I’ve received several emails and comments regarding savings and banking - guess it’s time for this article. One of the many myths about traveling is it’s expensive. Nomadic Matt consistently drives home that with diligence one can enjoy a full experience on $40 a day.
My goals are slightly different. While my sojourn abroad might last 6 months to a year, where I’m headed is a life overhaul.
Whatever your ultimate goals, the question remains – how do you prepare financially?
Is $40 Enough?
If you haven’t already, sit down with a spreadsheet program and start a travel budget. Creating a travel budget serves two purposes. One, it transfers a conceptual idea (money) onto concrete paper, and two, it reveals the big picture of traveling.
I broke down my budget as such:
- My current earnings.
- My current expenses (rent, food, demanding cat, etc.)
- Great, now you have an idea how much you bring in and how much goes out. Now, how much can you save per month? Add that to the sheet.
We now arrive to the travel portion of the budget:
- Factor in your itinerary. Some aspects of Europe might be slightly expensive versus Southeast Asia, for instance. While other countries appear to be budget oriented, but aren’t. Cuba and Bhutan come to mind.
- Based on your itinerary, decide how much you want to spend per day. Add in extra activities that peak your interest (food, drinks, tours).
- Add the following: visa fees, transportation fees, vaccinations, travel insurance.
- If you’re a travel blogger like me, don’t forget your laptop and/or cellular device.
- Lastly, what do you require for gear? You certainly need a backpack to house the contents of your travel life.
Wow – that’s a mouthful. Draw comparisons to your savings and travel budget. The difficult part – you may have to trim down to make it realistic. Don’t tear your hair out. Just research what’s truly significant to your trip. I really, really longed to fit in Latin America on top of volunteering in India, but my main focus is to fulfill that dream. The joy is you can always include a locale into a fresh adventure.
Some ways to trim down:
- If this is a short trip – borrow gear from friends or family. That will save you money.
- Cut out unnecessary purchases. Lately, my desire to buy anything has dissipated. My trip is more important than a new blouse.
- If blogging is low on the list, don’t purchase a laptop that you’ll eventually be tempted to throw into a body of water. Utilize Internet cafes or some hostels offer free computer use.
- Incorporate the B.I.T. philosophy. Buy it there. This sounds harsh, but a high percentage of products we use are manufactured in countries you plan to visit, which means buying it there will be drastically cheaper. Timothy Ferris does a stellar article about this.
So, perhaps you’ve got a workable budget (right on $40 per day!) and savings are ready to go, what now?
High Interest Savings
The Aussie Nomad offered a great tip in an article about finances. Open a high interest savings account. Any bank worth it’s mettle will offer this service. If the preference is to forgo using your bank for this task, I suggest ING Direct or Everbank. This option works wonders for travelers in the early planning stages. Knowing that your savings are gaining interest daily eases the pain of cubicle hell. If you’re about to embark, another idea will be discussed below.
Bargaineering’s review of 5 international online banks.
Highinterestsavings.ca has a comparison chart (with links) to Canadian institutions.
Ditch the Dollars
You might be close to leaving, oh my! However, you’re worried about currency conversion. My Canadian dollars will wither and die against the Euro or British Pound. Jeanne D’ Arc of soultravelers3 gave me this brilliant idea – open a bank account in a foreign currency.
HSBC operates in 86 countries and boasts unique options. Right now I’m in the process of opening two high interest savings accounts, one Canadian, the other GBP, with the choice of opening a third in Euros. I highly recommend this bank. I collect interest and can place money in different currencies for multiple purposes. Take the British Pound. 1 GBP = 53.85 Baht. 1 CDN = 31.94 Baht. I’m convinced. A minimum $2.00 is charged for handling foreign currency, which didn’t seem bad to me. It’s also easy to transfer funds through personal Internet banking. The icing on the cake, if I were to do an extended stay in Brazil for example, I could open an account instantly in São Paulo.
