Taking time out to travel around different parts of the world is a great way to broaden horizons, build self-confidence and expand interests.  Unlike many travellers who take their gap year before or just after their university studies, I had spent several years in employment, before taking un-paid leave and packing my rucksack to travel around South America.

Before I started travelling, I had not thought much about budgeting for my trip.  I had a basic idea of what funds I had access to, how much I would need for the flight & other big-ticket items, and some rough calculations about my day-to-day living costs, but it wasn’t until I got a few miles under my belt that I realised how important it was to stretch every penny of my travelling budget.

Getting The Most Out Of Your Trip

Apart from vaccination injections and sitting around in airports & bus stations, gap year budgeting  sounds like one of the least exciting travelling tasks, but done properly, it really helps you to get the most out of your trip away and reduces the prospect of coming home to a mountain of debt.

How To Create A Gap Year Budget

To begin with, start making a wish-list of all places that you would like to visit during your trip and all of the ‘once-in-a-lifetime’ activities (such as a parachute jump, climbing a mountain, doing some volunteer work) that you think you will want to do whilst you are away.

Time and money restrictions will probably mean that it is not possible to do every item on your list, so the next step is to highlight the activities and places that you would be most interested in.

From here it is possible to create a travel itinerary.  Geographic constraints may mean that your itinerary is made up things that you really want (the must-haves) and things that would be interesting, but you could live without (the nice-to-haves).

Estimate The Costs

With the travel itinerary ready, the next step is to estimate the known costs.  These will tend to fit into the following categories:

• Travelling expenses (such as flight tickets, ferries, coaches, travel insurance, visas, etc)
• Preparation expenses (such as buying a rucksack, a camera and memory cards, any specialist clothing, vaccinations, etc)
• Living expenses (meals, accommodation, entertainment, etc)
• Once-in-a-lifetime activity expenses (taking part in a volunteering group, light aircraft flight over mountain ranges, rock-climbing, bungee jumping etc)

Your estimates don’t have to be an exact science, but by using the internet, travel books and advice from friends, it is possible to get a good idea of the cost of each item.  Listing the itemised cost into a spreadsheet will enable you to see the total cost of your trip.

The trickier cost to estimate is living expenses, as you cannot know for sure exactly what you will be spending every day.  But it is still possible to work out a basic daily budget for food, drink & accommodation and then multiply that by the number of days you are planning to be away for.

Remember that the cost of living will vary from country-to-country, so if you are planning to travel around different countries, you will need to think about the number of days you will spend in each country and then estimate them individually before totalling the final figure.

During my trip to South America, I ended up spending much longer than planned in Bolivia, because the cost of living was so much lower than neighbouring Chile and Argentina.

A Target To Save Towards

The total estimate gives you a target to save for and also lets you work out what you can realistically afford.  If you think the trip is going to be too expensive, then you can always remove one or two of the pricier items from your wish-list itinerary and make it more affordable.

Budgeting is also great for people who think they cannot afford to go travelling, as it helps to identify lower-cost trips to fit a tighter budget.  These will probably make the most of countries with a low cost-of-living, cheap hostels and just one or two key once-in-a-lifetime activities.

Funding A Gap Year Trip

Working out how much you will need and saving that money up before you leave is the best way to ensure you have a great time and minimise travelling debts.

School leavers and graduates should plan on taking on one or two temporary jobs for a couple of months before they leave.  Whilst working all day and night may not be fun, the more money that can be saved, the more fun the trip.

Another alternative is to look for work whilst you are away.  Many people spend a couple of months working in Australia or New Zealand to top up the cash reserves, but don’t forget to look into work permits before you go.

Further cash can be raised by selling stuff on ebay or other classified advert listings, and if you are planning on doing some volunteer work, you could do a series of sponsored activities before you leave, to help fund the required charity payment.

Try to avoid borrowing money to pay for the trip, as it is really depressing to have to come home and work to pay-off the debt.  Also most banks will refuse to lend money to people just for a holiday, so you will be reliant on credit cards with a much higher interest rate.  Instead, try to structure your trip so that it becomes more affordable and gives you more time to save.

Career Break

If you have worked for a few years and are planning a career break, then you will probably have a few more things at home to sort out, such as giving up a lease on a flat or renting out your home – not to mention resigning from your job or requesting a period of unpaid leave.

However the same budgeting and saving principles apply to career-breakers as those that apply to gap-year students.  A few months before my brother went to work abroad, he gave up the lease on his house-share and spent the rest of the time ‘couch-surfing’, literally staying with friends sleeping on their sofas.  Whilst it was a little bit inconvenient, it enabled him to save a couple of thousand pounds extra to take away with him.

If you own a home and want to rent it out whilst you are away, you will need to check with your mortgage company and it is also worth employing a local agent to find and manage the rental for you, rather than managing it from a poorly connected phoneline, thousands of miles away.

Managing Your Money While You Are Away

Arriving in a foreign destination with loads of savings, makes it very difficult not to go overboard and spend it all at the start of the trip.

This is why it is important to take a copy of your budget with you and to try and stay as closely on track as you can.

Obviously you will never remain completely on budget as circumstances may change or things turn out to be more expensive than originally expected, but by giving yourself spending limits for different stages of the trip, you will stand a much better chance of making the money last for the duration.

Keeping a notebook of everyday spend is useful and if you are worried about internet security when checking your bank account online from a hostel or internet cafe, just ask one of your parents to login for you and email your remaining spend every week or so (possibly with a long lecture about spending too much money on partying!).

If you have created your budget in a spreadsheet at home, it is possible to upload this to GoogleDocs and make updates to the budget online.

Accidents & Security

Backpackers will always be at risk from pick-pockets and general theft, both from locals and other travellers, but there are some simple tips to significantly reduce the risk.

A couple of strong padlocks are useful for keeping backpacks secure and to put onto locker doors in hostels, when storing valuables.  Try to use combination padlocks, as key padlocks are a real pain when you lose the key!

Credit cards are often a necessity when booking internal flights, hostels online or checking into certain hotels and it is worth bringing two separate credit cards with you, just in case one gets stolen or is cancelled.

I only brought one credit card on my trip and it got cancelled half-way, which was a real pain, as I could only use my debit card to get cash out of the cashpoints.  Pre-paid credit cards are the best for this purpose, because they save you from having to set up new accounts and they can be topped-up by your parents at home every now and again.

Try not keep all of your documents in one place, but spread them around your rucksack and clothes, so that the theft of a bag will not result in you being stranded with nothing.

Travellers cheques are becoming less common nowadays, but a mixture of cash, credit cards, debit cards and travellers cheques will help you to spread your eggs (security-wise) and minimise the impact of loss or theft.

Remember, hostel and internet cafe computers can easily contain viruses, so be wary about what personal data you enter into them when checking emails, Facebook or checking your bank account.

And finally, don’t forget to get some rock-solid travel insurance, which will cover you in the event  of a mountain climbing trip (or something similar) not going as well as planned.  Make sure you check the following features of the policy:

• At least two million pounds of coverage to cover medical and returning home costs
• Cover for valuables
• Cover for specific extreme activities
• Cover for the countries that you are visiting
• Personal liability coverage (covers a number of potential legal fees)
• A well-known secure underwriter (the organisation that will pay out in the event of a claim)

It is also worth checking to see what the process is for making a claim (do they have a 24hr helpline?) and whether you will be able to extend the cover if you wanted to stay away for longer.  Naturally good money savers will search around for the best deal, but be wary of sacrificing good coverage, just to save a few pennies.