Well, you've probably been skimping and saving for a while so it's time to blow it but try and get the most out of what you have.
Daily costs: How much money do I need?
So how much money do backpackers need to budget for on a day to day basis on a round the world backpacking trip or gap year?
You may be surprised how little you can spend when backpacking the world, but here's a basic guide to budgeting so you know what to expect to spend each day when backpacking.
|Approx. daily spending amount
|Australia / New Zealand
|South East Asia
How much money should I save for my backpacking trip?
Teaming up with another backpacker can save lots of money on hostels.
As an approximate guide, I generally allow about $2,000 (£1,000 / €1,500) a month when backpacking around the world. Cities tend to be the most expensive places to stay so allow more if you are spending more than a few days in major cities.
Pre-order your foreign currency online with Travelex to save money (post or pick up at airport).
No matter how cheap you think you are travelling you will always meet another backpacker who is staying in a cheaper, better hostel, eating in a cheaper, better restaurant and catching the cheapest, quickest transport. Our advice? Follow them!
Tips on how to spend less money each day
If you are backpacking around Europe, get a EuroRail or InterRail train pass as this is a cheap and efficient way of getting around. You can also book sleeper berths overnight to save money on a night in a hostel.
If you are travelling with a few friends it can also be good value to hire a car and split the costs.
Hostels are the cheapest accommodation and some are surprisingly comfortable these days. If you know you are going to spend a few nights in the same place, ask if you can get a cheaper deal and offer to pay in advance for the whole stay if that makes it cheaper still. Check hostel or hotel prices.
Most backpacking hostels have a kitchen so you can buy cheap food in the local market or supermarket and cook yourself. You'll probably share the cost between a few other backpackers and make a larger, cheaper meal.
Order foreign currency in advance to save money
Exchange rates at airports and processing fees for foreign ATMs can be too high for most travellers, so avoid these by ordering your foreign money online through Travelex.
What are the best ways to take money when travelling?
The safest way to carry your money is as travellers cheques but these are by no means the most convenient. Cash would be ideal but is easily stolen or lost (not be mention spent!) and cards can also cause problems if you are in the middle of nowhere.
The best way then is to carry a mixture of all. Out of the US$200 worth of ready money you would aim to take, choose half cash and half travellers cheques and keep them in your money belt. This way you are prepared for all eventualities and have the credit cards as back up.
Carrying cash when travelling
Your 'readies' are going to be your best and worst friend when you are away. Some people unexpectedly become very careful planners while others tend to blow what money they have extremely quickly.
Cash is the ideal way to have your money in some countries as little else is accepted but be VERY careful regarding your security. It is wise to spread what you have between your bags, money belt and pouches. This way if you are the victim of theft you will hopefully not lose the lot.
It is probably best to carry US Dollars over any other currency as these are the most widely accepted. However, in Europe, Euros will be your cash of choice.
Smaller denominations are also best as you are more likely to be able to get change from a $10 bill than a $50. They are also safer in case you lose them.
Travel and credit cards
Debit or credit cards are a useful way to access your cash and a good way of recording your expenses at a later date. It is inadvisable though to depend solely on your plastic in case they are lost of stolen.
Most places now take Visa, MasterCard, American Express etc. but for safety reasons you should try and pay in cash for most shopping and restaurants bills in case a copy of your card details is used when you are long gone.
Also watch out for bank charges when withdrawing money. It may be best to take out larger amounts with fewer withdrawals but be careful if you do this as you do not really want to be carrying large amounts of cash around either.
Carrying travellers cheques is one of the safest ways of carrying your money.
Often they are too much of a pain for petty thieves to steal as most places also request to see your passport as you cash them in.
The only drawback is that some places will try and rip you off by either asking for a $50 minimum exchange, for example, or by adding a high processing fee which has been a common problem for me in South America - especially in hotels.
In some situations you will have no option but to do this if you are stranded in a town with no cash and no ATMs. Just think of it as a learning experience and the chances are that you will change them BEFORE you run out of money next time!
A money belt or money pouch is by far the safest way of carrying your money and valuables.
Most recommended money belts
It's not just important to keep your valuables out of sight, but it's also important to keep your money, tickets and passport dry.
How to wear a money belt
Wear your money belt in the small of your back so it doesn't stick out.
Worn under your t-shirt, or preferably shorts, money belts help reduce petty crime, like pick-pocketing.
However, most people know that the majority of travellers and backpackers use money belts so when sleeping on buses or trains turn the belt around and wear it behind you in the small of your back, so that you would be woken up if anybody tried to get at it.
Alternative ways of keeping your money safe
Accessing your money from your belt
Be subtle when getting your passport or cash from your money belt - especially in crowded places, or even in banks when onlookers can see clearly where you have stored the US$100 you have just taken 5 minutes squeezing into your money belt!