Financial planning for long-term travel: preparation

by Dave from The Longest Way Home ~ June 18th, 2012. Updated on November 12th, 2012. Published in: Travel blog » Long-term travel.
Iranian man counting his money

Financially planning your long-term travel means more than counting your money today

Before you go on any long-term travel journey you should prepare your finances

Financial planning for long-term travel is one of those things you can’t help but tackle head on. You need money to travel.

Many people write about how to earn money to support yourself when traveling. I’ll try to cover this a little later on. But before you rush off onto a plane with your cash you should really have spent a few months physically preparing your finances.

You’ve saved and invested in long-term travel for years. Don’t see it all get sucked up by the giant travel vacum cleaner. Read about what to expect  and how to prepare your hard earned cash for long-term travel.

Leaving your job to go long-term traveling

Do prepare for this well in advance. Even if you hate your job with a passion and have imagined your last rebellious day for years: leaving on good terms is a better idea than mooning your boss. Remember if applying for another job abroad you’ll often be asked for a reference from your last employer. This might not happen straight away but a year or two down the road you might be applying for a job overseas where that reference will come in handy.

Do make sure your boss is the first to find out you are leaving and not the last.

Be kind to your boss: Give your employer plenty of notice to prepare for your leaving. Not only will this make you look good but it shows you care about the company. A good “out” is to say you’re planning on long-term volunteering to give back to the world. Who can argue with that?

You might also use the same excuse to get a written reference now, or write-up a draft yourself to speed things up. Many employers today do not give out written references unless a new employer asks for one. Explain this can be problematic in a small rural village in the middle of nowhere land with no electricity.

Woman covering her face

Don’t leave your financial planning for travel until the last-minute

Basically what you are after is a “Dear Sir or Madam” generic reference to stand by you in future. In two to three years your boss might be gone and having a letter like that will help in gaining employment.

You might also consider collecting up a few more of these reference letters from past employers too.

Vacating your office: Try to avoid using work equipment to research your long-term travels and don’t forget to delete your personal emails, and internet history before you leave – just in case.

I would seriously avoid all manner of things like asking for a raise before you leave, hand in your notice or to help fund your travels.

Avoid rubbing it in with co-workers: Try to avoid bragging to your colleagues about the fact you’ll be away for years traveling the world. A lot can happen in those last few months to both change things, and make life difficult at work.

Does long-term travel effect tax and social benefits at home?

For a start do make sure to pay any outstanding taxes you may owe. If you have any pension funds or make contributions to your social welfare system my advice is to consult a financial advisor for the best advice on how to handle this within your countries system.

You might still have to pay tax: If you are going to be earning money when traveling then there’s a strong chance you’ll need to pay tax on it back home. This is dependent on your country of residence but do read on for other considerations.

Do remember when reading about financial planning online that your own countries tax, welfare and financial system may differ from the advice you are reading

Do find out if you need to contribute to your country of residences state system.  Many people who leave their home countries do not realize that by not contributing to the state may mean you will not be able to claim benefits when you return after an extended absence.

This means that if you return home after several years abroad you may not be able to claim state medical benefits, social welfare entitlements or other public funded utilities.

Again, make sure to check a local financial adviser in relation to your home countries laws.

Using investments at home to support your long-term travel overseas

If you have worked hard enough through saving, or got lucky enough, you might have a large pool of cash both to travel and/or invest. Having a financial resource that can provide you with a monthly income whilst traveling is an ideal scenario to be in.

House owner: Renting out your house may both pay for your mortgage or help fund your travels while away. However do take additional costs like housing management, insurance and repairs into account.

Running a business back home: Likewise having a small business at home that provides an ongoing income is another viable option. However again you may have to reinvest money into hiring additional staff and take increased communication fees from abroad into account.

Savings & investments: If you plan on using your savings to fund your travels over a long time you might look into secure term-deposits or stocks or bonds for the funds you will not be immediately using. General banking rates these days are often questionable when it comes to interest on savings so consulting a professional banking or financial planner will help you for your own personal needs.

Preparing your banking for long-term travel abroad

Make sure you have online banking: Online banking may be essential to you unless you have someone at home looking after your expenses and or income. If you are doing it yourself talking with a point of contact at your bank will help tremendously. Get all your codes, passwords and anything else you need to operate your accounts online well in advance to make sure they work.

