The Easy Guide to a Traveler’s Money Management (Conclusion): 3 Simple Money Exercises to Clarify Your Travel Goals


Throughout May, Nathalie dives into money management for travelers in five parts. Which credit card is best? Can a regular ol’ traveler invest her money? Is it possible to earn and adventure at the same time? Nathalie has your most burning questions covered, so you can put those money worries aside and prioritize what truly makes you happy: travel.

My series on travelers’ money management has, so far, not included any hard numbers. I have always believed that the most important aspect of personal finance is not the numbers, but the mentality, the prioritization, and understanding who we are and what we want out of our money. Only after can we start in on the spreadsheets.

Now that we’ve gotten this far…bring on the spreadsheets! Once you’ve recognized what your financial priorities are, what you want your money to do for you today and in the future, now is the time to figure out what your exact financial picture looks like and how you can change that picture to get what and where you want.

Fast thought: These exercises may bring about numbers that you didn’t want to see and make you realize things that you didn’t want to think about. If these exercises annoy you, that’s honestly good! The point is to start a discussion, be it with yourself, your partner, your dog, or your favourite houseplant. Starting the discussion by just thinking, “What can I do better?” is the point.

Exercise #1: Calculating your net worth

In principle, your net worth is a simple calculation: your assets minus your debts. Your net worth gives you the starting point from which you can evolve. It shows where you are today.

What do you owe?

To figure out your debts, grab all of your documents from every debtor you owe. These could be:

  • Student loans
  • Mortgage
  • Line(s) of credit
  • Car loan
  • Credit cards with balances

Then add up the numbers.

What do you have?

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Image by Pixabay user martaposemuckel.

Your assets can get a little fuzzier, but you should still start by grabbing all of your financial documents again.

Assets include:

  • Bank accounts — checking, savings, money markets, etc.
  • The value of retirement accounts
  • The value of investment accounts
  • Your house — Add the current market value of your house, which is how much you could get for it if you sold it tomorrow, not how much you hope for.
  • Your car — Its value is not how much you paid for it and not how much you owe on it, but how much it would be worth if you sold it tomorrow. Yes, this value is probably way less than what you paid for it.
  • Any other assets with significant monetary value that could be sold for cash — gold coins, a classic Monet, etc.

Done? Now subtract your debts from your assets.

Is the number negative?

That’s unfortunate, but quite common. And you’ve done the first thing needed to improve the situation: simply recognizing that it exists and realizing that you might want to do something about it.

Is the number positive?

Awesome! You’re going in the right direction for a lifetime of freedom and travel.

Exercise #2: Calculating your current cost of living and cash flow

This exercise involves figuring out your exact income and subtracting all of your expenses. Remember that personal “budget” involving your financial priorities? This is where you fit all your expenses into those categories. If you have expenses that don’t fall into any of those categories, or the balance is skewed horribly towards one less-important category, you know where to cut your expenses to put more into the important categories, like travel savings!

What expenses do you have little control over?

To start, figure out your non-variable living expenses (ones you have little control over). These would include:

  • Rent/mortgage
  • Utilities
  • Insurance
  • Etc.

Note that I said that you have “little control” over these things, not “no control.” While these don’t tend to vary much from month to month, you can technically choose to move or negotiate the price of your insurance or other.

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Image by Flickr user Moyan Brenn.

What expenses are under your control?

Next, figure out your variable living expenses (the ones that are necessary but that you have more control over):

  • Transportation
  • Groceries
  • Cell phone
  • Etc.

What else do you spend money on?

Lastly, figure out everywhere else that your money goes each month. It’s a little controversial to do so, but I like to put any and all non-mortgage debts here in the “everything else” category because I recommend you don’t travel on debt anyway, so it should be the first thing to disappear when planning a lifetime of travel.

“Everything else” includes your debt repayments, your entertainment, clothes, and that cash that seems to disappear each month.

This cash flow calculation — your total income minus your total expenses — should be a positive number. A negative number indicates that you are falling more and more into debt with every passing month. In that case, drastic changes need to be made before your life of travel can become your financial priority.

Exercise #3: Figuring out how much you need to live the life YOU want with the amount of travel you’re looking for

This number is incredibly variable and depends on the person you are. Whatever you land on, this is another moment when you should be honest about your habits and your wishes.

Here are a few things you could consider:

  • Do you like to slow travel over long periods of time?
  • Do you prefer shorter, luxurious stints abroad?
  • Are you hoping to travel for years at a time (and thus get rid of most of your at-home fixed expenses while doing so)?
  • Do you want to keep your current standard of living and simply explore more exotic places during your vacation time?

