With a solid sense of typical household spending and ideas on cutting expenses, as covered in the previous step in this series, it’s time to take a first stab at creating the adventure travel budget.
The Power of the Adventure Travel Budget
The most common question we receive on our adventure travels are “How can you afford to do this?”. It’s rarely the first question, but eventually it’s asked.
To most, the idea of dropping out of the workforce for months or years to pursue adventure seems financially impossible, especially with kids.
Shifting the mindset from fantasy to reality takes practical planning, and planning involves taking time to estimate the adventure travel budget to appropriately save to fund the adventure.
Get the Baseline for the Budget
It’s important to have a solid handle on the household’s typical monthly expenses, because we can use those monthly expenses to start calculating our adventure travel budget. (If you missed it, click here for a previous step, Step 3: Analyzing Current Household Spending.)
In our running example, over the six month period from April 2015 to September 2015, we calculated in Step 3 that our average monthly expenses totaled $15,401.60.
Below is a snapshot of the proportions of our spending by category for these months, and in the table further down we show the relevant dollar amounts.
Spending by Category, August to September 2015
Estimating Our Expenses and Setting a Target
When we estimate the expenses we can expect while traveling, we must take into account a number of overarching factors for the unique circumstances of our family adventure. You’ll need to do the same for whatever adventure you’re planning.
Some major factors affecting our budget include:
- Our adventure is an RV trip and will include associated RV and fuel costs
- We have to accommodate the comfort needs of a family of four (mom, dad and two kids), though we want to be frugal on our trip, cooking most meals and camping in parks vs staying in hotels
- We’re traveling in a very expensive place: America
- We will be renting our home and investment properties to cover mortgages, taxes, and insurance
- We strive to mostly maintain our investments in mutual funds
Taking a first pass at the numbers around an adventure travel budget is largely an exercise in common sense guessing and refinement. Using our typical monthly spend as the basis, combined with our understanding of our adventure trip and lifestyle requirements, we can start determining what expenses we could cut, modify, or replace on our adventure.
On our trip, we’re targeting $10,000 monthly spend since we’re servicing four mortgages and considering our monthly mutual fund investment an expense.
Don’t let the $10,000 per month discourage you. Our actual adventure will be done for less than $4,000 per month. $6,000 of this monthly spend goes towards the mortgages on four houses and a mutual fund, which are relatively optional to maintain while we travel. We could always sell the houses and stop investing, but it’s not the outcome that we’re after. We’re trying to have it all, to embark on adventure while also striving for wealth building. Both are important to us, and in later steps we’ll discuss how we invest for the long term.
Since we are maintaining ownership of our homes and continuing investments, we have to keep them in our budget, just like any other obligation one might have (i.e. union dues, college debt payments, cell phone bill).
When we examine our typical monthly expenses and take a stab at the adventure travel budget based on these current expenses, here’s how the budget shakes out:
| Spending Category | 6 Mos Average Monthly Spend | Adventure Travel Budget | % Change from average | Comments |
| Auto & Fuel | $413 | $1,300 | 215% | Including gas, insurance, repairs |
| Bills & Utilities | $571 | $200 | -65% | Covers 2 cell phones + hot spot |
| Business Services | $31 | $29 | -5% | |
| Entertainment | $318 | $380 | 20% | For fun activities |
| Financial | $1,885 | $1,500 | -20% | real estate mutual fund only |
| Food & Dining | $1,811 | $1,000 | -45% | Groceries, restaurants, treats |
| Gifts & Donations | $145 | $20 | -86% | Monthly church contribution will continue |
| Health & Fitness | $106 | $100 | -6% | Doctor visit and meds |
| Home | $5,908 | $4,546 | -23% | Mortgages only |
| Kids | $2,344 | $0 | -100% | No child care |
| Personal Care | $140 | $75 | -46% | Haircuts and other treatment |
| Services Fees & Charges | $93 | $100 | 8% | For random fees and charges |
| Shopping | $1,167 | $300 | -74% | Splurges and such |
| Travel & Lodging | $470 | $620 | 32% | Average $20/night stay for 31 night month |
| Total | $15,402 | $10,170 | -34% |
Initial Assessment of the Budget
So after the initial pass, we’re a little bit above our target monthly budget of $10,000.
That’s OK for now.
Prior to travel, the budget is a living document. As we gather more information about the adventure, and as we curb our normal spending habits in every day life, as discussed in the previous step, we should be updating the budget to ensure it more closely reflects reality.
The first test after creating an adventure travel budget is a common sense test.
Given current spending habits and knowledge of the adventure to come, does the budget make sense?
Am I cutting too much for a given category? Increasing too much? Not considering some aspect of the adventure that will be an added cost that I simply don’t have in my regular life? I cycle through these questions to see if I’m on the right track.
Reducing Expenses for a Category
The biggest expense we removed from our budget is childcare, which removed $2,344 dollars per month. Does this make sense? Yes, we’ll be taking care of our own kids.
For the home category, the reduction is largely a result of cutting expenses for home bills, small improvements, and random Lowe’s trips. The remaining money reflects the cost to cover all mortgages, taxes, insurances, and HOAs for our home and various rental properties. This still makes sense.
We cut consumption in food and dining by 45%. This budgetary number includes groceries equivalent to our typical monthly spend, but it eliminates almost all restaurants. Makes sense, but maybe a little aggressive.
For the cuts in the shopping category, we’ll be significantly reducing random purchases that had become a part of our normal life, such as new clothes, toys, and such. The remaining budget will be used for needed gear and clothing replacements.