Be sure to clarify with your bank about the countries you will be traveling in as many log ip addresses and if you show up accessing your account from another country it might create an alert.

Calculator, pen and receipts

Financially planning long-term travel well in advance is important

Handing your bank account over to someone else: If you are planning on being abroad for years you might want to consider appointing someone to legally take control of your money should anything happen to you. Or open a joint bank account with someone. That way if you get stranded somewhere or incapacitated someone can help you out quickly and without a lot of formalities.

Using Credit / Debit cards abroad

With any form of card you are using overseas companies need to be aware or where you will be traveling to otherwise you might get a cancelled card. PayPal too needs to be aware of these things. Read more about how to deal with PayPal when traveling here.

Also try to remember that buying online may still be cheaper than locally. Think books, clothes, or luxury items. Just watch out for import tax!

Cancelling bills, subscriptions and other fees

If you subscribe to any service that debits your accounts or cards be sure to cancel them well in advance. Many companies are notorious for not cancelling promptly. You may have to talk with a bank or credit card company to ensure these subscriptions have been cancelled. This is much easier to do at home than overseas.

 Avoiding  banking charges when traveling overseas

With financial planning for long-term travel do take into account the charges levied on you for withdrawing or transferring money overseas. Many banks will charge you to use their service to keep money with them, transfer money from them and then again to exchange money to another currency. While overseas you’ll be using different banks who will again charge you for using their services.

Banking charges can cost you up to USD$10 per transaction. That’s a lot of money just to be able to access your money!

Do some research before leaving. If necessary change banks to a bank that does not levy charges when accessing your account overseas.  Try to find the names of the banks your bank has affiliate statues with abroad. Very often these banks will not issue with a charge.

Wade Shepard from Vagabond Journey recommends:

The key to not paying high banking charges when traveling is to, simply put, not use a bank that charges big international withdrawal fees. Before setting off to travel internationally, shop around for the bank with the best deal for international transactions and move your money. I pay a 1% VISA transaction fee on international ATM withdrawals, and my bank takes none of this. If you’re bank is going to charge you for accessing your own money, it may be time to look for a new one. If you’re from the USA be sure to check out brokerage firms like Charles Schwab and Fidelity, as they have some excellent banking plans for international travelers, and also look into some of the smaller credit unions.

Banking overseas when traveling

Open a foreign bank account: It’s not easy. But it’s possible. If you stop traveling in a country abroad for any length of time you might want to consider opening a bank account there. Either to deposit money earned in said country or perhaps transfer money into it and avoid international ATM fees.

In many cases you’ll need to satisfy the bank abroad that you are either a resident, working, or have viable funds before being considered. Again this will all change from country to country. And you probably will be asked for anything from utility bills to driving licenses to passports and certain amount of money to open the account.

Understand not all banks work the same way: Issues to look out for are quite literally getting to grips with a whole new banking system and rules. In Nepal for example you can earn up to 9% interest on your savings. But, you can only withdraw so much every year. Also beware than opening a bank account in a foreign country without being a resident may leave you with little ground to stand on should any issue arise.

Benefits of opening a bank account overseas are to avoid international charges, deposit locally earned money, pay local bills show a proof of local earnings and if you plan to live overseas in said country a way to start your savings securely.

Additional financial advice from Earl from Wandering Earl 

“Don’t rely on one method when it comes to money. You should carry some cash (US dollars or Euros), have a credit card and at least one debit/ATM card. Even if you notify your bank of your travel plans, there will undoubtedly be a time when your bank blocks your account or your ATM card won’t work or your credit card isn’t accepted. Having a little cash on hand as a backup plan is always a good idea in case such a situation arises.”

Financial planning for long-term travel includes saving & budgets

Budget your yearly expenses: Again this goes a little beyond what this article is meant to cover. However in financial planning for your long-term travel journey you should draw up a yearly budget of your known expenses. These would include things like health insurance, bank charges, taxes, etcetera.

Keep saving: If you do plan or are earning money while long-term travel you should, just like any non-travel based job, be considering using part of your earnings for your future. This includes savings, pension plans or investments, etcetera.

