Whether you want to travel for a week, five years, or move abroad permanently, you will need money. And it is always good to budget more money than you will actually need. But to do that, you will have to save some money and that’s not so easy. Or is it? For me, saving money has never been difficult.
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As long as you have an income, saving can be fun and easy. In this article I want to share with you my best strategies to save money to travel. These are the steps I follow:
I’m a bit chaotic and disorganized, and I operate in a similar manner. But it works! When it comes to savings, I don’t save a fixed percentage of my income and I don’t have any automated savings strategy. My only goal is to save as much as possible.
At the end of each month when I get paid, I list my income and deduct all my fixed expensed for the coming month. Based on what’s left I set a rough budget for variable expenses and savings. If I spend less on variables than I budgeted for, I save more. Most months I challenge myself to see how much I can save.
I like to track my savings with a chart and a graph because it makes me feel good to see that number increase every month. The more I save, the more fun it becomes. Fun is key! Figure out a realistic strategy that works for you, and that gets you excited about saving money.
Speaking of fun and excitement, this is the most important step you’ll take. It’s challenging and you may experience a few slip ups, but once you get a hang of your emotions, saving money will come so easily!
The way I did it was by replacing one emotion for another. As humans we are impulsive and emotional when it comes to spending money, so leverage your emotions to change your spending habits. Every time I find myself wanting to buy something I ask myself: would I enjoy the travel experience more than this item? Most of the time the answer is yes. Then I visualize the destination I’d like to visit and imagine how it would feel to be there. My willingness to spend money instantly diminishes. And as an added benefit, I feel happier when leaving the store than I did walking in.
You may have heard this a thousand times, but you need to know where your money goes! I track all my expenses using the Numbers app on my laptop, which works equally well on the iPhone or iPad. To keep it simple, I write how much money comes in, how much money goes out, and my cumulative savings to date. I don’t feel the need to be more detailed because I spend very little. I also want to keep this step as quick and simple as possible so I’m more likely to continue tracking my finances.
Be detailed with your tracking, but keep this step as simple as possible. If you struggle with motivation, have something to look forward to. I look forward to seeing my savings graph increase, so I track that first then I go to income and expenses.
If you eat out or purchase takeaway, I would suggest you create a dedicated table to keep track of that. Pay attention to any subscriptions (such a Netflix) you may have. Take note of how often you use them and how much value you get out of them. If you can, calculate a cost per use, and track that over time to see if you’re getting the most out of your membership. And if you are not, go to the next point.
Now that you started tracking your expenses and know where your money’s going, where can you cut back? Any subscriptions you can get rid of? Here are some things I’ve been doing:
Aside from rent, bills, and groceries, I only have one subscription. It is an Adobe photography plan at 9.99 USD plus tax (around 15 CAD per month). Since I create and sell digital products, I used to have the creative cloud, which was 52 USD plus tax. At times when the CAD was low, my credit card would get billed as much as 85 CAD per month! Now I just make do with Keynote which came for free with my laptop. I rarely eat out or go to the movies anymore. My local library has a free card which gives me access to some streaming websites where I can watch a few movies, and I can also borrow movies on DVD. I also listen to Spotify with ads and watch Youtube videos for entertainment and learning.
My bank has an offer, if I hold a credit card with them and keep a minimum balance in a saving account, my monthly banking fee gets refunded. I signed up for this as soon as I graduated so I never paid any banking fees in my entire life! If you’re a student, make sure your bank knows as most student accounts don’t charge monthly fees. If you’re not a student see which criteria you must fulfill to get your banking fees refunded. Don’t be afraid to switch banks if there’s a better deal elsewhere.
I lowered my cellphone plan from $70 to less than $20 per month by switching to a prepaid SIM card. Before moving to Denmark, I had a monthly plan with one of the three big companies in Canada. I gave them a 30 day notice to cancel my plan, but they “forgot” and I got billed an extra month. Once in Denmark, I didn’t have the CPR number I needed for a phone plan (it took 3 months to get that number). So I was stuck with a prepaid SIM which was so good, that I never signed up for a plan again.
When I went back to Canada, I purchased a local prepaid SIM and it saves me so much money! I pay the basic plan every 30 days (only $16!) which includes text messaging, and once in a while I purchase minutes and data. Any unused minutes and data carry over to the next month. If you can manage to save even $30 per month on your cellphone, it adds up to $360 in a year! And the best part is that you have no contracts to cancel. When you don’t want the service anymore, you just stop paying. Simple!
Since using credit cards is a great way to earn points and get some cash back, I tend to use mine for everything. I don’t have a travel credit card (there are fewer options in Canada than in the U.S.), but I have a cash back credit card. This gives me a small percent cash back on everything I buy, and it has no annual fees. I make payments as soon as possible, often multiple times per month, to prevent interest payments. In the end I incur no fees, but I get the reward.
Once you get a hang of managing your emotions and curbing impulsive spendings, then you have no reason to be afraid of credit cards. There are multiple credit cards out there with travel rewards if you want one. Personally, I’ve had bad experiences trying to redeem points for flight tickets, so I’d rather get cash back.
I mentioned this point previously in my Simple Guide to Moving Abroad. As humans, we need something to do something fun once in a while. So instead of going out with your friends for food and drinks, figure out some fun hobbies that could be monetized. If you are occupied with a fun activity you won’t be tempted, or have time to spend money on anything unnecessary.
I like to go for walks and take pictures, which I later sell on stock photography agencies. I also create and sell printable planners on Etsy, and I’m working on a few websites. There are multiple money-making hobbies you could try. You might not make money right away, or you may not enjoy the first hobby you try. Keep going until you find the right hobby for you.
Do you have any additional tips for saving money?