The Issue of Money

One thing I’ve been asked by quite a few people is regarding money. Namely, how I’m going to afford this kind of trip. Realistically, adding the working holiday part into New Zealand should allow me to stretch my budget considerably, assuming I do find work (and I think I will). But even without factoring in supplemental income, I should have more than enough to live and travel for over a year on my savings alone.

The amount of money to budget for these kinds of trips is all over the place once you do some internet searching. Some people will do a round-the-world trip on as little as $10,000 for the entire year, all expenses in. Others will spend $30,000-40,000 in one year. One large determining factor is where you spend the majority of your time – if you are in Europe, Japan, North America or Australia/New Zealand, your costs are going to be orders of magnitude higher than if you spend a lot of time in India and China. Another large factor is how bare bones you make your trip, whether you experience some of the ‘must do’ things when you are in certain countries, such as hiking the Inca Trail in Peru, bungee jumping in New Zealand, or 100s of other touristy things that cost extra.

I’m looking at somewhat middle of the road. At least for the first year, being in New Zealand will be a bit of an extra strain on my savings. New Zealand isn’t a cheap country to live in, but several things will be working in my advantage: The Canadian dollar is strong right now, so I’ll get a bit of a boost when I transfer my money, my travel costs should be minimal since I won’t be flying once I reach Auckland, simply bus or car travel, and I plan to live on farms/smaller communities as much as in larger, more expensive cities. From what I’ve read about people doing Work Holidays in NZ, a budget of between $3000-5000 is more than sufficient for a year, and if successful in finding some good jobs, that money may hardly be touched.

Anyways, on to the dollar amounts. Being the planner I am, I’ve got considerably more saved up than what I plan on needing. Ideally, whenever I get back to Canada, I won’t be flat broke this way. But who knows. It breaks down like this:

Immediate Cash – $10,000 – This will be the money I’ll transfer to New Zealand for all my day-to-day and travel expenses. Considerably more than I plan on needing, but I’d rather to have more than less.

Short Term Savings – $20-30,000 – The majority of this is in the wonderful TFSAs that the Canadian government set up a few years back. For the tax free savings accounts, my actual input is $15,000, and the account has made nearly $5000 in profit/interest so far. They are medium risk Mutual Funds, but I got in at a good time for most of them, allowing pretty good growth. I don’t plan on touching these until I need them, which would likely be once I leave New Zealand to continue travelling around the world. Hopefully I’d be able to return to Canada with at least $10,000 left, but who knows? That’s a long ways away.

Long Term Savings – This is my ‘retirement’ account. Kind of funny to think of, considering I won’t be actually inputting anything into it for quite some time now. But, they are high risk investments that should continue to grow while I’m away. I won’t touch these unless I absolutely, absolutely have to. No real need to put the savings amount currently here, since I don’t plan on using it, as I would like to still have something saved for 30 years from now.

So I plan to have around $40K accessible to myself when I travel. I’d say the average for a year of travel that I saw pegged costs around $20K/year. I should (and hope) to be able to last 2 years myself, and with the first year being balanced working around New Zealand, I think this should be a reasonable and achievable goal. But, it’s hard to say until I actually start travelling what the costs will REALLY look like.