Quick note from Michelle: Today, I have a great post from Brendan. Brendan is a former Chartered Accountant from Auckland, New Zealand but now is a full-time traveler (since 2011!). I absolutely love full-time traveling and I really enjoyed reading this. Here's how he saved $45,000 in three years to create a life of travel. Below is Brendan's post:
Whenever I meet people out on the road, we tend to ask the same questions.
“Where are you from?”
“How long are you staying?”
“Where are you going next?”
And then somewhere in the mix, the question I dread eventually comes out.
“How long have you been travelling?”
Most people expect to hear something like three or four weeks, maybe a couple of months, so naturally I cringe a little when I tell them the real answer.
Of course, this leads to all sorts of questions like; How do I do it? What do I do for money? Do I suffer from permanent jet lag? What's Colombia like? Are park benches in Sweden really made by IKEA? Until we finally get all the way back to the beginning. That's actually what I'm here to talk to you about today.
My journey started not too different from most long term travellers. When I was 21, I graduated from university and landed a decent job with a decent paycheck in a decent firm. I was an accountant, following in my mother's footsteps. Yet from my earliest days in that office, I just knew something wasn't right. I didn't belong here. I had bigger dreams than this. I wanted to see the world.
Berlin Wall, Germany.
I was signed to a three year contract with my job, so I made it my mission to save aggressively for the entirety of those years. I didn't know it at the time, but I was building up the travel fund that would end up taking me around the world twice and then some. I never expected the journey would turn out quite like it has, but what I did know was: I wasn't going to be an accountant forever, and if I was going to be spending the best years of my twenties in this cubicle, I sure as heck was going to have something to show for it.
Three years later I had managed to save over $45,000 to my travel fund. I handed in my resignation, right on cue, and set off on the journey around the world that still hasn't ended.
While I'd love to tell you about those adventures, what I really want to talk about today are the non-adventures that preceded them, because without those three years of a stable paycheck, I'm certain none of this journey would have been possible. When it comes to travel, it's rarely the tips like finding cheap flights or cheap hostels that people struggle with. It's the preparation, the years of arduously stuffing away paychecks, the challenge of staying dedicated long enough to make the journey happen.
Saving $45,000 isn't easy (at least for most of us). It takes a lot of staying power and commitment, but most importantly it requires a mental shift in the way you spend your money. During those years I learned that it wasn't just good savings tips and a piggy bank that was needed, but a shift to a savings-oriented lifestyle that prioritized saving over most other aspects of your life.
Today I want to talk to you about this lifestyle change, the key actions I took to achieve this, and some helpful tips you can take away and apply to your own life.
I lived at home with my parents and family
This was a conscious decision. I had many discussions with my then-girlfriend if we should move out together, and even buy a property, and we considered it seriously many times.
In the end I decided against it, the sole reason being it just didn't make financial sense. Admittedly I was lucky to have the option to stay with my family, but interestingly almost all of my colleagues had that same choice and decided against it, mostly as a lifestyle choice. I was in my early twenties at the time, and rents were around $150 per week. While it would have been a lot of fun to get an apartment and live the young professional lifestyle, I just felt the extra saving was just too much to give up.
Saving over three years: $23,400 (at $150 per week).
Related article: 30+ Ways To Save Money Each Month
I only spent $7 a month on my phone bill
This was back in 2010/2011, when the smartphone craze was booming (I believe it was the iPhone 4 making everyone go gaga back then). Many of my friends and colleagues jumped on the craze, but I just continued using the same phone I'd had since high school. Because my phone had no internet on it, I only paid around $5-$7 per month, whereas a smartphone plan would've cost closer to $25 per month (not including the cost of the phone!)
Saving over three years: $648 (at $18 per month).
I brought lunch from home each day
In my first year of work I actually spent a lot on lunches each day. Settling into the nine to five life wasn't the easiest and a nice lunch in the middle of the day was always something to look forward to. It wasn't uncommon for me to spend $15-$20 on lunch at one of the cafes or sushi bars by the office.
Halfway through my first year I started noticing these amounts adding up on my bank statement and decided to get it under control. I started bringing lunch from home every day – either leftovers, tuna and rice, some fruit – just very easy things that didn't cost a lot. On average lunch started costing closer to $3 or $4, rather than $15 or $20.
Saving over three years: Around $5,000.