All the above should be given consideration before leaving on your journey as they are a lot easier to set up before you go rather than when you are already traveling.

Get an education before long-term travel

Don’t skip over this bit: A good college education in this day and age will often make it easier to make a living both after and before long-term travel. You will often read me writing about “travel is the best education you can get”, which is true. However that does not mean everyone else will think the same, nor does it provide ultimate proof that you are skilled in one particular area that requires specific competence.

Chinese Yuan

Thinking about your money before you travel will help you in the long run

Get a certified education before traveling then go out and get a real education in the world

At some stage during long-term travel you will need to earn money. Possibly even get a job overseas. The only way this will remotely happen in this day and age without working illegally is by showing you have a college/university degree.

With a degree you can fully open up the gates to being financially independent when long-term traveling.

Christine from Grrrl Traveler recommends: 

“Travel itself is an education. But if you want a formal or accredited one, why not enroll in a school or university abroad? It’s the best way to kill two birds with one stone!”

Should you pay off a student loan before long-term travel abroad?

Yes. Unless you have some form of income whilst traveling that will pay off the loan for you. And, unless you have a specific load agreement that will suspend repayments if you are not earning.

Chose your loans carefully: Some student loans can be suspended if you go volunteering with qualified agencies. Some of these volunteer agencies will give you a remittance at the end that can go towards paying off your loan.

You could also take a job overseas teaching English and try to payback your loan that way.

What’s really important is to note in paying off student loans vs travel is “life”.

Free from study, the world awaits and so too does responsibility.

Getting a financial bailout should not be an option: It’s easy to get caught up in travel and put debt repayments in the back of ones mind. Then when the cash dries up look to parents or another loan for a bailout and face years if not decades paying every one back.

Personally, I would settle all debt before long-term traveling. With only having a volunteer / job guarantee payout that would end the dept as an exception.

Then again, one could always argue that volunteering / working overseas is not strictly “traveling”. But, it is a frequently asked question here.

Study abroad option

Again this is going a little beyond the scope of this article. However if you do not have a college education and want to travel you may want to consider studying for a degree overseas. While visas, nationalities and money may stand in your way the benefits might be that a degree overseas is cheaper than back home. Learning a new language and culture. Starting a career in another country.

It’s a topic onto itself but one that’s worth noting in regards to financial planning.

Earning income when traveling long-term

Pay your taxes: This article is specifically about preparing your finances before long-term traveling and not about how to earn money overseas. However in planning do be aware that if earning overseas you may be liable to pay tax back home or at least must contribute to social welfare systems. Let alone within the country you now reside in.

I have met people who traveled a long time and went home only to find they owed money (tax) due to not filing a form to state they were unemployed after leaving their last job

Take advantage of the system: At the same time you might also be able to avail of tax breaks due to reduced income, or added expenditure. Claiming tax back based on what you are earning in terms of expenses.

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A final note about Long-term travel financial planning

Each country has different laws, taxes and banking systems. It’s not possible to realistically cover them all here. I would however advise you to start preparing your finances at least one year before you begin traveling.

  • Give plenty of notice when leaving your job and try to get a reference letter
  • Find out if you need to contribute to taxes or the state of your home country before you leave
  • Find a bank and/or credit card company that will not charge you for overseas transactions
  • Make sure your bank knows you are traveling and that you have a point of contact
  • Cancel all your direct debits payments, subscriptions and other charges at least six month before leaving
  • Create an online account and a separate account for overseas earnings

Have you encountered some other tips for preparing your finances before going long-term traveling?

  Long-term travel planning is not something many people have written in-depth about from beginning to end. I’ve been long-term traveling for over 7+ years. And I’ve been long-term travel planning for most of my life. Read more of my articles on long-term travel

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24 Great responses to Financial planning for long-term travel: preparation

  1. BB Travels says:

    Tip: do a night course and get trained in a practical skill you can earn money from.

  2. trevor waeman says:

    in UK, bank cards are valid for 3 years…. what do u do , as u r travellling very long term, and i take it from ur ‘situation’ u do not rely on people managing a UK (?)account for u..

    other bloggers say that they are on the road for their whole life BUT go ‘back home’ to re new bank cards, etc..

    i dont rely on others in my home country to control my banking and banks refuse to mail out new cards internationally and i wanna be travelling for more than 3 years… any advice? to over come this?? thx

    • Each bank is different, even within the same country. They all must follow credit card company guidelines. And all the above change every few years. So the options are varied.

