need to be able to get yourself out of trouble if it comes to that.

Emergency funds may be needed if you get hurt and need medical care, need to change your plans and get home immediately which means rebooking travel, have a credit card stolen or hacked and need other financial resources. The worst case scenario isn’t sexy to think about, but it is part of being responsible. The ideal amount in your emergency fund should be calculated based on the length of time you plan to travel, the cost of goods and services in that country, and how quickly you’ll be able to withdraw those funds if needed. I always make sure to have a couple thousand dollars in a checking account at home, and that a family member not traveling with me is signed onto the account so they can work with the bank on my behalf if needed. I also make sure to have a few hundred dollars in cash on my person for quick access. This has been essential when banks close for a holiday or credit cards stop working, a wallet is stolen, or you’re in a developing country that isn’t familiar with digital wallets, tap to pay, or payment processing that requires internet (I’m looking at you Laos and the backwaters of Colombia…). The cash on hand I usually try to hide in my suitcase lining, or in my sneaker socks when on excursions in case my wallet is stolen, and I always try to have a mix of small $10s and large $100s so I don’t have to worry about correct change.

Once in Thailand the banks closed for a multi day holiday and we were unable to get cash from a teller. We decided to withdraw from the ATM instead and the machine ate my debit card, crunching sounds and all. The cash in my luggage made sure we had enough money to eat until the banks reopened and could withdraw on David’s debit card. Once in Cambodia the ATM charged my debit card but didn’t dispense the cash out. We had to wait 10 days for the ATM to settle the counting report and prove that the cash didn’t dispense. Hundreds of dollars were pending on my account and we had to reroute our travel plans back to the bank branch to follow up and receive the account reversal. Once David’s credit card was hacked at home while we were abroad. We had to cancel our primary card, have it reissued, and pick up the new card months later when we got home. Our parents held it with our mail. Luckily we had an emergency credit card we could switch over and use for the rest of the trip but with a lower limit. Always, always have a backup emergency form of money!

Travel Insurance & Health Coverage

There are tons of options for travel insurance, but the main thing is knowing what they do and don’t cover. Read the fine print! Some credit cards will include insurance if your entire trip is booked through them. Some travel agents can add on supplemental coverage for a fraction of the cost. COVID was eye opening in showing what parts of a trip were protected and what companies or airlines wouldn’t honor credits or cancellations. Never assume your travel is protected, always research the details and then buy what you need.

I know from experience that US based health insurance companies do not cover claims overseas upfront. Most companies like BCBS and Cigna require you to self pay overseas and then backfile a health insurance claim when you return home if you are traveling for a short period or vacation. This requires collecting lots of medical documentation and receipts to submit your claim later, but it can be done. If you decide to live overseas or plan to be gone for a long period of time you will need an international policy or a policy within that country as the US based companies will drop your coverage outside the US. Health insurance is important to have for catastrophes, but I have also found that basic visits to a local clinic for dehydration, stomach illness, flu, or a pediatrician visit have been very affordable (less than $50 for the visit and the prescription combined). It is nerve wracking to see a doctor when the appointment isn’t in your native language, you are afraid the symptoms or diagnosis isn’t translating correctly or is misunderstood, how to properly take the medications prescribed in foreign script, and then on top of this “how much will the visit cost?” Insurance can give you peace of mind so that you can afford care when you need it and focus on getting healthy again. I have seen many people sick with dengue fever because they were unprepared for the costs of seeing a doctor.

Planning for Zero or Reduced Income While Traveling

Maybe this is a short vacation, maybe this is a year-long trip around the world, so what happens when the paycheck from home stops? It could be that you miss a pay period during your 2 week vacation, or have lost commissions if you aren’t making sales. Or you’ve decided to leave your job (in addition to medical and retirement benefits) to hit the road for an extended period of time. Saving in advance for this reduced or zero income will help ease the financial worry and create a cushion until you can get back to an income stream. If you expect to miss paychecks for a short time I would recommend adjusting your budget and spending habits the months leading up to your trip. You can soften the loss of that money by spreading it out. If you plan to forego your income for a longer time (or quit your job like David and I did), I recommend saving a minimum of 6 months expenses prior to your trip in case it takes that long to find a new job or resettle after travel. It’s nice to have the savings because it allows you to re-enter the workforce looking for a job you love instead of accepting the first job you’re offered that may not be the best fit because you need the cash. Calculate your savings by “knowing your number” for a regular month of living. How much does your lifestyle cost you at home on a routine basis? Be honest with yourself and prepare for it.

Passive & Active Income: Keeping Cash Flowing

Beyond your job or career there are other ways to bring in money while you travel.

Digital Nomad: freelancing, remote gigs, teaching English, consulting.
Ask your current employer about reduced hours and working remotely?
Negotiate a work/ trade with your hostel or guesthouse if you plan to stay in one location for a while. This can offset room expenses and is a way to meet more people.
Airbnb, rent, or sublet your home (make sure you have someone back home that can help with guests and repairs if needed).
What are you good at and can it be turned into a digital product?
Take a seasonal or part time job if you plan to stay somewhere for a while. Be honest about balancing your hustle and leisure time so that your trip doesn’t feel like a second job and dictate the hours you have available.

Don’t Forget Home Responsibilities

When I travel I have a tendency to check out from my home life so that I can fully immerse myself wherever I am (my mom checks Instagram posts for my “proof of life” because I’ve been known to disappear for a while), so I make sure the following is taken care of at home so I won’t return to shambles.

Set up autopay for recurring bills (utilities, credit cards, subscriptions, mortgages or loan payments). I once had my gas shut off while I was in Costa Rica, but thankfully I avoided frozen pipes…
Add a trusted person to my bank account (or power of attorney).
Have all of our account numbers, investment information, and wills in one location in case something happens and they are needed.
Monitor financial accounts remotely- set alerts, secure logins, do a health check on my passwords.
Have a maintenance man, property manager, neighbor or family member that can check on my house in case something breaks or goes wrong.
Stop my mail with the post office.

Being a World Traveler Is Not an Excuse for Financial Recklessness

Being a long-term vagabond is still adulthood, you just do it from over there… Being a short-term vagabond is exhilarating, but not a reason to blow up your stable finances either. It’s important to stay credit worthy on either length trip, and still have financial goals even while abroad. Putting off your finances can send you into a deep hole quickly that can be extremely hard to come back from. Blowing a budget and traveling lavishly and outside your means can take months or years to recover financially. I could tell you stories from the countless people I met that burned through a budget in record time and were on their way home sad and defeated. They had plans and dreams to travel for 2 years and then had to return home after 5 months because they were out of money and financially unprepared. To truly have smart, sustainable, travel freedom for amazing adventures you need to have financial wisdom first. Explore, wander, and discover, but keep your financial house in order.