I spent almost nothing on clothes
We had a strict dress code at work (suit, shirt, tie, shined shoes), but I made sure to not let this become expensive. For most of my “career”, I only owned one suit and one pair of shoes, which I wore every day. No other pieces I had were expensive either, I just had a handful of $20 shirts and $10 ties I'd bought overseas, and a very cheap leather belt.
This was quite a contrast to many of my colleagues, who would come in every few months with new shirts and shoes. Some of my colleagues would wear a different suit every day of the week. I was quite surprised at the amount people spent to keep up appearances at work, but over time I noticed it was quite a common thing – people just liked to buy clothes.
Since I was at work all the time anyway, I hardly spent any money on outside-of-work clothes either.
Saving over three years: At a guess, $2,000 – $3,000?
I didn't have a gym membership
Gym memberships felt expensive. I did play various sports with friends, but was never in a position where I was having money regularly debited from my bank account for a gym or fitness class. At the time, it was around $50 a month to join my local gym. With a bit of discipline and some creativity, it was more than possible to stay in shape at home, and that saved me a lot in both petrol and gym clothes too.
Saving over three years: $1,800 (at $50 per month).
I quit drinking
Drinking culture was rather heavy in my office, and Friday night was always the night where the crew would head out after work. Usually it would involve a few bites at a restaurant and then bar hopping until the early morning. On nights like these I would easily spend $100 on food and drink, and usually a lot more.
It wasn't only Fridays, but all events, parties, weddings and so on where I challenged myself to stay off the drink; as we know, “just one” always ends up being more than just one! There was one stretch of about eight months where I didn't have a single drop of alcohol, and although that was difficult it was worth it in every way. Drinking tends to exacerbate your spending in a lot of ways (food, taxis, cover charges, snacks, gas), so this lifestyle change was a big money saver, and also had a lot of benefits beyond the financial too.
Savings over three years: Easily over $10,000
I'm not really a coffee drinker anyway, but I also made a conscious decision not to start this habit. Many people had told me their coffee addiction began after entering the nine to five life, so I was always mindful to never start. I'm not sure how much that would have saved me as coffee was all free at work, but I know it would have affected my spending in some way.
Saving over three years: Maybe $1,000?
I had a small side business
I had a very small eBay style business that I would run in my free time, which just involved flipping a few goods now and then, selling old things, and sometimes I would buy a few wholesale things and sell them. It never made much money, maybe $50-$100 per month, but it was something that kept me busy in my free time and also brought a little extra money in too. If anything, it stopped me from going out to spend!
Extra income over three years: Around $1,500
Learn more at Make Money While Traveling – Yes, It’s Possible!
I paid for everything with plastic so I could see where my money went
One thing that was helpful was I paid for absolutely everything with plastic. That way, I had a record of everything I had bought that month.
At the end of each month I would look through my bank statement and see where my money had gone. Quite often the biggest/most frequent outgoings were from nights out on the weekend (which is why I stopped drinking) and expensive lunches (which is why I started taking lunch from home).
Understanding both how money comes in and goes out of your bank account is crucial to keeping on top of your finances, and exercises like this, whether you do it with your bank statement or with a notebook or even with an app like Mint, is something everyone should aim to do regularly. You'll be surprised how often you spend money without thinking about it!
I had a goal
I had always known I wouldn't have my regular paycheck forever. I had a three year contract and knew I wouldn't be staying much beyond that. It wasn't my dream job and it wasn't something I wanted to make a long career out of.
Because I knew my paychecks were limited, I was doubly motivated to save while I could. At the time I didn't know that money would be used specifically for travel, but I did know I was saving for something and I didn't have forever to do it.
I didn't have a specific goal of how much I wanted to save, rather, I had a specific limit of how much I could spend each month. The idea that I only had limited paychecks to save as much as possible was secondary motivation for me. I think having a goal, whether it's a time period or a dollar amount (or both) is very powerful, especially if you're not a naturally frugal person, and I think this had a big impact on the amount I was able to save during those years.
I sent my money offline and invested
In our world of one click purchases and credit card taps, it's easy to buy things on instinct. However, if you push the temptation to spend just one inch further away, it's often enough to make you think twice.