Even if you prefer not to follow my lead, HSBC is a great international bank overall. Check the site for your country to find out about opening a foreign account.
It’s more than possible to travel the world on $18,000 or even $15,000. Simply focus on where you can cut the budget, add savings, and maximize the money you currently earn. That might translate into some lifestyle changes, but if travel is what you long for, thousands of others have accomplished it, so can you!
Photo: JuliaF
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{ 17 comments… read them below or add one }
@Joel – haha,, no need to run out and get an HSBC account, it just works for me, is all. Cheers!
@Nomadic Chick – I always had visas so I guess that makes since. Next time I am traveling though I will def look into opening a HSBC account.
@Joel – Its’ very hard to open a bank account unless you have a work permit/visa or some kind of residency papers, such as you did. Lots of travelers don’t have that option and rely on their bank back home. I use HSBC and am extremely pleased with them, you can literally find one anywhere, well most anywhere that is. I even found them in India. :) Although there are HSBC’s all over the world, for me to open a bank account in that city would prove hard as I noted above. Nice thought, though. :)
Did you ever entertain the idea of opening an account in the place you were currently at?
I was teaching in South Korea for a while and decided to open a Korean bank account. All my paychecks went to that account and I just transferred money home as I saw fit. Most of these accounts have a very low transfer fee or have a online service so you can manage them even from other countries. Coming back home I just waited till for a great exchange rate to transfer my pensions back to my american bank account. It seemed pretty easy and I didn’t have to worry about finding international bank locations in whatever country I was in.
@CineSF – I found this post on banks in Spain: http://www.spainexpat.com/spain/information/banking_options_for_expats_in_spain/
It seems the popular choice might be Citibank or ING. Not sure if you’re American or Canadian, but if you already have a Spanish account in Euros, it sounds like you’re ahead of all of us! :) Thanks for stopping by.
Unfortunately HSBC doesn’t offer personal bank accounts in Spain-any other suggestions for Spain?
Hi Greg,
Thanks for stopping by and appreciate the email! You’re correct, many do live on less than $1 a day. The saddest of all, North Americans use up 80% of the worlds resources. You’re so right on finances not being a large obstacle, it’s about using your money wisely and not burning it up at expensive locales. :)
Hey there, great site!
$40 a day is luxury even (with Europe/Scandanavia being an exception). Keep in mind that a majority of the world’s population lives on US $1 a day or less.
I get the same question over and over…how can you afford to travel for so long? But when you do that math, its actually cheaper for me to travel than to live in the US! Even with a demanding cat, finances aren’t as big of an obstacle they seem. :)
Hey guys, just another thing, when on the HSBC site ensure you’re on the correct site for your country. Not all countries are equal, unfortunately. It seems Americans get the shaft, I could not bring up an application for an international account. The other option is open one and during your travels open another one in that country, keep in mind there could be a fee for that. Cheers!
@mytimetotravel sent me a direct message asking which account I signed up for. The link is here: http://www.hsbc.ca/1/2/en/personal/chequing-savings/savings-accounts
Basically they are called foreign currency accounts. Hope that helps everyone!
Hey Stephanie, so glad the info helped. I know for a fact that Nomadic Matt also uses HSBC. If that’s not expert endorsement, I don’t know what is. :)
Really great article, so well said. I am looking at HSBC now.
Ok, bookmarking this one so I can return to it later. Sweet tips for the high-interest savings. God I’m a financial fool.
Hey Shannon, HSBC was such a find. My applications are pending, crossing my fingers on getting approved. :)
Interesting tip there about HSBC – I have really heard a lot about this back but hadn’t yet researched the benefits or anything like that! :-)
You’re welcome on the mention. Your post reiterated that a high interest savings account really helps build up money. I’m in love with HSBC. Sigh.
Great tips I am going to look into an HSBC account in preparation for the UK because GBP is going to murder my little aussie dollar. Oh and thanks for the mention.