Knowing how much money to save is a tricky question, especially because different countries have different exchange rates and living costs. For example, my budget month in the US cost me around the same as three action-packed months in South America.
My general equation is:
Start costs + £1000 per month
(Don’t forget – if you buy an open ticket you need to factor in the cost of a return ticket home!)
Calculate your start costs
I’ve included my start costs for reference.
- Travel insurance – £300. I went with World First and insured myself for 10 months.
- Immunisations – £100. As I’m from the UK some of my immunisations came free with the NHS.
- Flights – £1073. (London to Rio, Lima to NYC, NYC to San Francisco, LA to Fiji, Fiji to New Zealand.) I purchased my flights through STA.
- Return flight home (approx) – £800. I keep this stowed safely away in a savings account.
- Multiflex pass – £100. If you have as many flights as I did, it’s probably worth purchasing a pass which allows you to change your flights free of charge.
- Tours (if applicable) – £2559. I recommend that you book tours at your destination unless it’s something like the Inca Trail in Peru that needs to be booked well in advance. Please do not take my figure as a good example!
- Travel gear – £150. Backpack, day bag, head torch, insect repellent, etc. I have already posted a full list of what I took to South America
(My total start costs: £5082)
Why £1000 (or $1600 USD) per month?
As I was on a long-term Round The World Trip (RTWT) visiting different countries with different living costs and exchange rates, my spending was going to vary hugely. Working out costs per day and a specific budget for each destination was a nightmare because I honestly didn’t know how long I would be in each country. Every blog I read gave different advice, and often the advice was specific to a particular region or country.
I just wanted to know roughly how much money I needed overall and a loose rule of thumb to follow for when I was on the road.
This magic figure ended up being £1000/month or $1600 (USD). It covered my food, accommodation and activities.
How does it work?
£1000 is a good round figure on a RTWT because it will be more than enough for the cheap locations like Thailand, thus leaving you with what I like to call “excess” money which you can then use in the more expensive countries.
For example, I started in South America where £1000 went a long way. Because I spent less that £1000/month, I actually had a large sum of “excess” money left over. This meant that if I needed to go outside my budget in the US I could just say, “I can take it out of my left-over money from Peru.” It’s like when you find £20 in your old coat pocket – it doesn’t really count.
Trying to stick to the £1000 mark when you’re in expensive countries also means that you are much more careful with your money.
When will £1000 per month not be enough?
My rule works because it suits my travel style and my attitude towards money. I never want to be broke and I am very cautious with my money.
You may struggle with this budget if:
- You are travelling only through expensive destinations and you want to participate in more costly adventures. Even if the exchange rate is in your favour, £1000 probably won’t go far in terms of living costs and activities in countries like New Zealand and the US. The average dorm room in New Zealand is between $20NZ and $30NZ a night (£10 – £15), and the price of activities such as kayaking are more than double what they’d be in somewhere like Indonesia.
- You like partying. Alcohol is where a lot of backpackers’ money gets sucked away.
- You plan on taking tours and travelling more comfortably in the expensive places. I had to live pretty cheaply in New Zealand to stay within budget.
Can I do it for less than £1000 per month?
Yes! If you’re backpacking through places like Indonesia you could probably half it and do it for £500 a month.
Equally, if you are prepared to stay in cheaper hostels and seek out more off-the-grid and free activities then you can absolutely travel for less. Two months backpacking around New Zealand cost me around £1200 because I hitchhiked and Couchsurfed.
Please don’t hesitate to contact me if you have any questions!
Got a suggestion for another First Time Backpacker topic?
This article is part of my First Time Backpacker series. This series is designed to give first time backpackers honest advice on those all-important topics such what to pack and how to prepare. I was bursting with anxious questions before I left on my first travelling adventure and it took me hours of scouring the internet to find answers. I want to simplify this process and give you the answers that you need all in one place!