Life on the road can be expensive, so start thinking about your budget early. When you know how much you need to save, you’ll be less tempted to draw down your savings account balance for goal-hurting purchases.
Your budget is going to be unique to you, your tastes and preferences, and what you prefer to spend money on. We hope that using us as an example helps you think through the total amount you need to amass to start your own adventure.
Here’s how our spending broke down:
|Category||% of Total|
|Car and Insurance||19%|
|Camping and Hotels||15%|
|Food and Drinks Out||12%|
|Groceries and Supplies||12%|
|Shopping and Entertainment||2%|
In total, eleven months on the road cost us about $48,000 (I am excluding our final month in London from our totals). Through Paul’s freelance work and my pension cash-in, we brought in about $10K less than we spent — much better than we thought we’d manage.
Our average discretionary daily spend over eleven months was $76/day. We spent an additional $69/day, on fixed costs like car payments and insurance.
This total might seem surprisingly high, but consider what you currently pay for your rent or mortgage each year. In Chicago in 2006, the last year we rented, we were paying about $14,000/year in rent alone. When we bought a condo, our housing costs shot up to $35,000/year (including mortgage, assessments, real estate taxes, and homeowner’s insurance). That’s a significant chunk of change — just for a roof.
And we had to buy a car.
Transportation: Car, Insurance, and Gas
The amount that you set aside for car costs is going to vary depending on whether you already own a car and the size of your down payment. We settled on a $3,000 down payment; put down more and your monthly costs will be lower – put down less and your monthly costs will be higher. If you own a car that’s already paid off, your monthly costs will be limited to insurance, maintenance, and gas. And repairs.
This total includes oil changes and tire rotations every 5,000 miles or so. We luckily didn’t have any major issues that needed to be repaired during the trip.
To arrive at an estimate for gas costs, loosely estimate the number of miles you’ll drive, your car’s average miles per gallon, and the national average gas price.
|Miles per gallon||25|
|Gallons of gas used||1,520|
|Total cost of gas||$5,169|
|Average cost per gallon of gas||$3.40|
Lodging: Camping and Hotels
During our time on the road, we spent our overnights: 55% camping, 15% hotels, and 30% with family, friends, or house-sitting. 68% of our camping and hotel budget was spent on camping (average $23/night), 29% was spent on hotels (average $43/night), and 4% was spent on host/hostess gifts.
When we originally created our camping budget, we used a 2-year-old book, figuring the prices couldn’t have changed too much in that time. We also thought we’d find a lot of free camping. Boy, were we off. In the past few years, states like California have faced budget crises and resorted to moves like raising their camping fees to $35-$60/night to make their parks self-sustaining. State Park, State Forest, and National Forest campgrounds have also, for the most part, dramatically increased their camping fees.
Camping just isn’t a dirt-cheap way to travel anymore. To avoid making the same mistake when creating your budget, check prices online at National and State Park websites in states where you’re planning to camp. Most National and State Parks use the same reservation site, so you’ll be able to see prices for a wide range of parks in one place. Don’t worry about making reservations, though – parks typically hold aside a few spots for walk-ins, and most parks aren’t often filled to capacity, except during busy weekends and holidays. The reservation fee ($5-$10) is too outrageous to make this site something you’ll want to use on a regular basis.
In addition to websites, there are a few helpful books that you can use to create your camping budget and to discover areas where you’ll be more likely to find free or cheap camping. Most books are aimed at RVers (notably, the Woodall’s guides), but if you don’t have an RV, you’re probably not going to want to stay in RV parks. A good resource for finding free and cheap campsites is Don Wright’s Guide to Free Campgrounds. We had some issues with the accuracy of this book, but it seems to be the best guide for finding inexpensive, non-RV park sites (we’ve got more tips for finding good camping in another post).
Also include a budget for host/hostess gifts. We’d bring a bottle of wine, a six-pack of beer, chocolates, or other local treats for our hosts. We’d also often buy dinner, drinks, or groceries while staying with friends and family, but those costs are included in the food and drinks category.
