BUDGETING

BUDGETING

We all wish we could travel the world and not worry about the money. Unfortunately, that is rarely the case. Budgeting is an essential, albeit boring, part of travel. However, you will be surprised by how manageable budgeting a European backpacking trip can be. In this budgeting guide, I will walk you through what needs to be done to keep a tight budget, while still enjoying all the wonderful aspects of European life. I have broken my budgeting guide down to four aspects you should consider: 

1. Common mistakes

2. Using money and conversion rates

3. How much does Europe really cost? 

4. Best budgeting tools

1. Common Mistakes

Not writing down expenses: The number one mistake people make is simply saying, “I’m just going to be careful with how much I spend, no need to write everything down” NO! You need to write down your expenses, or you will almost certainly spend more than you want or can afford. I cannot be more emphatic about this. Writing down what you spend on a daily basis, will be the most important part of keeping a budget in Europe. 

Not being realistic: Backpacking around Europe is going to cost you some money. As much as you might want to believe all the crazy stories of people traveling on nothing, it is simply not possible to travel in Europe for 3 months with $1,500 (or however little people say). Do stop your travel dreams. while it may impossible to travel for next to nothing, it is possible to take a backpacking trip without completely depleting your bank account. That is why I recommend setting a realistic budget with realistic goals. If you can stay on or below budget, that is a success. 

Not giving yourself a buffer: If you plan on traveling in Europe for $4,500 you should really have $5,000 available to spend. Having a buffer is essential to making a backpacking trip feasible. There are always going to be unexpected expenses, whether it is a city tax, phone bill, or a haircut, there is always going to be something. Aim for under your maximum budget (ex. $4,500) and then be happy when you stay on budget ($5,000). If you do not give yourself a buffer you WILL (not even might) go over your budget. Never go to Europe without a safety net. 

Not separating sources of money: You should never keep all of your money and credit/debit cards in one spot. In fact, I keep money in three different spots while I travel. I keep some extra/emergency cash in my large travel backpack. I keep my credit card in my wallet along with some cash. My debit card is always in my valuables bag (read my full article on what to pack here and see the PacSafe Anti theft bag I use to hold my valuables here). That way, if one item or bag gets stolen, I am not left completely without resources. I would recommend putting photocopied versions of your passport in multiple locations as well, keep your real passport in your valuables bag. 

2. Using Money and Conversion Rates

You need three things to pay your way around Europe: a credit card, a debit card, and cash. As I mentioned above, you should keep these items in separate areas so you are never left without any money. 

What to use a credit card for: A credit card will be the most common form of payment you use. You can use a credit card to pay for hostels (some are cash only, so make sure you are aware of your hostel’s policies), day-to-day purchases, and large purchase like plane or train tickets. A credit card is great because it is not directly linked to your checking account. This means if someone steals your credit card and starts making million dollar purchases, the bank will lose the money, not you. The flip side is, if you start making expensive payments in Europe, your credit card company will be quick to freeze your account (which is super annoying to get fixed). Make sure you call your credit card company before you leave to let them know where you will be. If your credit card does get stolen, you should call your bank right away to notify them to freeze your account. I usually keep my credit card in my wallet for easy use, be aware of your surrounding’s to avoid pickpockets. 

You should also be aware of your credit card’s policy regarding foreign exchange fees. Most cards will have some sort of fee associated with exchanging the currencies. Typically this will be a percentage per charge (usually around 3%). Ideally, use a credit card that does not have any foreign exchange fees.Talk with your credit card company to figure out which credit card is best for you. Personally, I use the Chase Sapphire Preferred card but there are plenty of good travel credit cards out there. This article by nerdwallet does a great job of explaining what the best travel credit cards are. 

What to use a debit card for: A debit card should ONLY be used for cash withdrawals at well-regarded ATM’s and banks. Your debit card is linked directly to your checking account, so whatever money is stolen, is gone forever. If your debit card does get stolen, call your bank immediately to have them cancel the card before too many charges are placed. I always keep my debit card locked away in my valuables bag and only bring it out when I want to withdraw cash from an ATM. Just as you did for your credit card, call your debit card provider to alert them of where you will be traveling. 

