Saving money sucks. But there is a way to sock away some cash without selling your kidneys. Before you have a therapy inducing flash back of your parents trying to instill archaic financial management into you at age 12 (ok, maybe that was just my family) stop for a moment and figure out what you are saving for. Saving for savings sake doesn’t work.
Make it good. Really good. Half-ass goals result in half-ass saving. Write it down. Dates, times, countries, museums, mountains, people. Whatever is important to you. I made a goal a little over a year ago. I’m leaving Seattle and drive with my husband and my brother to Tierra del Fuego. It’s going to take no less than a year, and involves going to Antarctica. I am leaving 9 months and 14 days from this moment.
Somethings are easy to budget. For example, a brand new 2010 BMW M5 costs exactly $85,700. Driving to Tierra del Fuego, not so easy to budget. We’ve written quite a few articles on how to make a budget. Yes, it will involve math and possibly a spreadsheet. Start one. Get a good idea what it’s going to cost, then add at least 10%. Great, now you have a number. My number is $25,000 per person. Ouch.
The first time I had to save for traveling I was 22. September 11th just happened and plane ticket prices went through the roof. I realized it was going to cost $1,500 to spend 3-weeks overseas. I was broke, unemployed and had six months before my college loans kicked in. I thought it was impossible.
It’s not impossible. But don’t go trying to sort out the details until you’ve had a chance to get over sticker shock. Cocktails help with that.
This is easy. Take the number of months until you want to leave and divide by how much money you need. Voila.
What do you have to do to get extra cash in the bank every month? Every stinking month? You can’t miss one. You can’t just decide to buy a new iPod instead. The key is to make this not negotiable. Pay it FIRST, not last. Cut everything else.
Make a list of your priorities. I have a set of crucial bills: rent, utilities, internet, and $300 for food. When I get a paycheck every month, those come out first. Then comes the travel money. Everything else comes last, if there is any money left over. EVERYTHING ELSE. Cable TV, cell phone plans, clothes, booze, porno, friends, gas, pets, Christmas presents, lunch, Netflix, laundry, eating out, car payments, electronics, movies. It all has to come last. (yes, even porno).
Reality sucks sometimes. Those crucial bills plus your travel savings usually adds up to more than your monthly income. Take a deep breath, go back to step 2. Something has to give. There’s generally four solutions: 1. Figure out how to live cheaper. 2. Figure out how to travel cheaper. 3. Earn more money 4. Move you trip start date back. I recommend you attempt all of these in order. Don’t go moving your start date back, if you haven’t asked for a raise.
All banks aren’t created equal. It doesn’t take much research to find one with a good interest rate and low fees. Bankrate.com is a great resource to determine where interest rates are the highest.
I have a regular brick and mortar checking account with a local bank down the street, but I keep all my savings at ING Direct. The best part about an online savings account– it takes two days to get any money out of it. If I need to get into my savings for any reason, I have to wait two days. You would be surprised how many situations resolve themselves in two days. (Second best thing about ING, no fees.)
Once you have a plan, a list of priorities, and a savings account, you can put your money in the bank every month and try to forget about it. I’ve never been able to do that. As you research your destination, plans will change. Some months you’ll be able to save more. Some months you’ll save less (these months suck). Don’t let change destroy your plans. Be prepared to adapt.
It sounds silly and obvious, but with a pile of cash in the bank, sometimes you lose sight of that goal. Don’t forget what you were saving for. Even though you spent months, or even years saving, realize you do have to get up and go.