There’s no such thing as an average travel budget for a trip around the world. Whether you’re going to circle the globe or just go backpacking through the Americas for a year, you need to give a calculator a workout and do some math. After all that though, you need to be honest about how often you’ll go off budget.
No matter what figure you come up with in the end for daily, weekly, or monthly averages, add some more to it for the unexpected. You especially want to build in some money for splurges along the way.
Calculating a Long-term Travel Budget
If you pick up a copy of The World’s Cheapest Destinations, you’ll have the info at your fingertips to create a budget for the 26 best destinations where you can travel on a budget. These are the best cheap travel deals on the planet. Using the ranges in there, you can get a rough estimate of what you’ll average daily for expenses like food, lodging, transportation, and sightseeing.
So let say, after adding in a few weeks in an expensive country here and there, but balancing that out with a place like Nepal or India, you come up with the following budget for a couple for your year-long trip:
$20 a day on lodging
$25 a day on food/drinks
$10 a day on transportation
$15 a day on sightseeing and tours
That comes out to $70 a day, so for a year you would need $25,550 for the two of you in savings or remote income. That looks like a lot, but it’s about $2,219 a month—far less than what the average American couple spends just on monthly housing and transportation bills, never mind food, health care, and fun. In many big cities, that barely covers rent.
There are some chunks you need to add to that though: the big flights that cross an ocean, vaccinations before you go, any new gear or travel clothing you need to pick up, and any clothes and gadgets you’ll buy along the way. A trip around the world comes with lots of add-ons before and during the journey.
People usually remember to budget for those up-front round-the-world travel expenses though if they’ve been reading blogs like this one. What they forget though often throws them off: occasional splurges along the way.
Worthy Travel Splurges for a Trip Around the World
Travel splurges come in three main forms when you’re traveling for months or a year on end.
The first would be unexpected or badly needed splurges. You arrive in a city during festival season and the only room you can find is $50 a night. (Been there.) Or the cheapie option is just too disgusting to bear and you need to upgrade to a proper hotel (done that too). Or you really want to go hang out in a vacation resort area for a bit and it’s either pay more or don’t go.
Second, there are the must-see, bucket list places or experiences that come with a hefty admission fee. Obvious examples would be the admission costs at wonders of the world like Petra, the Taj Mahal or Borobodour. These will wreck your budget in a hurry as they’re such outliers in otherwise inexpensive countries. But are you really going to go to Peru for the first time and skip Machu Picchu?
Last, there are the experiences that really define a place and will provide memories that last a lifetime. Are you going to give up your dream of hiking the Inca Trail there because it doesn’t fit into your $70 a day budget? Or skip that trip to the Perito Moreno Glacier in Argentina because the day is going to cost you far more than an average day? Are you going to pass on a tour of the Valley of the Kings in Egypt for budgetary reasons?
Plus there are some destinations that are just plain going to cost you a small fortune, no matter how many corners you cut. It’s next to impossible to visit the Galapagos on a budget, for instance, for good reasons. The same with Easter Island or other fragile places. Conservation costs money. Either be ready to cough up a few grand or save that destination for later when you’re a working stiff on vacation. Or your parents invite you.
Splurging on Experiences During Your Budget Trip
A few years back I was in Santa Catalina, Panama, a surfer magnet on the Pacific Coast that reminded me about this splurge budget practice. I’ve got Panama listed as an “honorable mention” in my book because some things are a bargain, especially outside the capital, but this is a country with a booming economy. Most people aren’t rich here, especially outside the capital business district, but the middle class is large and getting bigger each year. Plus half the wealth of pre-Chavez Venezuela has seemingly landed in Panama City.
If you’re heading overland to South America, you need to go through this country. You could come to Panama and do nothing but kick back and party on the cheap. This is, after all, one of the cheapest places in the world to knock down some drinks. Almost nothing is taxed heavily here, including booze. But if you want to do the things most leisure travelers come here to do, you have to splurge a little now and then.
Back to Santa Catalina, where you can get a hostel bunk for $10 or less a block from the beach or get a private room for $15-$25. The thing is, if you want to get out to Coiba Island, where these photos were taken, you’ll pay $50+ a person for a boat of six people. It’s not that they’re ripping you off: it’s 37 miles to the island and gasoline is a tad more here than it is in the U.S. You need a few guys along as well, including at least one who can speak English. Plus there are park permits to pay for.
So if you want to get the full experience, you will need to toss the daily budget out the window. One way to deal with this is to make up for it later, by just staying put in a cheap place and not doing much for a week. It’s better though just to have a bit extra set aside for just these situations.
Being there brought me back to an experience I had as a round-the-world backpacker in the late 1990s. My wife and I had spent nearly six disappointing, sometimes grueling weeks in the Philippines, with only flashes of good memories to show for it. Overall, we were dejected and ready to high-tail it out of there to somewhere more attractive.
When we finally got to El Nido on Palawan Island though, our moods brightened considerably. Natural beauty, better food, and a decent cheap hotel for once all drastically aided our mood. But the price for a boat tour of the islands and lagoons—$40 each in late 90’s dollars—was really going to trash our budget for the week.
We debated, we hesitated, but in the end we threw down the cash and went out on our boat tour. It was by far the highlight of our last month in the country. A day of unsurpassed beauty and one postcard-perfect stop after another. Thankfully we had the sense to step up and go.
When you’re 80 and looking back on your life, you won’t remember what you did with the $40 or $50 you saved once by skipping something. Or probably even remember what you spent for a bigger splurge. You will remember the great times you had.
Yes, I’m all for cheap travel deals and having a clear long-term travel budget for that trip around the world. You’re going to need to cheat sometimes though when you have the chance to do or see something really special.
So build in some extra for travel splurges and you’ll deposit much better memories in your mental bank. Those will make you much happier than anything physical you will spend that money on back home.