One little trick I did was move all my money into either investments or offline bank accounts – I only had $50 or $100 in my checking account at any one time. If I ever wanted to buy something, I needed to find a computer and move some money across before I could do it. This intermediate step between purchases was very effective at stopping me from buying unnecessary luxuries.
It also meant that my savings were in stocks or fixed interest earning deposits most of the time, which further added to my savings balance.
I educated myself
This was perhaps the most important thing I did during those years.
Financial literacy is important for anybody wanting to take control of their money. Working as an accountant, I was given a front-row seat to the financial turmoil people managed to get themselves in. One particular client I'll never forget was earning over a million dollars per year and couldn't pay his tax bill (nor his accounting bill, to my boss's endless frustration). When I looked through his bank statements, it was obvious why he was in this situation. He had multiple houses and cars, was swimming in debt, and bought silly things.
I spent a lot of time reading different financial blogs, learning about the stock market and how it worked, learning how to invest smartly, talking to the guys who worked in wealth management and corporate finance at my office and asking them questions, I learned about the difference between good and bad debt, read the financial news each morning, understood how interest rates were and how they affected my money and savings. You might think that accountants know all this stuff already, but the dismal attitude towards money of many of my colleagues would tell you otherwise. Many of them saved nothing and spent their entire paychecks.
Improving your financial education is not a difficult thing to do. Ask good questions, read the news, read good personal finance blogs (like Making Sense Of Cents!), read books, and apply it to your own finances. It's important, and it works.
What happened next?
In early 2011, I finally handed in my resignation and started this journey around the world. Today I am a full time nomad, bouncing through various of my favourite cities around the world, working as both a blogger and freelance writer. These past years have been life-changing, but I always tell people it was those steps at the beginning that made it all possible – taking control of my money, educating myself, making the most of my regular paycheck when I had it, and staying disciplined with my saving.
For those of you who are saving towards your own long-term travel (or any other goal), here are four final tips to take away with you:
Every bit counts
I've relayed this story to countless people over the years, and many of them can never quite get it.
So you…didn't buy an iPhone and…now you can travel the world full time? That just doesn't make sense!
But it does. Because every bit that you save counts. Saving $1,000 is just saving one dollar a thousand times. It adds up. Don't buy a coffee today. $3. Don't buy the bottle of wine. $8. Over a few years of saving this not only adds up, but compounds. Spending leads to more spending, and saving leads to more saving. If you can utilize this positive feedback loop, you will improve your relationship with your money and saving will become a habit that you are proud of, rather than a battle you seem to be fighting every day.
It helps to celebrate. When you set your savings goals, set your savings rewards as well. Saving is challenging and having something to look forward to is a powerful tool for keeping you on track. When your savings reach $1,000, reward yourself with a nice lunch. When you reach $5,000, take a little weekend trip.
This approach is great because not only does it motivate you, it both permits and controls your discretionary spending too. If there's a pair of shoes that you love, you don't have to tell yourself that you can't have it. Simply write it down on your rewards list and tell yourself that you can have it, you just need to reach the next rung on your savings goals first. This is something I use in many areas of my life – dieting, fitness, saving, blogging, and it works (just write 1,000 more words and you can watch that Game Of Thrones episode!)
Don't beat yourself up
We all slip. It happened to me all the time. After a rough week I'd come home with a new video game, or I'd stash my lunch in the fridge and go out for pizza with the guys on Friday. We are all human and it happens to all of us (except for Robocop, he saves everything). Don't use this as an opportunity to beat yourself up – use it as an opportunity to learn about yourself and your relationship with money. Do you tend to splurge when you're stressed? Don't focus on the money, focus on the stress. Do you blow cash on big lunches when you're hungry or tired? Work on the hunger or tiredness. Money can teach us a lot about ourselves!
Don't worry about mine or anyone else's results, and be proud of what you save
Forget about me, or anyone else. You may be sitting there thinking how impossible it would be to save as much as I did because you have kids, or you don't earn as much, or you have a mortgage, or any other reason you might have. The truth is, any amount of money you manage to save is an achievement. Set your own goals, stay committed, and be proud of what you save. We're all on our own journey.
Good luck, and safe travels!
Brendan is a former Chartered Accountant from Auckland, New Zealand. He has been travelling full time since 2011, and shares stories, life lessons and travel advice on his blog, Bren On The Road.
Are you interested in traveling full-time? Why or why not?
Join the free Master Your Money course!
Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.