I strongly believe that everyone should get a chance to travel, but unfortunately it is not an option for everyone. I also think everyone should also strive to financial independence and stability and that travel should not negatively affect your financial journey in the long run. Travel should not cost an arm and a leg, but it does cost money no matter how much I want it to be free. Finances are most people biggest obstacle when it come to travel, particularly long term travel. I have been working in the financial industry for 3 years, love personal finance and love long term travel. I have collected some of the best long term travel financial tips in order to make it more achievable.

1. Consciously Create a Realistic Plan, Goal and Budget

So many people will tell you that in order to save for long term travel you have to get a second job, stop drinking, don’t get coffee, cut the gym, stop going out and never have fun ever. There is one major thing wrong with this advice – it is nor realistic. Personal finance is personal! Just because one blogger cut out coffee for 6 month and then went traveling for year does not mean that you have to.

Travel is important and should be something you save up for, but there are and should be other aspects of your life that make you happy. Denying yourself of these means that you’ll likely get depressed, burned out and possible end up resenting having to save up for travel. Travel (in my opinion) is one of the best things you can spend your money on that will bring you happiness. However it is not a magic bullet to a happy, healthy and fulfilled life.

Now do not take this as me advising you that you shouldn’t save for travel. You should, but you need to create your own plan, goal and budget taking in to account your personal situation and what makes you happy. Pick what is important to you, keep that in your life and cut out the stuff that is not. This is why I kind of resent articles that say ‘cut out these 10 things and you can travel for a year’. The things that you cut out should be a personal decision.

When I was saving for my first long term backpacking trip I took a second job, limited my drinking, but still kept my gym membership and regularly went out for coffee. Maybe that meant that I had 1 less month of travel money, but it also meant that the year saving up for it that was still a lot of fun.

2. Separate Your Bank Accounts

Ok ok so I know I just finished a big rant on how personal finance is personal, but there is one thing that I think everyone should do to their finances when preparing for a long trip. Separate and set clear intentions for your bank accounts. This applies to when you are saving for travel, when you are traveling and when planning your return. There are many different ways that you can separate your financial goals. In my opinion it doesn’t really matter how you do it, it just matters that you do it.

While you are saving for travel it helps to have a place to put all of your money separate from your spending money. This way you know for sure you are not going to spend it. It makes budgeting easier, but is also better for your emotional health as it helps see obvious progress to your goals. While you are traveling having a separate emergency fund is essential. Don’t touch it! It would suck to have to return early because you went into credit card debt and ruined your credit score. The separate bank account means that you are way less likely to touch the money you set aside for emergencies.

Travel is likely not your only goal in life and most likely your other goals also cost money. At the very least everyone has the goal of retirement. Just because you are saving for travel does not mean that the rest of your life just stops. Create a separate bank account for none travel related goals, even if there is only $100 in it. Having at least the intention of saving for other goals means that you are more prepared for when you return and encourages other goals in your life other then travel.

3. Have a Plan for Your Travel Spending

Call it a plan, call it a budget, call it whatever you like. If you’re anything like me the discipline that you built while saving for travel will evaporate the second you’re on a beach in Thailand and someone is offering you another bucket. And to a degree it a good thing to relax your spending. Take that bucket. Just make sure it doesn’t turn into 100 and end up forcing you to come home early (ok that might be a bit of an exaggeration, but you get my point).

For some people having a strict travel budget works and to be honest I am in awe of those people. I do not have that level of self control, but there are other ways to create a financial plan. For example I created GICs (Guaranteed Investment Certificate) that deposited $1000 in my bank account at the start of every month. Kind of like an artificial pay check. That way I knew that even if I went a bit over board one month, I still had money the next month.

This didn’t work perfectly. There were months where it would get to the end and I would have absolutely no money left. I think if I didn’t have this system I would have spent all my money a lot faster and possibly had to come home early. I have also heard of people doing a similar thing where they keep their money in a friend’s or family member’s account and have them send money every month. Just make sure you trust that friend!

4. Create a Back Up Plan

What will you do if shit hits the fan, you have a crazy medical expense or need to purchase a last minute flight. Having an emergency fund is the first step, but I think you should also have a back up itinerary. What happens if you run out of money? Will you fly home, get a working visa, cut out expensive country or work online? For example my back up plan was to work at hostels designing websites for free accommodation. I didn’t end up having to do this (good thing cause my laptop crapped out), but I would have been happy to. Having a back up plan that you can get excited about means that even if things don’t go according to plan you will still have a great trip and not mourn what you are missing out on.

5. Travel Slow & Cheap

I won’t go into this one too much because I think its both obvious and overstated. Traveling slower means traveling cheaper and cheaper means longer. I do think it is important to mention because lots of long term travelers wis around the world, get tired, burnout and run out of cash. Traveling slower prevents a lot of that even if it is just a break between periods of faster travel. Look into options like the Camino or Workaways which are a great experience, but cost very little.

6. Create a Source of Income

Creating a source of income that you can do from the road is not for everyone. I didn’t have one on my last long term trip. However I do think it is an important option to consider and something that I am trying to do to prepare for my next trip. There are two types of incomes – passive and active.

Passive Income

A lot of people think that passive income means that you don’t do any work and you get paid. It actually means is the the income you receive is not directly associated with the time you put in. This could go both ways. You could spend days making a product to only to sell 1 or you spend an hour making a product and sell hundreds. The reality is normally somewhere in the middle.

The ability to do the work upfront means that while you are traveling you really only have to maintain it. For example my favourite passive stream of income is my Etsy shop where I sell digital products. Although it took a long time to set up it now brings in about $500 a month without me having to do much work. Although that is far from a full time income that money will provide a nice little buffer on my next long term travel trip.

Active Income

Passive income tends to get all the hype when people talk about setting up a traveling income stream and for good reason. However I think there is also a place for active income. Especially one that can be ramped up and down. An active income stream is one where you trade your time for money. For example a traditional 9-5. There are a lot of active income streams that can be taken on the road. You shouldn’t overlook an active income stream because it usually provides more control than a passive income stream.

For example let’s say there was a $600 boat trip that you wanted to take, but it was out of your budget. Theoretically you might be able to cover $500 with a passive income stream, but would have no way of getting that extra $100. You could launch a bunch of new products, but that would almost certainly not create $100 in time. So you’d have to pass on this theoretical really awesome boat trip because of $100. With an active income stream you could work a few extra hours and be able to go on that trip.

I don’t currently have any active income streams that I could take traveling. But things like graphic designer or teaching English on a website like Qkids would do the job. Keep in mind that depending on what you do there is work involved to set up an active stream of income. I.e. getting your name out as a graphic designer or applying to a remote job.

Conclusion

Finance is often a dirty subject and people don’t want to talk about it. However it is an important part of the travel industry and essential that people talk about it. Financial literacy and education should be available to all and hopefully an increase will mean that more people can travel. I hope these long term travel financial tips will help you integrate travel into your financial plans while still keeping you financially healthy!

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