Over the years I’ve become pretty good at saving money, but it hasn’t always been that way. In fact, for many years I used to live pay check to pay check. I even took out a loan to help afford my everyday life.
The truth is that I’ve struggled with saving money in the past. I loved going out and spending all my money on beer and takeaway food because that’s what everyone else was doing. I mean who doesn’t love beer and Big Macs?
The inspiration for this post comes from reflecting on those times where I was in debt and couldn’t even save enough money to take a weekend trip anywhere.
Saving money for your next trip is actually a simple process. As long as you have an open mind and are willing to make some short-term sacrifices, you will be living it up abroad in no time.
I’ve narrowed down the saving process into 6 easy to follow steps:
1. Set a Target
Without a specific target, it’s impossible to reach your savings goal simply because you don’t have one. Work out how much you need to take away for your trip by doing some initial research on the country your visiting and work out a weekly/monthly spending allowance.
By setting a target (for example $5,000) you can work out how long it will take before you can move abroad.
For my trip to Mexico the process looks like this:
-Research the country that I want to move to (Mexico)
-See how much it’s possible to live off per month comfortably ($1,000)
-Work out how long it will take me to settle in and find a job abroad (2 months)
-Get an idea of how much flights will cost ($1,000)
-Work out how much I’ll have to spend on travel insurance ($500)
-Add an extra $1,500 as a safety net (not able to find a job, flight home etc.)
If we totalled up all of these amounts we would get this equation:
Total savings=(number of months to find job x cost per month) + flight + insurance + safety net
In this case it would be:
Total savings needed = (2 x $1,000) + $1,000 + $500 + $1,500
Total savings needed = $5,000
Use this method to work out how much you will need to save before you can take your next trip abroad.
2. Open a Savings Account
After working out how much money you need to save you’ll need to open a savings account with your bank.
The advantages of opening a savings account are:
-Savings accounts generally earn 3-5% interest each month
-It’s a separate travel fund that is designated purely for your travel savings and nothing else
-You can start seeing trends of how much you’re saving each week to work out how long it will take to reach your travel target
Now that you have opened the account, put any savings that you already have into the account and start adding to it. At this stage, you should start trying to add at least 30% of your wage each week to your savings account.
3. Download a Budgeting App
This is a great way to work out how much you’re spending and where you can potentially cut costs.
The great thing about using a budgeting app is you’re able to start seeing trends in your spending. You’ll start noticing certain things that you’re spending a lot of money on that you didn’t even realise (beer in my case).
The best way to effectively use a Budgeting App is:
-Start recording all of your expenses every day
-Add categories for your main expenses
-Analyse your data after 1 week
-Adjust your spending habits
After a week or so you’ll start to get an idea of how much you spend, where you can cut costs and how much you can save each week.
At this stage, it’s time to work out how long it will take you to reach your savings target (from step 1).
For example, if you’re able to save $1,000 per month, and your savings target is $5,000, it will only take 5 months before you have enough to move abroad. Book your flight for this date to give you more motivation to continue saving.
4. Cut Costs
The hardest part of saving money is cutting costs. Making those decisions about what you really need and what you don’t really need isn’t easy.
I’ve found the best way to do this is to look in the categories from your budgeting app, see where you spend the most amount of money and try to minimise those costs.
The easiest way to cut costs include:
1. Start cooking all of your meals at home
By doing this your food budget can easily be less than $100 per week.
2. Unsubscribe from all of your monthly subscriptions
This includes Netflix, Cable, Foxtel etc.
3. Cancel your phone plan
You can find many different month to month contracts for less than $20 a month which include unlimited calls and texts and 1-3 GB of data.
4. Don’t drink every night
Alcohol is expensive and if you limit yourself to drinking only once or twice per week you will save a lot more.
5. Swap your car for a bike
The costs of running a car these days are high. Between fuel, insurance, registration, services and repairs it all adds up. Sell your car and start riding your bike to work or take public transport.
6. Make your own coffee
Stop going to Starbucks and save yourself $5 per day by using instant coffee.
7. Leave your wallet at home
One of the best ways that I’ve managed to save a lot of money is by leaving my wallet at home. By doing this I’m not tempted to go out for a drink after work or buy take away food on the way home.
5. Sell Your Stuff
There are many websites out there to help sell things you don’t need anymore. The reality is that you don’t need half of your stuff anyway and you’ll be able to save hundreds of dollars extra by selling things you don’t need.
Some good websites to sell your stuff online include:
6. Find Extra Work
We live in a time where there are plenty of options for part time work that you can start in a couple of days.
You don’t need to look very hard to find part time jobs anymore. Between the internet and companies such as Uber, there are hundreds of different ways to make a part time income.
Here are a few places you can start making money this week:
Saving money doesn’t have to take years. Follow these steps and you’ll be able to save for your next trip abroad in no time. You don’t need to have ten’s of thousands of dollars to be able to afford a life overseas. Just save a couple thousand dollars and look for work opportunities abroad.
Yes, it’s true that you won’t be living in luxury but you’ll be able to move abroad sooner and start having the time of your life.
I know these tips work because I’ve used them many times in order to help fund my life abroad. Living a simple way of life for a little while isn’t hard and it will make you appreciate the more important things in life.
Have you started saving for your next trip abroad? What methods have you used to help grow your savings?