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“Have I saved enough money for my trip around the world for a year?”
“How much will an around the world trip cost per month?
Back when few people could work remotely and even fewer Americans were traveling around the world for a year, I used to get questions like this on a weekly basis. Now it’s not so unusual to take off for months and the digital nomad movement has become mainstream, but that doesn’t mean it has gotten any easier to figure out how much money you’ll need. There’s plenty of information out there, but it can be overwhelming and contradictory.
Fortunately, if you keep some basic principles in mind, you can stick to a reasonable budget for your round-the-world journey, whether it’s for three months or three years. You’ll almost surely spend less than you do now on your monthly expenses. As the author of five editions of The World’s Cheapest Destinations book and a guy who has probably been to as many countries as he has years on this planet, I’ve got a good handle on how to work this out.
Back when Lonely Planet’s Thorn Tree forum was the place everyone went for travel advice from their peers, I used to spend a lot of time looking at readers’ questions on the Gap Year and Round-the-World Travel message board. The same budgeting questions would come up over and over again, more often than any other subject. They were usually some form of, “Here’s where I’m planning to go and for how long. Do I have enough money saved?”
The problem is, nobody can accurately answer that question without a lot of follow-up questions except in the obvious cases when it is clearly not enough money for what the person is trying to do. If your year abroad includes nine months in Scandinavia and three months in Japan, Korea, and Singapore, you need to be loaded. You’d better have a big inheritance coming, an online job/business you’ll keep doing, or a major amount of savings.
If you’re going mostly to the places covered in The World’s Cheapest Destinations, however, you can get by for far less than you would spend at home…IF you do it right.
Round-the-world travel can actually cost less than you are spending on your monthly bills today. You won’t be living the same lifestyle, however, so take a hard look at your priorities.
Here are the questions you really need to answer honestly before you’ll know how much money you need, then the answers on how to put the principles into practice.
1) Am I spending most of my time in cheap destinations?
You can spend two months in Indonesia and spend less than you would in two weeks in Norway or Switzerland. The Czech Republic is half the price of Austria even though they share a border. Bulgaria is half the price of traveling around Greece. Guatemala is half the price of neighboring Belize. Bolivia is less than half the cost of neighboring Chile. Malaysia is half the price of neighboring Singapore.
If you’re not made of money, a country’s costs should be your #1 factor in choosing where to go. It’s that important.
RTW Travel Budget Action: Plan to go where your budget will go a long way and budgeting will get a whole lot easier. Use my book or other resources to get a real cost comparison. You don’t have to skip your dream destinations completely, but limit your time in the high-priced ones and extend your time in places where your dollars or euros will really stretch.
2) How much am I going to be moving around?
Having a bucket list checklist that forces you to race around from place to place is a sure way to burn through your money twice as quickly. You will be handing much of your hard-earned savings to transportation providers and your memories will be a blur of buses and trains.
Take time to get to know a place and its people and you’ll be amazed at how much less you need. Slow Travel is not just a better way to experience a place; it’s also a sure way to spend less money. (See The Budgetary Case for Slow Travel.)
If you’re not in a big hurry, you can actually pay less per night for your accommodation, often the biggest expense in your budget. Most Airbnb owners actually have built-in discounts on their listing for stays of one week, two weeks, or a month. Sometimes the nightly price can drop by half. At hotels and guesthouses, you can negotiate a lower rate for a longer stay.
Around the world trip budget action: Figure out some place or places where you’d be happy to spend a week to a month in one place, get an apartment to stay in with a kitchen, and take advantage of it to offset more expensive periods. Also, if you have 36 destinations on your year-long trip plan, cut that down by half or more. There will be other trips!
3) Is my itinerary full of big city visits?
There’s a huge divide between rural or small-town prices and big-city prices, whether you are in a third-world country or a developed one. In many cases the prices for lodging are double: Prague/Mikulov, Paris/Leon, London/Nottingham, New York City/Rochester, Mumbai/Hampi, Lima/Arequipa, and on and on. I’m not saying you’ll get the same experience in these very different places, but you may find you enjoy the smaller one more, especially since you can eat out more and afford the attractions.
This is not some great conspiracy or some collective gouging scheme. Cities just have higher real estate costs, higher taxes, and higher employment costs, so that impacts how much you pay for everything. Running a hotel or restaurant in Lisbon just costs a lot more than running one in Evora or some other smaller city.
