If your travel dreams are being held back by finances, I have three effective budgeting techniques to help you turn those dreams into reality. Here’s how I managed to finance my adventures and how you can too.
On December 15th, I entrusted $500 to Charlie as a deposit for my Shasta, a vintage travel trailer. By the end of March, after making monthly payments, I fully owned the Shasta and began remodeling it for my travels. This was accomplished while on short-term disability, earning just 60% of my usual income. Here’s how I made it work.
Step 1: Create and Stick to a Budget Using Envelopes
This isn’t your typical budgeting method. Gather your bank statements, a calculator, colored markers or highlighters, and some envelopes*. Using color codes, categorize your expenses to get a clear picture of your spending habits.
*If you save the extra envelopes that businesses send you to submit payments by check (because who uses checks anymore?) you will not need to buy any materials for this – including the envelopes.
DO NOT BE TRICKED INTO BUYING BUDGET BINDERS AT THIS STAGE!
Step 2: Identify Your Expenses
If you use tools like YNAB or Mint, this step is easier. Categorize your expenses using different colors for each type:
- Utilities: Phone bill, rent, mortgage, insurance, etc.
- Car: Gas, tolls, car payment, insurance.
- Food: Groceries and dining out.
- Shopping: General purchases.
- Miscellaneous: Everything else.
Highlight your bank statement transactions to see where your money is going.
Step 3: Determine Your Income
Focus on your income streams, which should be clear from your bank statements. Knowing your monthly income is crucial for the next steps.
Step 4: Allocate Funds and Cut Unnecessary Expenses
Examine your spending categories. Are there unnecessary subscriptions like multiple streaming services? Trim these expenses. Keep essential funds in your bank account and allocate the rest into envelopes for food, shopping, and miscellaneous expenses. Stick to a strict weekly allowance, adjusting for your lifestyle.
For example, I allocate $50 for food, $10 for shopping, and $20 for miscellaneous each week. Anything left over at the end of the month goes into savings. I also keep a credit card for emergencies only.
Step 5: Track Your Progress
Keep track of your spending by noting transactions on your envelopes or using a paper inside them. Collect receipts and review them weekly, filing them monthly. This helps in managing returns and preparing for audits.
Some use a spreadsheet, others have envelopes that come with a tracker printed on them. If you use the envelopes that come in the mail from junk mail, you can simply use a ruler and pen to make rows and columns to track for free.
Bonus Technique: No-Spend Days
Inspired by a savvy budgeter on YouTube, I implemented no-spend days. I chose three days a week where I don’t spend any money, which curbed my impulse spending and dining out. Plan your shopping and fuel needs around these no-spend days to help stick to your budget.
Evaluate and Adjust Monthly
Your budget isn’t set in stone. Adjust it based on changes in your income or expenses, such as tax returns or school supplies. Avoid rigid budgeting; flexibility helps you stay motivated and succeed.
If this ends up being extremely helpful for you I would highly recommend investing in a small fireproof safe to store your envelopes in when you’re at home. You do not want to be carrying around large amounts of cash and you also do not want large amounts of cash sitting around at home.
What if I do not want to use cash?
As an alternative to the cash method if you absolutely do not want to be bothered with cash, you can do this same exact thing but with two separate bank accounts (or even use PayPal, CashApp or Venmo in conjunction with your bank account as all of those apps have their own card AND they link to your bank account so you can transfer money back and forth).
You would simply follow the same exact steps, but instead of having multiple envelopes full of cash to pull from you would withdraw/transfer all of your allotted spending money for the pay period and put it into your second account or app. All leftover money gets transferred to your savings account.
By following these steps, you can save effectively and fund your travel adventures. Customize these techniques to fit your needs and set yourself up for a financially stable journey. Safe travels!