What to use cash for: You will use cash more than you think. A lot of places in Europe – specialty shops, tours, and markets – only accept cash. You want at least $50 worth of whatever currency you are using. I usually carry $100 on me at any given time. However, you will not want to carry large bills, as most places will not except $50’s or $100’s (note that U.S dollars will not work either). To get out smaller currency from an ATM, put in custom amounts. (ex. ask for $134 rather than a flat $100 to avoid one large bill) 

 Local currency and conversion rates

Currently, most, but not all, countries in Europe use the Euro. Below is a map of what countries use the Euro and which don’t:

Most notably, the U.K, Poland, Czech Republic, Hungary, Croatia, Sweden and Switzerland do NOT use the Euro. Each of these countries has their own unique currency and will not accept Euros, Dollars, etc. For current exchange rates for all European countries, click here.  As of writing this article, the Euro is worth 1.16 U.S Dollars. 

3. How Much Does Europe Really Cost? 

The truth of the matter is, Europe ain’t cheap; but it doesn’t have to empty your retirement account either. I will go through three different travel durations – 30 days, 60 days, and 90 days – and three different travel expenses: set up costs, living expenses, and sightseeing. Feel free to read every duration, but note that they will be mostly redundant (multiples of 30 days with small variations in set up costs). One great perk of traveling for longer, is that set up costs are essentially fixed. This means the longer you travel, the more value you get from setting up your trip!

30 Days

Price Range $4,200 – $6,000

Set up costs: Consists of plane tickets, train tickets, equipment, and insurance. A plane ticket will set you back around $1,000. A train ticket (One month Eurail pass with set number of travel days) will cost about $500. Travel equipment (assuming you have nothing) will cost $500. Add another $200 for train reservations and city transport. Plus $150 for traveler’s insurance. 

Total set up costs: Around $2,350

Living expenses: Consists of hostels and food. I made a helpful chart to show how much hostels and food will cost you depending on three price ranges, low, mid, and high. Low means the cheapest hostel in the city and only getting food from the grocery store and eating free hostel breakfasts. Mid means a solid hostel, mostly grocery store food, and a little room for one meal out or an extra drink at the pub. High means the very best hostel in the city, regardless of price, and two meals out a day (essentially no budget). 

Total living expenses: between $1,500 and $3,450

Sightseeing: This will consist of museum tickets, tours and day trips. On a low budget you should limit your sightseeing to 2 paid sites a week. Over 30 days, this comes out to $120 (If you like math, here it is: $15 per paid site x 2 sites a week x 4 weeks in 30 days = $120). Mid budget will add one extra site a week. This comes out to $180 ($15 x 3 x 4 = $180). For a high budget, add one more paid site. This will be $240 ($15 x 4 x 4 = $240). 

Total sightseeing costs: $120 to $240 

Total Costs of a 30 day trip: All considered, a 30 day trip through Europe will cost at least $3,970. If you are throwing the budget (mostly) to the wind, it will cost you $5,840. Remember to put a bit of buffer room into your budget. That means if your goal budget is $3,970 you should have $4,200 available. 

60 Days

Price Range $6,400 – $10,500

Set up costs: Consists of plane tickets, train tickets, equipment, and insurance. A plane ticket will set you back around $1,000. A train ticket (Two month Eurail global pass) will cost about $900. Travel equipment (assuming you have nothing) will cost $500. Add another $300 for train reservations and city transport. Plus $200 for traveler’s insurance. 

Total set up costs: Around $2,900

Living expenses: Consists of hostels and food. I made a helpful chart to show how much hostels and food will cost you depending on three price ranges, low, mid, and high. Low means the cheapest hostel in the city and only getting food from the grocery store and eating free hostel breakfasts. Mid means a solid hostel, mostly grocery store food, and a little room for one meal out or an extra drink at the pub. High means the very best hostel in the city, regardless of price, and two meals out a day (essentially no budget). 

