How much do I need to save for long term travel?

Everyone is aware that it costs money to travel. But what’s not so clear is just how much. We will take a deeper look and answer the question, “How much do I need to save for long term travel?” In addition, we will look at expenses after one month in South America compared to one month of expenses while living in Chicago.

Molly and I have been saving for the past few years and decided to use the majority of our savings to take this trip instead of applying the savings to a down payment for a house; we are not dipping into our retirement funds (Roth, 401K, 403B, stock market accounts). Although considered by many to be non-traditional, we believe the long term value added by this trip will be much greater than the value added by purchasing a home.

Photo courtesy of nattanan23 at pixabay.com

Part I of the post discusses important items to consider when designing a budget for a long term trip. Here we will discuss a recommended monthly budget for a long term trip and take a glimpse at our expenses after one month in Colombia.

Recommendations And What We Are Saving

Most travel websites and long term travelers say that you can travel on a monthly budget of $1,500-2,000 USD per month, which translates into $50-66.66 USD per person, per day. But you must consider your destination and required level of comfort while traveling, among many other factors (for more detail, check out How Much It Costs To Travel Long Term, Part I).

To err on the side of caution, and because we knew we would often opt for private rooms as opposed to shared-dorm hostel beds, we set a monthly budget of $2000 per person, per month. This equates to a budget of $12,000/person for a 6 month trip through South America. We each individually allocated $14,000 prior to departure in case we happen to be above budget.

The budget app we use is called Trail Wallet. It costs a one time $5 fee in the App Store and allows you to enter expenses in your currency of choice, by category, date and location; it clearly displays your expenses and how much you are above or under budget. When you stay below budget it offers words of encouragement and when you go over it lets you know.

Here is a summary of our expenses after one month in Colombia:

One additional expense not included in the total listed above is travel insurance, which we obtained through World Nomads and pay $195.55 per month or $97.77 per person per month. Including the cost of insurance, total expenses for the first month in South America comes to $2,506.20 or $1,253.10 per person.

We set a $4,000 monthly budget for ourselves, and as you can see above we have stayed below that thus far. Colombia, however, is one of the cheaper South American countries so we anticipate monthly expenses to rise moving forward.

Here you can visualize our monthly expenses by category in an easy to read pie chart:

Below is a breakdown of expenses from an average day in Medellin, in both Colombian pesos and U.S. dollars.

To shed a little light on the above graphic in regards to normal daily expenses in Colombia compared to the U.S.:

Saludpan is a vegetarian restaurant in Medellin that serves up fresh, gourmet eats with decadent presentations similar to those found at upscale Chicago restaurants. Cost of dinner: $12.36 for two (no alcohol consumed). The $38.43 price for accommodation in Medellin is for a top floor 2 bedroom, 1 bath apartment with a private balcony with views of the city and Andes mountains (pictured below), an 8 minute walk to the train and a 5 minute walk to a busy, restaurant filled street.

View of Medellin through the door of our Airbnb

Colombia vs Chicago Monthly Expenses

Now let’s compare our Colombian expenses with our average monthly expenses while living in Chicago. Below is a breakdown of our monthly expenditures of our last six months in Chicago. I realize our spending may look excessive to some but keep in mind, the cost of living in Chicago is not cheap compared to many other parts of the country. We also do not have children or pets and what is the point of living in a big city if you are not going to enjoy what it has to offer? Unfortunately, I was not using Trail Wallet while in Chicago so I will have to enter information in the old fashion way.

Rent: $1650 ($825/person)

Internet/Cable: $165.78 ($82.89/person)

Electricity: $105 ($52.50/person)

Natural Gas: $42 ($21/person)

Groceries: $701.10 ($350.55/person)

Restaurants: $392.50 ($196.25/person)

Entertainment: $266.72 ($133.36/person)

Cell Phone: $80.00 ($40.00/person)

Renters Insurance: $11.00 ($5.50/person)

Car Insurance: $37.50 (Ronnie) + 71.00 (Molly) = $108.52 ($54.26/person)

Automobile Gas: $33.12 ($16.56/person)

Public Transportation: $108 ($54/person)

Uber: $91 ($45.50/person)

Gym Membership: $65.00 (Ronnie) + $35.00 (Molly) = $110 ($55/person)

Spotify: $16.34 ($8.17/person)

Netflix: $11.98 ($5.99/person)

Miscellaneous (Clothing, Haircuts, Donations, Medical Payments, Medications, Books/Movies, Subscriptions, Home Improvement, Car Repairs/Maintenance, License Fees/Tags, Toll Expenses, Parking Tickets): $1,338.52 ($669.26/person)

Average Monthly Total Expenses: $5,231.58 ($2.615.79/person)

Now, you may notice the large amount in the miscellaneous category. Expenses in this category fluctuated greatly over this time so we felt it best to lump these into one category, as each month’s differences in bottom line expenses fall into this category.

Photo courtesy of ipu.org

Bottom line

$5,231.58 (average Chicago monthly expenses for two people) – $2,506.20 (cost of one month in Colombia for two people) = $2,725.53 (amount saved for two people by traveling!)

OR

$2,615.79 (average Chicago monthly expenses for one person) – $1,253.10 (cost of one month in Colombia for one person) = $1,362.69 (amount saved for one person by traveling!)

Photo courtesy of swns.com

As mentioned previously, our monthly expenses will likely rise in the future based on location, given we spent the previous month in Colombia where prices are generally cheap. We are also being more diligent about spending now that we do not have incomes but generally do not consider ourselves to be big spenders, even while living in Chicago with jobs.

My goal in being transparent with our finances is that you will be encouraged that you too can travel internationally for much cheaper than you can live in your native country. I will continue to provide financial updates throughout our trip, but if you have any questions or comments please do not hesitate to contact me. Safe travels!