Traveling is the single greatest recreational action you can take in life. The sights, the sounds, the people, the food – how does one sum up the excitement and the sensation of being completely out of your element in a foreign land!?
More importantly, how do you ensure that you’ve budgeted well enough to afford to do everything you wanted to do while on the road?
At UnCollege, we work with a lot of thrill-seeking young adults. Some take part in our gap year program and others turn to us for travel advice before they brave this wonderful, yet crazy world on their own. They all have different travel ideas and ambitions, but when they finally fill up their backpacks and journey to a far off place, the majority have the same complaint – their money didn’t stretch as far as they would have liked. For some people, this means coming home early. For others, it means changing their plans entirely to try and salvage what’s left in the travel fund.
So where did they go wrong? And what can you do to avoid the same problem?
Here are 4 common travel budget mistakes they made and how you can avoid them all together:
1) They Paid for Flights.
Flights are the most expensive element to your travels. I once spent a summer in Central America and spent more money on my flight than the rest of the trip combined.
What to do:
If you don’t already have frequent flyer miles saved up, open a credit card account during a points promotion that doesn’t have a high annual fee. I can’t encourage you to open a new credit card every time you want to go on a trip, but if it’s a big one like an international trip you’ve been planning for a while, a credit card is an easy way to fly for free almost immediately. This summer, for example, I will be traveling to London for my brother’s wedding. Instead of buying the flight, I opened a new card with British Airlines during a 50,000 points promotion. With these points I was able to buy the flight after meeting the promotion requirement – spending $1,000 over a 3-month period on the card. To accomplish this task, I sent my brother $1,000 via Amazon payments. He then used Venmo to send the money back to my checking account. What was the price of this transaction? Zero dollars.
If you can’t open a credit card on your own, ask you parents if they will open a joint account card. Chances are they will be open to the idea. Learning how to build amazing credit is a useful life skill. (note: it’s also useful to look for free airfare promotions like the one UnCollege is offering right now! It ends 3/17/15.
2) They Didn’t Make the Right Sacrifices.
There are times when you are traveling when you need to make tough financial decisions. If you plan on participating in an expensive activity, you need to plan how to budget for it appropriately during the days leading up and even after the event. I once spent a week spending less than $8.50 for accommodation and food a day, but that same week I spent over $100 to go paragliding in the Andes. I lived cheaply so that I could splurge on the event that would make it all worthwhile. In this case, I took the adventure experience over, say trying out the great, expensive local restaurants. It was a sacrifice that I chose to make. I couldn’t afford to dine like a king and fly like one.
What to do:
– Make a list of your priorities and the comforts you can’t live without and decide when to splurge and when you must be frugal.
3) They Got Duped on Exchange Rates.
If you are traveling for the fist time, your instinct is going to be to go to your local bank and make a large exchange in currency. There are a few reasons why this is not a good idea. The most important is that your bank’s exchange rate is never great. If you’re on a tight budget, make sure to exchange the bare minimum you’ll need to get through customs, catch a bus or cab and get to your destination. At that point, you can use an ATM or Debit card to pull out money from a local bank. Be sure to take out enough to last a week or two (taking out more money ensures that you make the most of the transaction tax) and distribute it into 3 different areas in your belongings for safe keeping. I once had to take out money three times in a day while in Patagonia. The bank charges totaled $42.50
What else can you do?
– Never exchange money at an airport.
– Find out your bank’s foreign transaction fees. It might be worth opening a whole new bank account if you plan on traveling quite a lot.
4) They Spent All Their Time with Other Americans.
It’s great to meet fellow travelers on the road that come from some place that you can relate to. They usually have the same agenda and they often turn into life-long friends. The problem is sometimes you end up with a travel partner who has a bigger budget than you and on a shorter trip, which can completely derail your strategic budget.
What to do:
– Meet a few locals. Find out their favorite places to eat and a few hidden gems you should visit during your stay.
– Be upfront about your budgetary constraints if you do end up exploring with a fellow American.
Looking for more travel tips? Check out our other travel posts.