Total living expenses: between $3,000 and $6,900

Sightseeing: This will consist of museum tickets, tours and day trips. On a low budget you should limit your sightseeing to 2 paid sites a week. Over 60 days, this comes out to $240 (If you like math, here it is: $15 per paid site x 2 sites a week x 8 weeks in 60 days = $240). Mid budget will add one extra site a week. This comes out to $360 ($15 x 3 x 8 = $360). For a high budget, add one more paid site. This will be $480 ($15 x 4 x 8 = $480). 

Total sightseeing costs: $240 to $480 

Total Costs of a 60 day trip: All considered, a 60 day trip through Europe will cost at least $6,140. If you are throwing the budget (mostly) to the wind, it will cost you $10,280. Remember to put a bit of buffer room into your budget. That means if your goal budget is $6,140 you should have $6,400 available. 

90 Days

Price Range $8,400 – $14,600

Set up costs: Consists of plane tickets, train tickets, equipment and insurance. A plane ticket will set you back around $1,000. A train ticket (Three month Eurail global pass) will cost about $1,100. Travel equipment (assuming you have nothing) will cost $500. Add another $400 for train reservation’s and city transport. Plus $250 for traveler’s insurance.

Total set up costs: Around $3,250

Living expenses: Consists of hostels and food. I made a helpful chart to show how much hostels and food will cost you depending on three price ranges, low, mid, and high. Low means the cheapest hostel in the city and only getting food from the grocery store and eating free hostel breakfasts. Mid means a solid hostel, mostly grocery store food, and a little room for one meal out or an extra drink at the pub. High means the very best hostel in the city, regardless of price, and two meals out a day (essentially no budget). 

Total living expenses: between $4,500 and $10,350

Sightseeing: This will consist of museum tickets, tours and day trips. On a low budget you should limit your sightseeing to 2 paid sites a week. Over 90 days, this comes out to $360 (If you like math, here it is: $15 per paid site x 2 sites a week x 12 weeks in 90 days = $360). Mid budget will add one extra site a week. This comes out to $540 ($15 x 3 x 12 = $540). For a high budget, add one more paid site. This will be $720 ($15 x 4 x 12 = $720). 

Total sightseeing costs: $360 to $720 

Total Costs of a 90 day trip: All considered, a 90 day trip through Europe will cost at least $8,110. If you are throwing the budget (mostly) to the wind, it will cost you $14,320. Remember to put a bit of buffer room into your budget. That means if your goal budget is $8,110 you should have $8,400 available. 

4. Best Budgeting Tools

It is important to keep tabs on your budget. I recommend having a master budget plan and a daily expense app. This will allow you to constantly be aware of how much you are spending and if you are staying on budget. 

Master budget plan

A master budget plan could be as complex as an excel spread sheet or simple as a notebook. The goal is to have one place where you keep track of all of your expenses. I use an excel spread sheet. I input prices of plane tickets, hostel expenses, travel insurance, and daily expenses there. Essentially, I keep a running tab on how much my expedition is costing me.  

Daily expense app

To keep track of what you are spending on any given day, use an expense tracking app. At the end of every day, input your daily expenses into your master budget plan. I use the Trail Wallet app to keep track of daily expenses. Trail Wallet is a very simple app that allows you to set a daily budget. You simply add in your expenses and Trail Wallet will let you know if you are staying on track with your budget.  If you go over budget one day, you know that you need to stay under budget the next. 

As can be seen below, I set my budget to $70 a day. $70 a day in Europe is a Mid range budget, you can survive for cheaper and you can certainly spend more. You will want to make sure you are adjusting for conversion rates when you are tracking daily expenses. For instance, $70 is worth 60.5 Euros. Another option is to change your currency within Trail Wallet to Euros or whatever currency you are using. 

  

Now you are ready to finance your trip in the most realistic and frugal way! To learn more about what it takes to travel the world, click here. 

 

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