Food and Drinks
We spent most of our entertainment budget eating and drinking at restaurants rather than shopping, going to museums, or going on tours or to shows or movies. We did continue to make a conscious effort to spend less on food and drinks with the money-saving tips we used to originally save for the trip: eating out for lunch instead of dinner, sharing entrees, ordering only appetizers, taking advantage of happy hours and specials, etc.
To determine your budget for food and drinks, look at what you spend on food now and use that as a guideline (using a program like Mint). It likely won’t be too different on the road.
We purchased a high-deductible health savings account (HSA) plan plus dental from United Healthcare. With our HSA plan, we were 100% covered after we spent $5,000 in a year. Until then, we paid out-of-pocket for all health costs. Technically, we could have put money into an HSA account pre-tax, but we didn’t have any eligible income. Paul still had a few hundred dollars left in an HSA checking account that he had set up a few jobs ago which helped reduce our out-of-pocket spending. An HSA plan might not seem like a great deal, but it’s a good cover in case something catastrophic were to happen.
Make sure that the plan you choose will cover the area(s) you’re likely to settle in once your trip is over. We learned the hard way that all plans don’t work in all states when we moved to New York and our quarterly premium increased to $4,300! We’re still shopping for a new plan.
Moving and Storage
We didn’t have a couch, bed, or much other furniture, but we still needed to rent an 8′x8′x8′ storage unit in Chicago for about $90 a month. Look for storage providers that don’t charge extra fees: administration fees, setup or clean out fees, and termination fees. Avoid fees whenever possible.
Make sure you read the storage contract’s fine print. Some storage companies require you to purchase insurance, which will add to the monthly rental cost. If you want insurance and the premium is less than what you could find with an outside company, then this might be a good thing. Just make sure you’re not overpaying.
Storage companies that offer online payments or auto-payments are the easiest to use. Some companies have a provision that allows them to auction your goods after a surprisingly short period of time of non-payment. You don’t want to worry about your check getting lost in the mail and your stuff being auctioned off on TV, a la Storage Wars!
Also, set aside a dedicated amount for getting settled when (and if) your trip ends. At a minimum, set aside enough to rent a moving truck and put down a security deposit plus first and last months’ rent on an apartment. Try not to cut it this close.
Student Loans (or other fixed costs)
Chances are you’re going to have some sort of ongoing loan payment that you can’t get out of. Don’t forget to include that payment in your budget. I still have a student loan hanging around. The balance isn’t too high, and at 2.25% interest, we’d rather have emergency cash than no debt.
Paul was able to work from the road, so we occasionally had extra business-related costs in addition to our regular website hosting fees.
Our cell phone spend was about $100/month. If you’re in an existing contract, it’s easy to estimate what your ongoing costs will be. If you’re at the end of a contract, there are ways you can reduce your cell phone costs (caution, the linked post involves copious use of the F-word in a satirical manner).
Shopping and Entertainment
We spent very little shopping for things that weren’t necessities. We avoided expensive museum admissions, tour fees, and concert and movie tickets. A large part went towards the purchase of books and magazines.
Finally, be sure you budget for unexpected costs. Our miscellaneous category included wedding gifts and hotels for the few weddings we were able to attend along the way, a new laptop after mine crashed, income tax payments (ouch!), Thanksgiving and Christmas travel, and Christmas gifts.
Include money in your budget for unexpected costs like car repairs, health emergencies, and any other potential contingency too.
Your total budget should consist of an estimate of your yearly spend, a reserve for emergencies, and a reserve for the end of the trip. Our actual figures:
|Total Regular Spend||$43,000|
|NY Move Costs||$3,700|
We also saved enough to cover living expenses for six months after the end of the trip, in case we weren’t able to find work right away. The size of your buffer will depend on how quickly you think you’ll be able to find work, whether you’ll work during the trip, and your personal comfort zone.