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How to Manage Your Money Before and During Your Gap Year

Saving for gap years

Saving and budgeting for your gap year abroad is unexpectedly hard work, especially if you’re not the kind of person that deals well with postponed gratification. But if you practice, if you master the art of frugality, you will be overseas exploring the world much faster, and you'll be able to extend your gap year for much longer.

You're going to need to make some sacrifices in your life if you want to earn enough to stay abroad for a significant amount of time.

Trust me, I am you. But I am future you, currently on a gap year around the world. Learn from your future self, and use these tips on how to save money and create a budget for your gap year abroad.

Before You Go

Before we get into how to create a budget and manage your money while abroad, lets talk about how you can get that money in the first place.

1. Live At Home

Whether you’re a new high school grad who hasn’t quite flown the coop yet or a university student taking a temporary sabbatical with the ones that raised you, living at home is a great way to save money before heading abroad.

Ideally, we’re talking no rent or bills at all, which means an extra $400-$1000 in your pocket each and every month. That’s a lot of skrilla. If you were to live at home for just one summer before heading on your grand adventure, you’d save enough for an entire extra two months in Australia, or up to an extra six months in Southeast Asia (depending, of course, on your spending habits abroad, which, stay tuned sweet pea, we’ll get to that).

On the lower end, where your parents try to teach you about the real world by charging you a little rent (thanks for the lesson, can I borrow $5?), you’re still saving at least some money by sheer virtue of location. And if they’re charging you market cap, well, maybe you’re at least saving money on food.

2. Cut Your Spending

Money

Here’s where it gets tricky. You’re going to need to make some sacrifices in your life if you want to earn enough to stay abroad for a significant amount of time -- especially if you don’t plan on working in any major capacity (say, through a work abroad or internship placement).

The easiest way to do this is through cutting down your food and drink budget. You probably haven’t even realized how much you spend on this kind of stuff, but if you buy your lunch every day at work or school, that’s an extra $50 every week. Throw in a night out with friends each week or two and you could be shoveling an extra $400 a month into your grimy mouth like some kind of insatiable hunger demon, and that’s not even counting what you spend on groceries. Gross, dude.

Learn to love rice. Learn to love beans, and fresh veggies. Buy a crock-pot/slow cooker, and learn to love that too. Ask friends or explore Pinterest for some good options of cheap, healthy recipes. Ramen is only the best budget meal option if you’re lazy.

Cut down on your food/drink budget, and you can save loads of cash and still have some extra dough for a movie night with that cute chick from the coffee shop you went to before you realized a coffee was, like, $6 for a tall.

Some more places to check your spending:

  • Entertainment – do you go out a lot? Movies, attractions, etc. can rack up the bills. Try doing more hikes. Outside is free.
  • Transportation – gas is finally getting cheaper, but it’s not the best way to travel by any means. Can you walk or bike more? Or at least carpool?
  • Non-necessary spending – You don’t need new clothes. Wash your own car.
  • “Necessary” spending – Bills can get expensive, but make sure you’re not spending hundreds on cable channels you’re not watching. Netflix bro. And if it gets cold, throw on a damn sweater like your mom always told you. Leave that thermostat alone.
  • Travel planning – don't be tempted to buy a whole new backpack full of travel gear -- you can usually do fine with the stuff you already own. Wait until you get abroad, and see what you need. The only thing you should buy at home is any electronics you need, as these are generally much more expensive overseas, and a sturdy backpack to carry everything in (if you don't already have one).

3. Track Your Monthly Spending

Of course, you know yourself better than I do. I know what I said earlier, but I’m not really you. Bummer for me, but if you're planning on doing things a bit differently than me, make sure you keep a good record so things don’t get out of control.

But it's not enough to know how much everything costs -- you need to know how you'll be spending, approximating your lifestyle so you know how much you'll need.

I’d recommend using Mint to track your spending. You can link it with your bank account and tell it exactly how much you’d like to spend on every aspect of your life each month, while putting aside a certain amount for your gap year. It’ll automatically keep track of your spending and let you know if you’re going over your allotted amount. Basically a godsend.

4. Create a Budget for Your Gap Year in Advance

But it’s not just about saving every buck you can. You need to save for something, which means knowing what your spending habits will be like abroad. That way, you won’t be gobsmacked and out of money two months before you planned on coming home. Keep a tally of exchange rates (I recommend downloading the XECurrency app and keeping it on your phone, loaded to the currency you’ll be using most abroad) and familiarize yourself with what everything will cost. This will help you plan.

And just for added measure, read up on spending guides for your country of choice. I have a few available on my own site (see bio) and Lonely Planet has quick summaries in each of their region / country guidebooks.

But it’s not enough to know how much everything costs -- you need to know how you’ll be spending, approximating your lifestyle so you know how much you’ll need.

