Right now you’re thinking, “Well how the heck is taking a Round The World (RTW) trip going to save me money? You idiot. I’m done with you. I’m going back to cutting coupons.” You’re right, if I was taking a RTW trip without adjusting my lifestyle beforehand it would be a complete financial disaster. The truth of the matter is, it’s not the actual trip that’s going to save you money (Mr. Obvious), it’s the lifestyle you’ve created prior to departure that will provide the financial freedom that you’re yearning for.
The lifestyle of a Budget $avvy Traveler is similar to someone who lives debt-free. Whether it’s travelling the world, saving for college, or starting a business. You’ll need to make wise financial decisions and sacrifices in order to make your dream a reality. Let’s break it down.
- Know where you’re spending your money. Do you spend hours per week cutting coupons but aren’t aware of the interest rate you’re paying on your car loans or mortgage? There’s no need to be penny wise and dollar foolish. Know exactly where your large expenses are and do whatever you can to decrease them. Visit PenFed to refinance and receive a great rate with low closing costs. Also visit lowermybills.com to identify other opportunities to save money.
- Live on less than you make. As your income increases over the course of your career try to limit the increase in your lifestyle. You were fortunate enough to receive a promotion, this doesn’t mean you deserve or are entitled to a big house and a BMW. When I’m feeling like I really need a Corvette or sailboat (because of course it’s going to make me happy), I tell myself that I should go rent one the next time I have the opportunity. Of course, I never end up renting one. Once that feeling of wanting/needing has passed, logic sets in and you realize what a foolish purchase it would’ve been, especially when you start adding in the additional costs of maintenance, insurance, etc.
- Pay yourself first. Make sure you’re setting aside funds every time you get paid. Contribute to your your emergency fund, retirement, investments, and of course your RTW trip. Your emergency fund will eventually turn into your RTW trip fund (we’ll get to that in later posts).
- Make some sacrifices. Starting small, but cancel the sports and movie channels. Get a dumb phone and unplug from the smartphone. Get a pair of Levi’s instead of the $100 jeans. Go out for dinner once a week and order a sandwich instead of the entree. If you really want to save money and live your dream as soon as possible go on a beans and rice diet. The more you sacrifice now the greater the rewards in the future.
Most life goals don’t occur because of the rationalization of (1) “I don’t have the time.” (2) “I don’t have the money.” If your goal is truly important to you, you’ll make the time and you’ll set aside the money. Planning and budgeting for a RTW trip is a huge sacrifice. Beyond that, it will supply you with the financial knowledge and wherewithal to accomplish future goals well past the time you return from your RTW trip.