How much do you need?
What will you do when you get back?
As we get closer and closer to our actual departure date our family and friends have asked these kinds of questions fairly frequently, and rightly so! I mean really, it’s a big deal to quit your jobs and be able to survive easily, while travelling, without any source of income.
The first thing to set your mind to is that while yes, we are travelling and intend to have loads of fun, this isn’t a vacation in the traditional sense. We will not be staying at hotels and eating out 3 meals a day like you might on a traditional vacation. You can’t just take what you might spend on a week-long vacation, and multiply that by 52, to get what our budget is…that would be an insane amount of money, and while it’s probably feasible for some, it’s not for us.
Interestingly enough, when we decided to take this trip we had already saved most of what we needed, just by sheer coincidence. If you read our post about how we made the RTW decision in the first place, you might remember that initially we had just intended to save for a move back to Colorado. We thought we might be out of work for a while, so we our intention was to amass enough for us to live on for at least 6 months of potential unemployment. As it turns out, the amount you’d need to live in America without working for about 6 months is close to the amount we need to travel around the world for a year. Go figure.
Let’s be clear about something else right away. We did not make a ton of money in New York City. I was a teacher for crying out loud! Justin had a solid job, but it wasn’t something we were going to get rich on. Saving money is HARD WORK. You have to make a plan and actually stick to it. Sometimes it sucks, but you do have to sacrifice things unless your salary is large enough to support your savings PLUS allow you to do whatever you want.
We have broken this down into a few posts because it’s going to get long. I appreciate details about how to do things, so I’m going to give as many details as I can. If you don’t want to read all of that, here’s the bottom line:
Don’t spend as much money as you do right now on unnecessary junk.
Most people have way more fat in their budget than they realize. The easiest way to start your savings it to trim some of that away, sort of like you’re on a money diet. I mean, if you want to lose weight, you cannot eat ice cream twice a day.
First, you have to figure out where the fat is, and to do that you need to track your expenses for a while. How much are you spending over the course of an average month? Start by just carrying around one of those tiny little notebooks and write down everything you spend. Yes, everything. Do you grab a coffee and a bagel on the way to work? Write it down. Did you make a donation to something? Write it down. Did you buy a fake moustache from a vending machine for .50 cents (it’s not like I have ever done anything like that…)? Write it down. You really do need to get a clear and honest picture of every cent you spend. You should be including all your regular bills as well.
At the end of a month, take a look at the numbers. How much is going out vs coming in? I know I’m being Captain Obvious here, but in order to save, the amount of money coming in must be larger than the amount of money you are spending. The bigger the difference, the bigger the savings.
You can do a variety of things to start cutting down on your regular spending. Many of these seem like such small expenses that most people never realize how much they are spending over the course of a year. Some of the things we cut included:
Coffee. I picked up a coffee every day on the way to work, and sometimes I’d get one in the afternoon as well. Each time, it cost me $2. I was spending an average of $15 per week on coffee. That’s $780 a year! That’s fat. I stopped buying coffee and started just making it on my own and bringing it to work. Not only was I saving the environment from all of my trashed paper coffee cups, but I was saving myself around $600 a year – you have to factor in that I did have to buy more coffee beans, and it doesn’t mean I NEVER bought a cup of coffee ever again. When Justin also stopped buying coffee every day, we were able to save about $1200 per year. If you buy fancy latte-frapa-whapa-chinos every day you can go ahead and double, or even triple that number.
We saved over $2000 in two years just by making coffee at home.
Lunch delivery. In NYC most people just order lunch to their office. In fact, I know a significant number of people who almost never eat at home. I fell into the lunch trap for a while and spent between $8 and $15 every time I ate out during the work week, which was usually 2-3 times. When I stopped eating lunch out I saved another $400-500 per year. When Justin started making his own lunch that number more than doubled.
Alcohol. We’re young(ish) and we like to imbibe from time to time. This wasn’t something that we got rid of completely, but we did cut it dramatically. We made a conscious effort to find great drink specials, to not overindulge, to gather with friends at someone’s house instead of a bar, or to just not drink during the week. I don’t have an exact number here because our spending in this area varied greatly, but I assure you we saved more than when we cut out coffee.
Plan your meals and don’t go to the store hungry. Buy in bulk when you can. Make more food than you need, and freeze the leftovers for easy lunches that are ready to heat and serve. Our membership to Costco saved us around $1000 per year in bulk food items like cereal, oatmeal, noodles and meat. I started making huge vats of pasta sauce and freezing it in small portions. Justin eats mass quantities of pasta and my sauce cost us about $1 per jar vs. $3-5 of store-bought sauce. Again, the little things add up.
Clothing. If we didn’t need it, we didn’t buy it. You can easily save hundreds of dollars a year by not buying new clothing “just because”, especially if it’s not on sale.
Haircuts. How often do you cut yours? Can you get away with going longer between cuts? What if you went every 5 months instead of every 4? Over time, this will save you a few hundred dollars.
Small change can mean big savings! At the end of every day we put all our coin change into a bucket. When the bucket was full we lugged it down to the bank nearby that had a free coin counter and we cashed it in. It took us a few years to fill it, but it ended up being worth $700. $700 for tossing change into a bucket.
There are so many little areas where you can really cut back, and every article ever written by a professional about saving money will tell you the same thing. What you cut will depend on what you already spend.
Do you need the gym membership? You can save between $250 – $1200 a year by working out at home or in the great outdoors.
If you haven’t already, QUIT SMOKING. In NYC a smoker who goes through a pack a day wastes more than $3800 a year. For real.
If you can, take public transportation, walk or ride your bike instead of driving everywhere.
Buy a reusable water bottle and carry it with you instead of buying bottled water.
The first step is always the hardest and there is an adjustment period to a lifestyle change. If you find it difficult to stay on track, put a picture, or ten, of your goal (be it a travel destination, a house, whatever…) to your mirror, or door, or fridge to remind yourself of what you’ll earn in the end.
Next time: Making a practical detailed budget, and how to keep yourself on track.