Published in: Credit Cards | Oct. 26, 2019
Here's How Much Money You Need to Quit Your Job and Travel
Seeing the world might be more feasible than you think.
If you take a scroll through social media, it would seem that nowadays nearly everyone dreams of quitting their jobs and traveling the world.
While that's not quite the case, it is a popular fantasy in our current cultural climate. Unfortunately, it's one that isn't feasible for many. Getting there, for most people, requires a savings account with a balance that's in the five-figure range.
That being said, traveling the world might be more affordable than you think, especially if you're willing to downgrade your lifestyle temporarily. Some people manage to make it around the world on almost nothing, but that does require a certain type of person.
While we've estimated that low-budget travelers could get by on as little as $575 a month, we've also broken down the monthly costs of long-term travel to suit every pocket: low-budget, mid-budget, and high-budget. Whether you want to travel for a few months or a whole year, this should give you an idea of how much money you'll need to have saved up, as well as some upfront costs travelers often overlook.
Creating a budget
When calculating a budget, you'll mostly be looking at the monthly cost of travel. However, it's important to add in upfront costs of travel that are often forgotten. Travel insurance is a must, given that falling ill or getting injured overseas can end up costing you thousands of dollars. You'll probably also need to buy some travel gear, clothing, and toiletries before departing. Don't forget about the flight to get to where you're going, either, although you can save on flights by earning points with the best travel credit cards.
The first thing you'll need to do is decide how low budget you're willing to go. Some travelers are comfortable crashing on couches and staying in shared rooms or hostels, while others prefer first class or nothing. To account for this, we've calculated a budget for each type of traveler. Which category best describes you? Keep in mind that the lower your budget, the longer you can travel on what you've saved up.
While it is possible to get around on very little by finding free couches and living off of nothing but rice and beans, most people aren't comfortable with that level of comfort. Our low-budget travelers are folks who are comfortable staying in hostels, cooking their own food most of the time, and getting around by bus and the occasional budget airline. Activities are mostly limited to those you can do for free or very cheaply.
These travelers also focus on low-cost areas like Latin America, southeast Asia, and parts of southern and eastern Europe.
Most travelers probably fall into this range. These are folks who prefer some privacy but are okay with staying in Airbnbs and low-cost hotels. They'll eat out more often than low-budget travelers but typically dine at more economical restaurants, and they'll opt for tours over the DIY route but won't go for budget-breakers like helicopter rides and private yachts. Mid-budget travelers get around by train and air travel, but they look for good deals rather than buying the most convenient flight.
Finally, these travelers are content traveling in more expensive parts of Latin America like Costa Rica, Argentina, and Chile, as well as western Europe, Africa, and most of Asia, but they probably won't spend a lot of time in high-cost centers like northern Europe, Switzerland, and Tokyo.
High-budget travelers don't have a lot of concern for cost. They stay in upscale hotels and eat out wherever they feel like eating, the more Michelin stars the better. When it comes to transportation, they go with whatever is most convenient and comfortable, and they don't shy away from business class.
In terms of destinations, these travelers are up for anything. Prices in Nordic countries don't scare them off, and in fact, they might build in a few bucket list destinations such as Antarctica or the Galapagos Islands.
How much you can expect to spend each month
Here's what you can expect to spend on the four main spending categories -- accommodations, food, activities, and transportation -- each month. It's worth keeping in mind that extraneous expenses, such as personal care items and souvenir shopping, aren't included here.
Monthly spending on accommodations
- Low-budget: $250 to $900
- Mid-budget: $900 to $3,000
- High-budget: $3,000 to $9,000
Low-budget travelers stay in hostels and the occasional Airbnb, spending around $8 to $30 per night. Mid-budget travelers focus on Airbnbs and low-budget hotels, spending $30 to $100 per night. Finally, high-budget travelers stay in nice hotels, spending $100 to $300 per night.
Monthly spending on food
- Low-budget: $150 to $450
- Mid-budget: $450 to $900
- High-budget: $900 to $1,500
Low-budget travelers cook most of their meals, and spend $5 to $15 per day on food. Mid-budget travelers combine eating in and out and can expect to spend $15 to $30 per day on food. High-budget travelers eat out often and spend $30 to $50 per day on food.
Monthly spending on transportation
- Low-budget: $25 to $100
- Mid-budget: $100 to $300
- High-budget: $300 to $1,000
Low-budget travelers keep their transportation expenses down by traveling via bus whenever they can and occasionally flying on budget airlines. Mid-budget travelers spend quite a bit more by taking more trains and flights and might take the occasional Uber. High-budget travelers spend a lot more because they tend to buy first-class rail passes and business class flights to get around, and rely on taxis rather than public transportation.
Monthly spending on activities
- Low-budget: $150 to $450
- Mid-budget: $450 to $1,500
- High-budget: $1,500 to $3,000
Spending on activities can be harder to calculate, as even low-budget travelers might want to splash out on major attractions such as Angkor Wat or Machu Picchu. We've assumed an average daily spend of $5 to $15 for low-budget travelers, but if you know about these big-ticket sites in advance, you can factor them into your budget. Mid-budget travelers average $15 to $50 per day, while high-budget travelers spend $50 to $100 per day, on average, on activities.
Total monthly spending
- Low-budget: $575 to $1,900
- Mid-budget: $1,900 to $5,700
- High-budget: $5,700 to $14,500
When you add up the numbers, you'll get an idea of roughly how much each type of traveler can expect to spend on their main expenses per month. If you multiply it by the number of months you want to travel and add in other costs such as insurance and airfare, you should have a good estimate of the amount you need to save.
It's important to have a healthy emergency fund with at least three to six months of living expenses to make up for budgeting discrepancies and unexpected expenses. Keep your emergency fund in an online savings account for high returns and easy access. Ideally, you should have even more saved, because you'll likely need to live off of your savings when you get home until you can find a job.
Saving up for your dream trip may seem daunting, but if you keep your goal in mind and put aside a little each month, before long it could be you who is posting your holiday snaps on social media.
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