Especially in Europe, travelers seem to mob the big cities and leave equally attractive smaller ones untouched. This can easily triple your daily budget in expensive places like France and Italy. There are exceptions even in Europe though: here are a few bargain capital cities to consider, especially good values if you stick around for a while. Some of the big Latin American cities still have hotel rooms with a private bath for $40 or less per night.
Otherwise, if you plan on spending most of your time in big cities, double your budget. And maybe bring a mask in much of Asia: not for virus prevention, but for pollution.
Round-the-world trip budget actions: Plan on hitting big cities for a few days to see the attractions, get your business done, and splurge at some great restaurants. Then catch a train or bus to somewhere less crowded for the longer stints. (And maybe get into nature or to a beach.)
4) How much discomfort can I put up with while traveling?
I stayed in some downright scary hotels on my first round-the-world trip, places you couldn’t pay me to spend a night in now. I was young, resilient, and willing to make sacrifices for the budget. Then when I set out again with more savings on second and third trips around the world, I was able to bump the comfort level up a notch on the next two. We went for slightly nicer rooms and some air-conditioned trains now and then.
The difference was only a few dollars a day, but if you don’t have those extra dollars you’ll have to settle. Do some camping, do lots of cold water showering in tropical places, and get used to outhouses and squat toilets if you are trying to travel the world on a shoestring budget.
A splurge-level room for backpackers…
There are ways to cut your lodging budget through housesitting, couchsurfing, and crashing with friends of friends, but if you don’t have these things lined up in advance, budget like you’ll be paying for a (cheap) hotel every night so you’re safe.
The more you can rough it, the lower the budget…to a point. This will probably be your biggest budget line item over time. Again though, the destination makes a huge difference. For the same quality room in the same quality guesthouse, you may pay $80 in Amsterdam, $40 in Mexico City, $20 in Bangkok, and $10 in Jaipur.
Around-the-world trip budget actions: Get out of your comfort zone on a regular basis while still at home and see how well you can put up with living very simply. Maybe make a quick trip to a cheap country nearby for a trial run. Here’s some advice on preparing for your eventual drop in comfort: Try all this before you go.
5) How many flights will I need?
I did this article a while back called Cheap Travel Clusters Around the World and it’s a good way to look at the world map when planning your big flights. Most of the cheap destinations are clustered together. If you’re not taking 12 flights for 12 destinations you will spend far less.
A reasonable round-the-world trip can easily be done with four or five flights total over the course of a year if you’re not trying to tick off every continent. You mainly need them for long distances and ocean crossings.
Your best bet is often to just plan on the major flights, then figure the rest out as you go along. Especially within Asia and Europe, there are many cheap budget airlines that can get you from place to place, airlines you will find out about after you’re actually in the country and seeing the sales. For instance, did you know that there are 6 budget airlines in Thailand alone?
There are at least 8 Reasons NOT to Plan Your Round-the-world Trip in Advance. The flight part is one of the biggest because long flights can really take a big chunk out of your overall budget.
RTW flight budget actions: Evaluate how many long-haul flights you’ll really need and make sure you have to do all of those. Buy the first long one and wait on the rest unless you see a fantastic deal or you’re implementing a travel hacking strategy to get some free flights.
Around the World Trip Budget Conclusion
Only when you figure out the answers to all these big questions above can you really know how much you will need for an around the world trip that lasts for months, a year, or more. If you’re on the right side of all the above, you and a travel partner can get by for $1,000 to $2,000 per month after flights fairly easily, for a year-long RTW trip. (Assume $800 to $1,600 if alone—there are savings in numbers.)
You’ll spend less if you stick mostly to the very cheapest spots and are a cheapskate. You’ll spend a lot more if you are a “flashpacker” or will be spending on a lot of adventure activities in developed countries. Double the budget if you need A/C, a western toilet, and hot showers on a nightly basis.
Again though, the destination choices will have the biggest impact. Two of you will easily spend $1,800 a month just on hostel beds if you’re in Western Europe in the summer, before you eat even buy one train ticket or eat one baguette. For that same amount, you could rent a swanky apartment with a view for a month in Bangkok or Buenos Aires.
One last obvious way to make all of this easier: get a job or start a business that will allow you to make money while you are traveling.
Have you been on a long around-the-world backpacking trip? What did you learn from your experience? Share it in the comments!
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