How to Budget for Van Life and Travel

There are a few things in life that I enjoy diving into. Personal finance and budgeting are some of them. This week's post will be about budgeting for van life and travel. There exist some similarities and differences between normal budgeting and budgeting for travel. A plethora of resources exists to show you how to budget and gives you a breakdown of costs with regard to travel and van life. Yet, I sometimes feel they lack information worth mentioning.

This post isn't meant to give you an exact dollar amount, rather, it's meant to help you think about the lifestyles as a whole.

**Disclaimer: None of my information constitutes financial advice, rather, it explains what I do and what has worked for me.

Table Of Contents

Introduction To Personal Finance
What Are The Rough Costs Of Living Alternatively
How To Budget For Van Life
How To Budget For Travelling
Conclusion

Introduction To Personal Finance

Here I will share a budget workflow that I've followed. This gives me a guideline on what to do with money, debt, and my future. Following these steps allows me to know I have the basics covered before I am able to move on to more frivolous things and more expensive endeavours.

Step 1: Budget Your Expenses

This step is crucial for understanding where you're money is going and allows you to make adjustments if required. Knowing your income vs. expenditure is critical in being able to forecast how your future looks financially.

Step 2: Build An Emergency Fund

This is a critical step toward ensuring your financial stability. Building up a small reserve of cash to cover unexpected *emergencies* can save you a lot of headaches later on. Without completing this step, it would be useless to start saving as you'd have to tap into that to cover unforeseen expenses. I've used this for nights in a hotel when my van was getting work done, and for shop fees when I needed to take my van in for repairs. This shouldn't be for when you need an oil change or you found a beautiful new piece of gear. It might be beneficial to later build a larger emergency fund to save you from drawing on your retirement savings when you are at that point. Start with something like 1000, then move up to a few months of expenses depending on how secure your job is, if you can anticipate any upcoming expenses, etc. I really like this step as it makes you feel powerful knowing that when an emergency arises, you are prepared.

Step 3: Take Advantage Of Employer Matching  

Employer matching is essentially free money. This is a large aspect of foresight that I believe lead me to be able to be as financially flexible as I am. When you prioritize this step, you are not only paying yourself, you're getting someone else to pay you beyond your wages too! It's almost like stealing free money and having your savings work for you. But it's not stealing, it's a part of your overall compensation.

Step 4: Pay Down High-Interest Debt

Paying down high-interest debt (i.e. >10%, credit cards) will allow you to relieve yourself of one of the biggest losses of money. Working towards, and eliminating these types of debt saves you money in the long by not paying interest to simply borrow money. You can be a bit more relaxed about lower interest debt since it has less impact on your overall financial position.

Step 5: Save For Retirement

At this step, you should be in a moderately healthy place to start focusing on saving for your retirement. Depending on your situation, you may wish to use different account types to put funds into. At this point, I wouldn't contribute more than 15% unless you truly despise employment and want to exit the workforce ASAP.

Step 6: Save Or Spend For Leisure

Once you've built up a sound foundation from the above steps, you have extra cash to play with. If you're not already adding more to your retirement plans, you can use these funds for travel/ other desires. This stage can also include saving for that unicorn tattoo or for if you know you'll require a new car in the near future.

These steps are not, and should not be viewed as a gold standard. Rather, they assist in ensuring you are able to do the adult thing and then pursue your interests/ pleasure.

There's a plethora of valuable information on personal finance. The internet is especially valuable. Here's a category of discussions and some incredible information on Reddit.

What Are The Rough Costs Of Living Alternatively

Roughly speaking, alternative living can be cheaper than a typical existence. You can expect to save a bit more living alternatively thus allowing you to live differently too. Things like food can be more or less expensive depending on your goals. Surprise costs come up more frequently when you leave some stability behind. To me, that's a small risk for the size of reward living like this affords me.

One of the most profound things I  have noticed so far was how much more in tune I was with finances. Once you're on the road, and if you don't have active employment, you really start to notice where your funds are going. Nothing can prepare you for the exact expenses you'll have on the road but it doesn't hurt to be as prepared as possible.

One of the biggest benefits of living alternatively is that you have the capability of retiring sooner. Knowing that your dollar goes further in certain locations of the world, you become capable of retiring earlier with fewer funds. While there are many challenges associated with this idea, it's something to take into consideration. Expat communities exist, and many people before you have made this lifestyle work.

Additionally, it is possible to travel to places where things like food and lodging and even medical care are cheaper. Going to places that are cheaper means you can spend more time away travelling and enjoying novel sights. On the other hand, you may choose to travel to a destination which is more expensive than your normal life. This presents some challenges, but ultimately it's up to you if the increase in the cost of living is worth the sacrifice.

