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Many people in supposed rich countries are struggling to pay the bills, but something budget travelers discover really quickly is that it’s financially easier to actually travel around the world. Thanks to currency arbitrage, lower healthcare costs, and other factors, you will spend less money being on the road for a year—counting airfare—than you will spend just staying home and existing.
Currency arbitrage has amazing leverage. If you leave a place where the average rent in your city is $2,400 and you go to a place where the average hotel or Airbnb price is $40, then you’ve just dropped your rent price in half not even counting utilities. Thirty nights at $40 each comes out to $1,200. If you rent a place for a month, you’ll likely spend far less.
This is hard for many people who only know vacation prices to understand. So here’s an old excerpt from my book Make Your Travel Dollars Worth a Fortune that still holds up well. If anything, the price differences have gotten even more extreme.
If you walk into the average bar in Copenhagen, Denmark, how much do you think you’ll pay for a draft beer? If you said anything less than eight euros, you’re wrong. Now how much do you think you’ll pay if you walk into the average bar in Brno and buy a beer? That’s more like €1.50. And you’ll get a better beer for €1.50 in the Czech Republic than you will for nine euros in Copenhagen. Looking at it another way, you could buy a round of the world’s best pilsner for yourself and 6 friends in the Czech Republic for what you’d pay for a bottle of Carlsberg in Denmark.
Let’s go up a notch and look at meals for two in a restaurant. If you go traveling around the Southeast Asian countries of Thailand, Malaysia, Laos, and Vietnam, you can almost always get a good local meal for a few bucks. You’ll have to go pretty upscale to spend more than five dollars per person on lunch. On the other hand, you can easily pay five dollars on one apple in Japan and you’ll be hard-pressed to even find a bowl of instant ramen noodles for that price at a Tokyo lunch counter. For what it costs to get a sub sandwich and a soda in the U.S., you can get a three-course lunch for two served to you in most of Latin America.
When it comes to hotels, prices between different countries can easily vary by a factor or two or three. For $40, about the price of the very cheapest Motel 6 in the USA, you’ll be lucky to get a private room of any kind in Western Europe, even at a hostel. In much of Latin America, that will get you a nice big hotel room with character, right in the historic center. In the lesser-known areas of Southeast Asia and the Indian subcontinent, it will get you the best room in town, complete with gracious room service, a bellhop to carry your bags, and a nice pool.
A $40 hotel pool in Bangkok
Often the difference between feeling flush and feeling broke is a matter of where you are standing.
You can use currency arbitrage to extend your runway when you’re starting a business. You can use it to get out from under the high cost of living in the USA or UK and have money left over each month instead of blowing through your earnings just paying bills. Or you can obtain a much higher standard of living on the same amount of money by earning in dollars and spending in baht, pesos, or dong.
Drop the High Fixed Costs to Travel More
So picking the right destinations is the first step, but just unshackling yourself from the monthly bills will free up an amazing amount of money. Take out inflated housing costs, auto costs, high insurance bills, and other fixed costs and you are subtracting thousands per month. Even adding back in the best travel insurance, new transportation costs, and nightly lodging, you come out way ahead.
It’s not unusual for long-term travelers to get by for $50 a day for one, or $75 a day for two. That’s less than a lot of people pay for rent and utilities. Never mind all of the other fixed costs paid out every month. And with that amount they’re seeing the world and having a great time. If they can budget double that amount (roughly the median U.S. income), they can do just about anything they want in terms of sightseeing and activities.
Many round-the-world travelers are also excited to discover that they can eat out every meal in cheap countries for less than they spent on the grocery bill at home. They can take local transportation all month and spend less than they did on a car payment and insurance at home.
At the very top end of the scale, however, you don’t get the advantages of pricing differences in the local economy. This is why people who have never traveled more than a week or two on a vacation budget have trouble comprehending how traveling can save you money. The average daily wage in Bhutan may be $2 per day, but that doesn’t stop hotels there from being able to charge $1,200 per night for a suite. My family of three can easily live for $2,100 a month in Mexico, but there are hotels in Los Cabos where you can pay that much per night. You can pay less than $10 a night for a comfortable hotel in Kathmandu, but you can also pay $350 if you want.
Budget for the long term and you will find that spending an entire year traveling around the world is cheaper than sitting on the couch and watching TV. “I wish I could travel more” usually means “I haven’t figured out how to stop spending so much at home.”
After all, if you commit to the road for months or more, you’ll actually feel richer than you did in a financial prison of your own making.
Currency Arbitrage and the Real Local Costs
What $50 per night gets you in Buenos Aires
If you want to see how this really plays out with where you live now, head over to Numbeo.com and play around with their cost-of-living comparison tool. I pulled up a medium-sized city where I lived for many years, Nashville, and compared it to Bratislava, Slovakia. Here’s the result:
– Consumer Prices Including Rent in Nashville, TN are 105.4% higher than in Bratislava
– Rent Prices in Nashville, TN are 252.0% higher than in Bratislava
– Restaurant Prices in Nashville, TN are 91.4% higher than in Bratislava
What if we look at a cheaper place to travel or live and put currency arbitrage to work? Well, here’s another example, for one of the most popular cities in the world for digital nomads.
“You would need around 260,022.5 baht (7,143.5$) in Nashville, TN to maintain the same standard of life that you can have with 78,000.0 baht in Chiang Mai (assuming you rent in both cities).”
– Consumer Prices Including Rent in Nashville, TN are 233.4% higher than in Chiang Mai
– Rent Prices in Nashville, TN are 584.8% higher than in Chiang Mai
– Restaurant Prices in Nashville, TN are 461.6% higher than in Chiang Mai
As I mentioned in my post about the cost of living in Bulgaria, I rented an apartment for a whole month in Bansko for €300. I went skiing there in winter and a daily lift ticket that takes you up from town in a Gondola is €40.
You don’t have to go to the cheapest countries in the world to take advantage of currency arbitrage though. You just need to spend time in ones that cost less than where you are now. We spent months in Greece this year and eating out was half the price of what we typically spend in a U.S. restaurant. When you factor in the taxes and tips, the USA is a costly place to eat out compared to most of the world. We also pay more than any place on the planet when it comes to healthcare costs. Then if you have a car…
If your monthly bills are getting you down and you have a remote job or business, why are you still hanging around in an expensive country? Get out and about and you’ll be feeling rich by traveling abroad. Settle down for a few months elsewhere and your costs will go down even more. If you own your own home, then take advantage of a home swap program and you can cancel out your lodging costs abroad.
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