Vacationing around the world, especially to expensive countries in Western Europe, can often seem inaccessible for people just starting out in their careers. Conversely, when we’re just starting out also the time when we have the fewest responsibilities and obligations preventing us from indulging our whims. Many people with my salary and debt are living paycheck to paycheck and have very limited discretionary income. I have significant student loan debt and a car payment. With an annual gross income that is less than half of my total debt, my ability to travel is largely based on two factors: my willingness to diligently budget and make travel a priority.
While every individual’s circumstance is different, this article will explain my big picture financial strategy for those who also have limited means and a desire to responsibly indulge a passion. What you won’t find below are “tips” that are constantly shared, but aren’t very applicable to people I’ve actually met, like “don’t buy coffee” or “pack your lunch”. I am not a financial professional by any means, but hopefully my situation is relatable and can generate some ideas. As a caveat, if you have credit card debt, it’s probably best to pay that off before reallocating funds for international travel.
My ultimate goal is to work diligently towards establishing a financially secure and debt-free future for myself without sacrificing things that matter to me now, like travel. While some financial experts would certainly advocate for a more aggressive savings or debt repayment strategy, this is what works for me.
My first step when working toward my travel goals is to track and prioritize my spending. For me, this means a budget. I start by allocating for life’s essential, this includes retirement, long-term savings, debt repayment, and necessities like housing, food, and transportation. My retirement contributions are made before I ever see my paycheck. Then, I allocate 10% of my take home pay toward an emergency fund and long-term savings. I also need to budget for debt, due to the aforementioned student and car loans. Putting 15% of my pay towards debt allows me to meet the minimums and put some extra money towards my loans each month.
All total, 62.5% of my check goes toward rent, utilities, insurance, and my cell phone, ingestible items (including alcohol and eating out), and everything involved in keeping my car in tip-top shape. Essentially, after all of the above is taken care of, I have 13% of my income to divide between everything not mentioned above. This includes entertainment, clothing, gym memberships, home supplies, gifts, charity, personal care, education, and my travel budget. Over 5% of my total budget is dedicated to travel, leaving under 8% to cover all other discretionary spending.
Second, any gifts or bonuses I get are immediately allocated towards savings and travel. I know if I put this cash in my checking account, I can find ways to justify spending it on treats for myself now. While it’s always nice to splurge, I know I’ll value the experiences I can have travelling much more than whatever whim I’m experiencing in the moment.
Third, once I’ve organized my funds and allocated as much as I can towards travel, I use credit cards to accumulate extra cash for my trips. I always pay these off in full every month, but over the course of a year they generally provide $200-$500 dollars to put toward travel, simply by buying things I would have anyway. This strategy is not for everyone, but the additional money it provides can cover part of a flight or a few nights’ accommodations. Additionally, one of the cards does not charge foreign transaction fees, saving me money when I am abroad.
Fourth, Saving money and maximizing rewards can only take you so far. It’s also important to think about how you’re going to spend money once you start booking. Traveling with a friend can reduce accommodation costs, as can travelling in off-peak times. The contents of this blog will continue to expand on affordable travel, and the specifics of how we implement our travel goals.
I cannot afford to take a month off of work, or stay exclusively in five-star hotels. I also like comfort and safety, can’t imagine passing out on the middle bunk in stacked hostel beds, and have the desire and means to pay for lodging where I don’t have to worry about a drunk stranger thinking I’m in their bed. I may not be able to afford everything, but I can afford to make my travel goals a reality. When I’m kissing Wilde’s tomb or drinking wine in Tuscany, the fact that I don’t dye my hair very often or redecorate my apartment doesn’t matter at all.