How To Budget For Van Life

There are many reasons why one might choose to pursue the van life. One of the most intriguing reasons I found was how much more cheaply you can exist. Allowing yourself to be freed from the ordinary way of existing can help you make the most of your time and money.

Life on the road can be financially better for a number of reasons. You can save on eating out, rent, utilities, etc. While there are many ways to save, you might run into some unforeseen expenses. Things like campsites (every once in a while to reset), eating out (potentially due to cooking fatigue), and impulse purchases (buying a dozen cookies at that shop you stopped at to use their restroom) can happen.

It pays (hehe, get it?) to add a small buffer to your budget to allow yourself a bit of flexibility when things like this happen. I allot for 10% of wiggle room on most expenses I plan for that I can't guarantee. Sure, it might add up to a lot, but in the worst scenario I end up being more accurate in my planning. The best case scenario is I don't spend as much as I had planned.

Choosing to live this way decreases your potential expenditure. When your van breaks, the potential costs are quite limited. When your house breaks, the costs are relatively higher. It decreases the potential overhead and can allow you to have a smaller emergency fund for when something does go wrong. When you live in a house, you should be expected to cover some months of expenses. A mortgage, house insurance, and all the other mandatory expenses you need to cover in an emergency add up. When you switch to living life out of a van, you can decrease the amount you should keep on hand.

When you live life on the road, there exist unforeseen expenses that not everyone talks about. I had come across a few resources mentioning that you should slow down when you first set out as newcomers generally travel extensively in their first year and spend so much due to the excitement. I did well with this for the most part. Despite the warning, I wanted to drive to far-off places, but being aware of the costs and the "stay and play" concept proved to be beneficial. Places like national park campgrounds can sometimes be sticklers while some gas stations will give you free water with or without the purchase of fuel. I've been to national parks that wouldn't allow people to enter for a shower, even if they wanted to pay a fee. And some gas stations have been more courteous than national park staff that make their wages through my tax contributions. It's never been a life-or-death situation for me, but sometimes it adds a level of difficulty I didn't plan on dealing with. As mentioned above, having a buffer in your funds can be very powerful.

How Much Does Van Life Cost?

Alternatively, take a look at this post on a different kind of cost breakdown.

How To Budget For Travelling

Traditional travelling (planes, trains, buses) is often viewed as an expensive way to enjoy your time. With the costs of accommodation, food, flights, and experiences, things can quickly add up. However, it doesn't always have to be this way. People have been travelling on tight budgets for a long time. There even exists books giving you in-depth directions on how to achieve that sort of lifestyle.

So, right now I have yet to experience this type of travel in depth. By the time this post is published, I should be well on my way to being acquainted with this lifestyle. What I am prepared for is a cheaper means of living since I'm choosing to be in areas where my money takes me a lot further. This is one of the critical points in allowing me to travel for an extended amount of time. Spending less than at home is a fantastic way for your money to go further.

There exists some negative aspects to living abroad. Making the most of your time in an area is a priority for a lot of people. Things like eating out, going on tours, and hiring guides often allow you to experience a place or an activity you might not be able to do on your own. So, while I wouldn't normally pay for eating out all the time, it seems more reasonable to eat out at a cheaper amount. Admittedly, I have a soft spot for food, so expenses related to that are often quite generous.

With international travel, a good rule of thumb I've been trying to keep in mind is to make my accommodations cheaper than what I'd spend at home. Contrary to van life, where accommodations are almost always free, I will need a place to stay nightly. Perhaps random camping would be sufficient, but I have yet to make that transition. Regardless, accommodations being one of the most expensive traditional expenses is something that can have a big impact on your budget abroad.  

The expenses associated with travelling abroad are sometimes easier to forecast. Because you have to book important things like flights and visas, it gives you a really good idea of how long you'll spend in an area. That will allow you to budget based on information in a particular area.

There are a few hidden costs when you travel abroad. Oftentimes, travel such as taxis and buses aren't mentioned when people detail the expenses of travel. Another hidden expense is the cost of using public restrooms. Believe it or not, some places like Europe, and even South East Asia require a fee when you want to use public restrooms. While it may seem small, it came as a shock when I first found out. Another hidden cost is vaccinations. They can add up quickly, but it's a type of insurance against being hospitalized. While this list isn't exhaustive, I feel it's good to point out that not all travel costs are spoken about. It's good to be aware of as much as possible.

Giving yourself a buffer in funds to cover these costs can help you with an overall picture of what you'll need when you travel.

How Much Does Travelling Cost?

Conclusion

Budgeting is essential for almost all aspects of life. Learning what you spend allows you to forecast and plan for what is to come in the future. Living alternatively can give you more possibilities and can allow you to go a lot further with your budget. Not only can it decrease your expenses, but it can also even afford you the ability to retire earlier than living in your current country.