I often get asked, “How do you afford to travel so much?” Sometimes, “Are you independently wealthy?” One time it was even, “Do you have a trust fund?” I answer no to the last two questions and I try to simply answer the first with this: When it comes to my finances, I prioritize travel.
Last night I did a Periscope broadcast during which we discussed a few strategies on how to save money for travel. The Periscope video is below as well as a shortened form of my recommendations. If you have the time, I would suggest that you watch the video because I spent a substantial amount of time on each topic and answered some questions. You also can just fast forward to the topics that interest you.
1. Be Honest
Money is often a taboo topic amongst friends and even families. Most people never discuss how much money they make, let alone how much money they have. If you want to keep your finances to yourself that is fine, as long as you are being honest with yourself. Make a real assessment of how much money you have or how much money you do not have. Do not live beyond your means!!
Honesty begins with writing down all of your bills, debt, savings and investments and doing an assessment to determine the next move. If you have credit card debt with high interest rates you should pay that off first then start saving aggressively. If you earn more interest on your credit cards than on your savings, you are losing money by saving. Pay off credit card debt first.
2. Track Your Spending
By tracking your spending and learning exactly where all of your money is going, you will be better positioned to create a budget for yourself and start saving more money. Personal Capital is a great resource to help you track your spending and have a clear idea of which categories all of your money is going to, across bank accounts and credit cards.
Questions to ask yourself: What can I cut back on? Where do I want to put more of my money? (hint: TRAVEL!!!!)
3. Use Other People’s Money
My sister taught me this a while ago. She was referring to using credit cards wisely. Credit cards offer you 30 days of free money, in the event you pay it off at the end of the month. Several cards offer extended periods of time with a 0% APR if you qualify. This is a godsend, if you’re responsible!
I purchased a $1500 computer and while I had the cash to pay for it up front, I decided to finance it. By financing it over an 18 month period, I was able to keep my $1500 in savings so that it continued to earn interest while I made small payments on the card, thus successfully using other people’s money, thus successfully using other people’s money!
4. Save. Save. Save. SAVE.
No matter how much money you make you should be saving a minimum of 10% of your income, whether you are an entrepreneur or a 9-5er. At MINIMUM. The easiest way to do this is with an automatic savings plan. If you have direct deposit at your job you can give them the banking information to your savings account and you will not even have a chance to spend the money because it will be routed to the account before you see it.
Once you do your financial assessment (see number one) you can figure out which categories to cut back spending and add to what you are saving. Traveling is cheaper than you think, but the more money you have, the more places you can go!
An important note, if you have credit card debt and are gaining more interest on that debt than what you are earning on your savings, you may want to pay off your debt. A few years ago I had $2500 worth of credit debt and $3000 in my savings account. After talking to my sister and her telling me that it doesn’t make sense to pay $15 a month in interest to my credit card when I wasn’t earning that in my savings account, though it was painful, I took $2500 out of my savings account and paid off my credit card. Following that (and after mourning the loss of most of my savings) I began to save aggressively to replenish my funds.
In a previous post I talked about the 52 week savings plan. It is an easy way to save $1378 in a year (in addition to your 10% of course).
5. Don’t Be Afraid to Be the Broke Friend
We all want to spend time with those close to us and often times that means drinks, dinner and other forms of entertainment that cost money. I am often the friend that is inviting people out for food and drinks. Even when you have the money in your bank account, sometimes it is ok to say no, especially since you are now saving up to travel the world. Let your friends know that you are saving for travel and offer to buy a bottle of wine and go to their house, or suggest going to drinks during happy hour as opposed to later in the evening, or tell your friends that you will join them for dessert or for an appetizer because you are saving money. Be honest with your friends, maybe they will even buy you a drink!
6. Stop Doing It For the Gram*
*I went on a pretty good rant related to this topic in the video so definitely check that out.
Over the last few years, social media has become pervasive and changed the way many of us live our lives. Many people now finely curate their social media to share their lives with family and friends, but some spend their time trying to make others envious of seemingly perfect lives. A quote that I love is: “We buy things that we don’t need with money we don’t have to impress people that we don’t like.” Remember you have one life to live so spend it doing what you love and for yourself. Don’t waste your time trying to impress other people. Do not buy the monogram Louis Vuitton bag or those red bottoms, in the end it isn’t worth it, unless you’re a millionaire, then more power to you!
In the interest of keeping the cliches going, “Collect memories, not things!”
7. Talk to Friends or Family Members That are Good with Money
Many of us don’t like talking to people about our financial situation, but if there is someone that you know and trust, and you know they are good with money, reach out to them. They may be able to help you to create a plan to get out of debt or just help you to save more. Use your network!
- Mint – This website is really helpful to help you track your spending and create and follow your budget.
- Credit Karma – This website is awesome because you can get regular updates on your credit score and credit report for FREE! It also will suggest credit cards to you based on your credit score.
- Myleik Teele – I was introduced to Myleik’s podcast a few years ago by a close friend and it truly changed the way I deal with money and my life in general. Her website offers a number of tools to help you get your finances and life on track.
Towards the end of the video I spend a bit of time ranting about student loans and discussing exactly how I deal with mine since people ask me about student loans quite often. Check out the video for that.
Now that you’ve got a few tools and tips to help you to add money to your travel fund, be sure to check out the post “Save Money on Travel” so that you can maximize your money.
Where are you going to go with your travel funds?