      Some options to help might include using your lawyers address. Then have them ship out the card. Or an accountant. It might cost money, but it will be cheaper than flying back.

      Likewise having a family member become your legal representative, meaning they can send cards to you.

      Another option is opening an international bank account with branches overseas. They will often send cards out to the branch bank nearest to you.

      Credit card companies often allow for two addresses. One is a home address. The other is a shipping address. Kind of like when you buy airline tickets they want your current address, and your credit card address.

      Finally another option is to buy prepaid credit cards. They work like top up cards. Again if banking with an international bank you can obtain these with relative ease.

      It’s a subject worthy of a single article, but nearly impossible to write as each country, bank and system is different plus changing all the time. So impossible to define. However hopefully the above might help you find a solution to your own needs.

      • trevor warman says:

        thank u for the reply.. very help full….. as a Brit, can i say in South Africa, buy a pre paid credit card or does one need a fixed address with work contract to be able to get one?
        i work in switzerland , so i know how some things work… u alwasy need a fixed addrress/work permit for a regular bank account.. not sure about pre paid cards.. any further info would be appreciated… thanks

        • No problem Trevor. Regarding Prepaid cards: You are basically buying a card with a set amount on it and no credit checks. Though I do know many ask for ID. Probably best to ask the international banks in Switzerland what their overseas outlets offer. It’s an option with limits as they may not work in all countries. So beware!

          • Mark says:

            There’s usually high withdrawal rates on those prepaid cards in my experience. If you are in Switzerland surely theres some international bank willing to help you?

          • trevor says:

            have been on to Caxton with regard to card validity.. 3 years…they quoted me… perfect!! free international ATM withdrawals…. can use Nat West credit card for on line purchases (only using my lap top for doing banking stuff of course)…. as expected SWISS banks do do pre paid credit cards but the charges are extortionate….

            when i apply to Caxton , hope they dont look in to my ‘resident of UK for how long status’ too much as i am never there but can of c supply bank letters with my address on….

  3. This one page just about covers it. One thing I’d like to emphasize on is the university education part. If you don’t have a trust fund, a ton of money in the bank, work remotely or assets that bring in enough passive income to travel on, you’re going to have to work at some point in your travels. The importance of having a university degree has rose exponentially in the past five years or so, and MANY countries don’t provide working visas to travelers without them. Thinking about teaching English abroad to build up your travel funds? Think again if you don’t have that piece of paper saying that you completed four years of university study. Sure, some companies will still hire you without the degree but can you get the work visa? In Japan, S.Korea, China etc . . . the answer is no. This means you’re working on a tourist visa (and probably for less money and no benefits) which has many foul implications in and of itself.

    Sure, there are all kinds of under the table jobs you can get that don’t require any sort of proof of education, but these are all too often low paying and puts you into the black market. I’ve done these jobs for years, and they will get you the money to live where you are, but unless you have some highly specialized skills, it’s difficult to make enough cash to travel for long on.

    If you’re planning on having regular work stops on your journey to save up travel funds, it may be a good idea to stick it out through university first.

    • Good points Wade. I might be mistaken but I think you did a degree when traveling? If you did you might have an article on your site that could help people out if they wanted to do the same. Feel free to post it here if you do.

      Otherwise it certainly would be an interesting thing to read if you wrote something in-depth about the subject!

  4. Jan says:

    If you get a degree from another country is it the same as one from your own place? Or is it regarded as less?

    • Nice question Jan. Victoria below wrote about her experience, it’s worth reading too!

      From my own experience I can tell you that there is a difference in countries and degree value. Both technically and practically.

      If the university is not internationally recognized, there is a universal database, then the degree will not be held in the same regard as a school that is universally recognized.

      Likewise a degree from come countries is indeed not the same as one from other countries. I’ve met some employers that ignore qualifications from some countries. Legally they still have to interview etc, but behind the scenes they’ve already experienced the problems of people with masters degrees who are clueless.