Don’t be overconfident in your ability to reduce expenses
For the most part, you can expect your consumption habits while traveling will gravitate towards your typical consumption habits when not traveling. You’ll likely want to buy the same brand foods and drinks at the grocery store. You’ll likely indulge a similar amount, consuming a similar amount of coffee, beer, and treats.
There may be expenses that can be clearly eliminated or reduced in the planning, such as a mortgage, child care, and house related expenses, depending on your circumstances.
There will also be opportunities for curbing your lifestyle to reduce costs, such as reducing the urge to dine out at restaurants, visit coffee shops, or buy new clothes.
For certain there are ways to reduce costs, but it takes energy and discipline to modify your lifestyle choices. We find it’s better to budget for moderate, not drastic, change. This ensures we’re planning our itinerary and saving the right amount of money for the realistic spend.
If you’re planning on dramatic changes, then attempt to make the changes before you leave on your adventure. This way, if the change fails to meet expectations, you can accommodate it in your budget before you leave.
An added advantage of budgeting for moderate change, if you do happen to develop more frugal spending habits while you travel, then you’ll have budget surplus, giving you upside to spend elsewhere or stay out longer.
Increasing Expenses for a Category
When you embark on an adventure, you’ll incur costs not normally associated with your daily life.
These may be hard to spot, but the more research you do about your anticipated adventure, then the more likely you are to identify those expenses and build them into the budget.
In our situation, our lifestyle is changing in a pretty dramatic way in that we’re becoming nomadic. As a result, we’ve increased the amount we expect to spend each month on car, RV, and fuel expenses.
For our cross country trip, we’re estimating we’ll burn two tanks of fuel per week. One tank to get from one campsite to another, and then another tank to run errands and explore for the week. Pile on the increased oil changes and unexpected repairs, and we expect a 215% increase in auto and fuel related costs.
We also estimate the need to increase our monthly spend on entertainment. After all, we’re embarking on the adventure to have fun with the family. We’ll be taking advantage of as many free, fun family activities as possible, such as hiking, beaches, and swimming, but we expect we’ll pay for some museums, zoos, tours, and the occasional movie.
For travel and lodging, our pre-adventure travel costs included the occasional weekend trip to the beach or trip to another city. On our trip, we’re expecting an increased frequency in spending on travel and lodging related items. However, since we’re staying at parks or wild camping, we’re expecting relatively lower nightly spend, and we’re targeting about $20 per night based on our research.
A Word On Real Estate and Mutual Fund Investments
More than half our budgeted monthly expenses, $6,046, are going towards real estate and investments.
We’ll cover our real estate and stock investments in a later step, but the short version of this strategy is that rents cover the mortgages and the investments aren’t pure expenses, as investments are assets, which are eventually used to buy more real estate or other assets.
If we didn’t have four houses and a desire to maintain our investments, then our monthly adventure travel budget target would be closer to $4,000 to cover all other categories, including auto and fuel, gear, food, and lodging.
A Note on Debt
Aside from our mortgage payments, we don’t have any debt. We don’t have car loans, student loans, or credit card debt. Our mortgage debt services itself through rent.
Debt that can’t be serviced in such a way as a mortgage can certainly make adventure travel more difficult to attempt and sustain.
We strongly encourage you to rid yourself of consumer debt before quitting a job to travel. Sell the cars and pay off the difference, if any. Pay off or settle the credit card debt. The student loans may not need to be paid in full, but you’ll need to account for the monthly loan payments in your monthly budget.
For more about eliminating debt, check out an earlier step in this series on Managing Debt Before Adventure Travel.
What should you do about YOUR budget?
You should download this tool that we built.
Adventure Travel Monthly Budgeting & Simple Savings Calculator
Use this tool to start making some realistic projections about the money that you need to spend to fund the requirements for your adventure and your desired lifestyle.
Nail down how much you think you’ll need to spend on a monthly basis to live out your adventure travel dream.
Once you’ve filled out this calculator, you have the first draft of your budget, which means you’ll know how much money it will likely cost you per month and in total to fund your adventure.
You should periodically revisit the budget before your trip, modifying the numbers as you learn more about the adventure trip and your lifestyle.
With this budget in hand, now it’s time to set a budget to gear up. While you have a sense of how to support your lifestyle, you adventure may require an extensive list of new gear.
Read the next article on creating a gear list with pricing (coming soon).
After that, we’ll be able to come up with a savings plan that helps us fund the adventure lifestyle and by all the needed gear before we depart.
Thank you , me and my brother Josh, of no blood kin, have decide we are going to start here in Louisiana drive to where the Mississippi River, divides the land. Then swim across ,then walk the tripple crown starting the AT ,would like to go pro the quest of perspectives, being aware of the word of God and living as intended, as the earth was presented. Won’t to stop by nursing homes and talk to everyone there abt life.telling them we are going to try to do all the things that are considered great, as in walking the tripple crown , hang gliding, etc. sword fighting in Rome as a gladiator, these is what were doing don’t know exactly all hills to top but that’s not the issues where not doing it for gain but to show LOVE ,so we have no differences of one accord . Actively looking for someone to help the AT is the first task,after we swim the divide, wisdom of the spirit will set us free ,I’m ready to start walking back home , called by my true name that I haven’t heard, in what feels like 300 years, We walk the crown for you. Will have very little funds but no bills. And will never use flashlights so we are not blinded.see with our eyes and hear with our ears.
Sounds great, Drew. Check out the Adventure Sponsorships we have.