There is no right answer; all options sound glorious! Whatever you decide, make a list of what you want, and tack on an estimated price for each piece of the puzzle (cost of rent where you want to live abroad, cost of flights, average cost of living in X country, etc.). With these estimated prices, you can begin to determine how much money you need per year to live the exact lifestyle you want in your future.

What’s the point?

The point of these exercises is to get you thinking about what you need to do financially to reach your travel goals on a long-term basis. Planning a single, two-week vacation doesn’t require much foresight other than saving the few hundred or thousand dollars required for it. A lifetime of perpetual travel requires you to think a little bit more broadly about your financials to ensure that you can journey in peace without running the risk of indebting your future-self for today’s travels.

Why do we want this anyway?

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Freedom to me means being able to see those I love whenever I want, even though they’re far away. Image by Nathalie Couet.

When someone asks me why I travel, I don’t have an answer. Sometimes I want to answer similarly to how Edmund Hillary answered the question of why he climbed Mount Everest:

Nobody climbs mountains for scientific reasons. Science is used to raise money for the expeditions, but you really climb for the hell of it.

We climb, explore, travel…for the hell of it.

Sure, there are scientifically proven benefits to traveling, from reducing your risk of dementia and Alzheimer’s to improving your overall cardiac health. Oh, and it’s also scientifically proven to increase your happiness throughout your entire life. But in all honesty, I strongly believe that those of us who are addicted to traveling are this way beyond any rational thought. Human curiosity, I suppose.

How do we get there?

How do we get to the point of not sitting behind a desk, working for “the man,” yearning for our few weeks of vacation, and always feeling like it’s not enough? The secret is prioritization and preparation. At each step in our lives, we have to prioritize what we want today, as well as prepare for what we want in our future.

In your twenties you might think it’s the time to party, spend every penny you have, or whatever society told you that you should be doing at this age. In your twenties you most likely have the advantage of having very few financial and emotional responsibilities. Use this freedom wisely. Your young adult years are a time to figure out how you want to live the rest of your life, and if you’re anything like me, it probably includes travel, but it doesn’t include debt.

Your first order of business is to get rid of any lingering debt you may have. Then invest, invest, invest; prepare for that future of travel. Take the time to travel now, of course, but do so wisely, with money you’ve put aside. Getting into debt today for travel is shortsighted and something you will regret when you wake up later and aren’t able to do what makes you happy anymore.

As you age out of your twenties and into full-blown adulthood, every subsequent year is likely to include more financial and emotional responsibilities: You might have a house, a partner, perhaps even a family. Don’t for one second think that this means travel experiences have to become fewer and farther between. If you set up the beginning of your adulthood properly, you should have an increasing salary most years, with less and less debt and more and more investments to help you travel.

Or perhaps you’ve managed to set up a life in which you travel while working. Either way, if you ever give in to the seemingly inevitable lifestyle inflation, be sure to do so in line with your priorities — bigger house and newer car, or more travel? More salary should enhance your life, not make you tied to more *stuff*. Never lose sight of your ultimate travel goals.

You live in a consumer society, but you don’t have to give in to it.

If you value experiences over things, hold on to that value, no matter what. Charles Kingsley once said,

We act as though comfort and luxury were the chief requirement of life, when all that we need to make us really happy is something to be enthusiastic about.

I couldn’t agree more. We’ve gotten so accustomed to luxury that we don’t even realize that what we live in IS luxury. We think things like cars, cell phones, and cable packages are fixed necessities. They aren’t. These are luxuries. It’s okay to want them in our lives, but it’s not okay to let their acquisition come before things we value more, like traveling, exploring the world, and learning.

Like I said before, money can buy you things, or it can buy you the choice to spend your time exactly the way you want, where you want.

Now my question is: What do you want?

money management
Image by Unsplash user Cynthia del Rio.

Did you miss:

Part 1: The Power Is in Your Hands?

Part 2: Where to Park Your Money While You’re on the Move?

Part 3: Earn Reliable Income While You Travel?

Part 4: Taxes and Insurance?

money management

Nathalie was raised by two immigrant scientists who taught her, from a young age, the value of a dollar and, most importantly, how to align her spending with her values above all else. She has always been fascinated by personal finance, and her deep love of the outdoors and simple living has led her to be a naturally frugal adult. Her parents taught her both the beauty of compounding interest and the importance of living below her means. As such, she is her own financial advisor, re-balancing her portfolio every quarter and investing in real estate in her home city — all on her modest budget.

Featured image by Pixabay user jill111.


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