This post follows on from Need a gap year? It’s never too late, where we discussed why and how you should plan a gap year right away. Here we’re talking money and the smartest ways to fund extended travel.
Getting your money right before you plan extended travel is crucial. The confidence and ease of mind you’ll have once your affairs and cash flow are in order will be priceless.
Address and organise these six key pillars of funding extended travel for a rich, successful and low stress experience:
1. Your budget
Knowing what your spending is going to look like is the smartest and most important starting point.
Firstly, download our budget template to map it all out:
Once you’ve completed this cancel as many fixed costs as possible; think music subscriptions, TV, phone etc. Having a phone with you overseas is almost imperative, but take one that is unlocked from your domestic provider and buy a global sim card, check this one out, or grab a local sim on arrival. One of the best ways to identify fixed costs is to take a Money Day and take stock of all your assets, especially those that already generate income, e.g. shares, property, bank accounts.
When you look at your bank statements, highlight any fixed costs that can be cancelled and account for those that you’re keeping, so that you can make the most of cutting as many expenses as possible.
A good way to balance your budget is to consider ways you can work and earn income overseas. Getting involved with the gig economy is a great way to make some easy freelance money on the side from a laptop. Remember not to forget about taxes on any income you earn at home or abroad.
2. Set up your bank accounts to fund extended travel
Smart online banking is imperative to fund extended travel. Before you leave, look at home for bank accounts with fee-free international transactions. This could eliminate the need to open a bank account overseas. However, if you’re spending a long time in one place, and if you’re locally employed, then you may need to consider opening an account in the new country.
Remember to do your research before you leave and double-check which documents and proof of identity you might need. You might also consider giving your power of attorney to a family member to take over your accounts in the event you go off the grid, or something worse happens.
Setting up important documents like your will and power of attorney before you leave is a smart idea.
3. Your home
There are a number of options depending on your living situation.
If you’re renting you could:
- Break your lease
- Airbnb or sublet your place if you’re not going for too long, you really want to keep your place and your rental agreement permits it
If you own your own home you could:
- Sell it, depending on how long you’re going for and on what you think the market is doing
- Rent it out as a long-term (or standard) rental through an agency or as a short-term rental using a service like Airbnb.
A long-term rental is probably the best way to go. This is because you won’t have to manage it while you’re travelling. On the other hand, if you prefer to leverage a company like Airbnb, you can use it in combination with a website like Airtasker, where you can have someone come in and sort your place in between guests.
Just remember that both of these types of income are taxable, so you need to be prepared for the tax you’ll have to lodge in Australia or in your home country every year.
4. Your car
If you’re going away for long enough it’s important to recognise that your car is a depreciating asset and that you should probably sell it. Sell it, pay out any loan, and free yourself of that concern. Insurance, registration, and keeping it running all add up.
Your other option is to rent out your car. If you live in an area where it’s popular enough, websites like Drive My Car are growing in popularity, and could be a great option to fund extended travel. Always research all your options and choose the best one for your unique situation.
If you’re looking to fund extended travel beyond 12 months, I strongly encourage you to sell as much as possible. There will be stuff that you want to keep, but make this list of items minimal (memorabilia, photos, where possible ditch the furniture). You can always repurchase when you return.
Tips for getting the most out of storage if you have to use it:
- Look for new construction – if there’s a new area, you’ll find they’re often vacant. These guys don’t make money if they’re vacant, so there’ll be discounts available.
- Store in slow season – uni students, people starting new jobs, and/or new leases tend to move at the start of the year in the summertime. Storing your items from autumn to winter is a good time to pick up a better deal due to the lack of demand.
- Choose amenities wisely – skip any extra storage options that you probably don’t need e.g. climate control. Go for the absolute bare minimum.
- Consider choosing a smaller-sized unit – don’t be sucked into getting a large unit, no matter what they say. You’ll be surprised at how much you can cram into a small unit. If something doesn’t fit sell it.
- Always ask for a discount – if you don’t ask you don’t get
- Consider using a mobile service for storage, like TAXIBOX – TAXIBOX picks up your belongings from your home. While these services can be a little bit more expensive they can often be worth it if it saves you the hassle of moving everything to the storage cage.
Many types of insurance have loyalty bonuses attached that might deter you from cancelling a policy. If you’re going for more than six months it could be worth paying the premiums so that you maintain the additional discount of keeping the cover for until you return home.
If you decide to cancel an insurance policy, be careful. Check first if you can put a policy on hold. Car and health insurance are usually easy policies to cancel and pick up again when you return. However, remember to replace health insurance with a suitable level of travel cover.
Another policy to consider cancelling is your house and contents insurance but only if you’re breaking your lease, or selling. Don’t make the mistake of losing building insurance though.
Life, Total and Permanent Disability (TPD), Trauma and Income Protection insurance might seem a little foreign to you, but if you don’t have these types of cover, consider these before you go.
In fact, regardless of whether you’re planning extended travel or not, if you’re earning money and have any sort of long term plans that rely on that continuing, you should absolutely consider this.
Most good quality cover will still pay if you’re overseas, but make sure you understand the policy wording first. Cancelling this type of cover can be a huge mistake. Speak to us if you’re not sure where to start.
There you have it. I wanted to show you how to fund extended travel because it’s totally doable. I’ve been lucky enough to spend a couple of longer stints overseas. I’ve seen more than 20 countries and in this time, I have learnt that travel is far more affordable than most people realise. You just have to plan ahead.
Congratulations if you’re planning an extended trip away from home! Embrace this opportunity. We’d love to hear your tips. Let us know in the comments where you plan to go and any other tips you have on how to successfully fund extended travel.