Some less obvious things to include in your savings plan:

  • Visas – some, especially working holiday visas, can be hundreds of dollars, and its easy to forget this when you’re thinking so little about crossing the border and so much about actually being in the country.
  • Travel insurance – you don’t want to be sitting at the bottom of a hill in Thailand with a broken leg before you realize that you should have considered this.
  • “Buffer” money – You’re going to lose money by sheer virtue of being a tourist. People will overcharge you. You’ll accidentally buy the wrong thing, or find a cheaper option a minute too late. Make sure you plan for this and bring more than you think you’ll need.
  • Emergency funds – this is a bit of a combination between the last two. Set aside a certain amount for when things get really dire. I mean, “leave the country unexpectedly on the first flight you can find” dire. Hopefully you won’t have to use it, but it would worse to need it and not have it.

And if you do everything right, you’ll have enough to set off on your gap year in no time.

Once You’re on Your Gap Year

Okay, so you've cut your expenses, moved in with your parents, and saved like a fiend. Don't let those good money habits drop the minute you get overseas.

1. Maintain Good Habits

Europe

Once you hit the road, you’re gonna be tempted to start blowing through that bank account like it was a bottomless well because, hey, you’re here and you did it, so who cares?

I should know. My first four days abroad, I spent $400 -- a decent chunk of which went towards guacamole. And I’m not saying you shouldn’t buy guacamole, because guac is awesome. But making it for the entire hostel isn’t a good idea, because as you learned in the section above, food and drinks are the biggest slices out of your wallet.

Don’t forget what you learned. Keep using Mint, and adjust the settings to compensate for your changed income/spending habits. You can divide the total amount of money you managed to save by the time you plan on being abroad, and use that as a starting point to create your new budget.

You can (obviously) shift some more money into the entertainment section, because that’s what you’re here for. But “live fast, die young,” isn’t a good mentality, unless you want your gap year to turn into a gap month.

Tip: If you're traveling with a friend, use Splitwise to track shared expenses, like dinners or hostels. This way, if you end up paying for the hostel, and your friend foots the bill for the bus, you can make sure you tally up who owes what at the end of the trip.

2. Get a Job, Ya Bum

If you’re going on a gap year, then there’s a good chance you’re already planning to work for part of that time -- nobody wants to save enough for an entire year in one go. The working holiday visas that many countries offer (though fewer to American citizens, unfortunately) are a great way to see the nation while embedding yourself in it even deeper.

If you’ve prepared properly and purchased the right visa, then you’re entitled to work pretty much anywhere you can get hired. The trick is to find a job that will satisfy four things:

  • You enjoy it. This is your gap year. Why would you want to do something soul sucking?
  • It pays enough. If you’re getting a job, it’s probably to save more to continue traveling after you’ve run out of money. If you’re not making more than you’re spending, then you’re just spinning your wheels and you need to move on.
  • It gives you some freedom. Again, this is your gap year, so any jobs you pick up on the side should still give you some leeway to see the world and grow.
  • It’s beneficial to you as a person. Don’t get stuck in something that’s doing nothing for you just because it’s easy and pays well. Gap years are a great chance to get certified for different sports and careers, and they’re a great chance to put something on your resume that will put a smile on future employers’ faces. Your job doesn’t need to do both those things, but either one counts as beneficial.

Some great gap year jobs include being an au pair, teaching, working in the service sector, tourism, or interning abroad.

3. Look for Free Exchanges

Is one of your gap year goals learning another language? Try doing a free language exchange in a large city instead of paying for classes.

Saving’s not easy. If it were, everybody would do it, and voila, world peace.

Are you willing to spend a few hours a week making beds and cleaning bathrooms? That could be enough to get you a free place to stay in a hostel (look for "work exchange" options on local hostel websites).

Though these can definitely help you stretch your money further, you shouldn't rely on them completely. Instead, budget in that you'll be spending X amount on housing each week, and if you don't spend it -- great! It's much better than the alternative.

4. Prioritize Fun Opportunities

We know, you won't want to say no to anything and you'll want to do every fun thing that comes your way -- but your budget may not allow for every expensive bungee jumping trip and boat ride. Instead, allow yourself one big splurge a month and prioritize what you really want to do.

When possible, look into ways you can get discounts or freebies for these fun activities. For example, is there a music festival you're dying to see on your gap year? Ask if you can volunteer in exchange for a ticket.

Think You Can Do It?

Saving’s not easy. If it were, everybody would do it, and voila, world peace. But it is easier than you think. And given enough time, you can get abroad much sooner than you think.

Everybody thinks travel is some expensive hobby you need to dedicate your life towards, but it’s not. All you need is some motivation, some planning, and a can back in your room to throw your pocket change at the end of the day.

Photo Credits: Colin Heinrich and Cooper.
Colin Heinrich

Colin enjoys traveling slow through whichever country will have him. He's considering changing his middle name to “Adventure,” and enjoys music festivals, backwoods camping, local cuisine, and saying yes to things he doesn’t quite understand. Follow him at Elsewhere Man and on G+.