I just returned from a six-week vacation to Bolivia and Peru. Since the beginning of October, I’ve been climbing mountains, exploring ancient ruins, and sipping pisco sours. Many folks dream of taking trips like this, but few people make it happen. (Well, except for Australians it seems. In Peru, I met dozens of Australians who had somehow managed to make long-term travel a reality.) If travel is a priority for you, though, it is possible to work it into your budget. I did it through a combination of targeted saving and conscious spending.
First up, using an online high-yield savings account, I’ve split my money into several different subaccounts, each of which I’ve named for a specific savings goal. My bank lets me name my accounts and subaccounts, so I give them titles to indicate their purpose.
I’ve designated one of these accounts specifically for travel to faraway places. At the end of every month, if I have money leftover after paying my expenses and funding my retirement accounts, that cash gets swept into my travel fund.
But where does that money come from? I make a decent income, but I also have a a lot of indulgences. I like to eat at nice restaurants. I collect comic books. I attend an expensive gym and have a private Spanish tutor. It’s not possible for me to do all of these things while still pursuing my passion for travel.
So, I made some conscious decisions. Over the past couple of years, I’ve given up cable television, opted to buy most of my clothes at thrift stores, and done what I can to walk or bike instead of drive. I eat out less often and I steer clear of comic book shops.
By doing these things, I’ve been able to find enough cash to stash away for trips to Europe, Africa, and South America. In essence, I’ve cut back ruthlessly on the things that aren’t important to me so that I can spend on the things that do matter. For you, the choices might be different. Maybe you’re willing to give up your car (I’m not) or to move to a cheaper apartment so that you can afford to spend your summers in Thailand. The trade-offs are different for everyone.
My trip to South America wasn’t cheap, and I don’t want to pretend otherwise. But with a combination of targeted saving and conscious spending, I’ve been able to start traveling the world. If you want to travel, or to pursue any other financial goal, you can use both techniques to help you get to where you want to be.
Obviously, if you’re strapped for cash, you’ll need to find ways to boost your income (or cut your spending). But once your cash flow is positive, it’s only a matter of time until you’re able to save for the things you want.