Spending a year without any income (outside of investment interest) is a daunting idea. Intentionally doing so while also planning on seeing the world is doubly so. When we first started thinking about traveling for a year, we wanted to set a maximum budget we’d be comfortable spending. We took a look at our finances and set a budget of $100k. For us that was the amount we’d be comfortable spending on this sort of experience, and also was around what we spent over the last year living in SF.
I broke the budget into the following categories: housing, transportation, groceries, eating out, attractions/excursions, flights or long trains, insurance, and cash/misc
This is the first draft of a monthly budget from working our way back from our max budget. Note: I budgeted on 13 months to allow some cushion for re-establishing ourselves once we get back.
|Total per Month||$7,671|
Housing was the biggest unknown. We started out with the idea of mostly using services like Airbnb where we would rent a house or apartment for around a month at a time.
For transportation, I originally had the idea that we would lease a car for our longer periods in a contiguous area (Europe and Southeast Asia) and do short term rentals or ridesharing in more isolated locations (Japan, Morocco, New Zealand).
We planned to mostly eat at home, but we still wanted to get out to eat occasionally.
For estimating flights, I did a basic route map with our major jumps factored in.
Lastly for our insurance I did a quick quote for a high end health insurance program that covers international travel.
To me this budget seemed easily within limits. However after doing some initial research, I started to find out ways that I thought we could reduce our expenses that would not inconvenience us.
My initial research into Barcelona and Porto led me to think that housing could be done for less. Most rentals reduce their nightly rate if you stay for multiple weeks, sometimes by as much as 50%. I reduced attractions down to $100 a week, but we’ll see how that holds out. I also did more research into health insurance and found a good plan for around $250 a month. (Our plan provides good coverage for accidents and emergency care, but we’re on our own for any preventative or routine care.)
This is what our first month or so (Jan 20 – Feb 15) looked like.
|Total per Month||$5,550|
Housing ended up being a little cheaper than expected, but it’s the off season so it will likely get more expensive around the summer holidays. Transportation was much cheaper because we ended up just walking and using the metro system in Barcelona. Groceries were also cheaper than expected. Fortunately, we were close to several grocery stores so it was both easy and convenient to buy food. Also because of that we’ve eaten out less than expected. We didn’t have healthcare expenses for January since we were still covered by our workplace insurance until the end of the month. (Both of us left our jobs in early January.) We were able to snag an awesome Black Friday deal on our flights where we went from SFO to BCN for ~$250 each. Our cash usage looks high in projection, but I think it is actually close to $250 since we spent about half of what we withdrew.
So far we are on track to be way under budget, but again, we are currently in the off season in most places so I’m expecting things to get more expensive in the middle of the year. If things continue at this pace, we should be at around $60k for the year, which would be a meaningful number since that wouldn’t have even covered our rent in SF.
Erika and I are both lucky to be frugal by nature so budgeting is generally more about having information about how we are spending than trying to constrain our spending. I hope this provides a bit of detail into the fiscal side of traveling the world for a year for anyone looking into doing something similar. I’ll be posting periodic updates on how we are doing on our budget. If you have questions about specifics, let me know in the comments, or email/text/call me directly.