      Out of date curriculum’s, no practical training, rote learning, and fraudulent exams are the main issues.

  5. Furio says:

    I know a few expats here in China that:

    1) Enrolls at the University to get a Chinese degree

    2) Apply for a scholarship from the Chinese government (2,000 RMB/month + accommodation it’s easy to get)

    3) Work part-time on weekends.

    • Thanks for your insight Furio, some interesting information there. Would be nice to know more about how to go about getting a Chinese University degree for people outside of China? It seems to be getting popular.

  6. Victoria says:

    Another interesting and helpful article Dave, thanks.

    Jan mentions a valid point. A degree in one part of the world has a different value to a degree elsewhere.

    For instance, the level of education in the Netherlands is extremely high and when we moved here, our South African qualifications didn’t count as much. You might need to start at the bottom again, and “work your way up” to a bettery paying job.

    • Interesting about the South Africa qualifications Victoria. I’ve seen this in other African countries too. Mainly stemming from having no practical experience. It’s one thing doing a catering course and then applying to a country with different health regulations etc.

      I keep telling people if they are going to do a course and want to work overseas then they should aim for internationally recognized qualifications.

  7. Jason says:

    Although I’ve been at this caper a while Dave. I got a bit out of this one. In a way, it was sort of a refresher course on what I already knew, but its a little uncanny in how close it is to my current situation (more on that later).

    On another point. Coming from a trade background myself. I feel that although not as useful as many University Degree’s, it can be handy to gain employment in many first world countries. Which will enable you to save a few more dollars to continue your adventure.

    The only problem being is that trade qualifications are not as prestigious in many countries, which is a polar opposite of my homeland Australia that see’s many Blue and White collar workers on the opposite side of the scales for once.

    If any trades people are travelling and come to Australia, the money to be eared in this day and age is stellar.

    • Glad you got something from this Jason, makes it worthwhile.

      Great point on having skills within the trade industry in Australia and NZ. Here’s something I’d like to know more about in regards to work visas there. It’s worthy of a full article as I imagine the information is fragmented online.

      Looking forward to your future plans!

  8. Very extensive post! And you just reminded me to check into my Korean bank account to make sure everything is ok. Which brings me to… if you are going to open a bank account in another country, try to find a bank which has locations in the U.S.(or your home country) for obvious reasons of being able to log-on online so you can make bank transfers, either from home-home or overseas.

    Loved what Earl said. That’s exactly what I do and for the same reasons. Notifying your bank of your travel isn’t always full-proof– my cards have still been flagged and denied and backup cards, country cash and U.S. cash have all come in handy.

  9. Plenty of great again, Dave.

    My experience is this, since 1988: always carry US cash $200-500+, including emergency stash not on you; have two VISA credit cards which are also global ATM cards, only use one – including internet purchases, other unused and only for emergencies; use internet banking based in home country and only use your secure laptop for access, so you transfer cash payments via PayPal or other account to your credit account, then use ATM.

    Going home to get a credit card renewal is also a good reason to return home to see family; but I’ve also had my bank courier-out cards to me in foreign countries.

    Long-term-travel usually means work along the route. I fund most of my journeys by teaching English, which often requires a degree nowadays – for legal work visa requirements.

    • You are right Michael having cash in hand today is as valuable as it was 100 years ago. And probably will be until the day money is no longer needed.

      Great points also about having a secure laptop for online transactions and multiple cards that can be sent out by courier by a bank. I’ve yet to meet a TEFL teacher in the past 5 years who is making “good” money without a degree. It seems those days are gone.

    • trevor says:

      yep cash is still the way to go in some countries….Africa for example…. either ATMS which accept only locally issued cards or no ATMS at all!!!! whats the point of having all those fancy credit cards eh!!! yep…. never go on line banking on a public computer…… have borrowed lap tops from other travellers to do this a few times.. and then delete all password/browsing history….


  10. Chris says:

    Thanks for this suuuuper long blog, loads of information I hadn’t even considered! It seems that no matter how many times I go to Spain (and I go a LOT), and I always tell my bank and Paypal I’m going, my card and Paypal account never fail to get locked :( Earl’s suggestion to have a little emergency cash is one of the best ones possible when travelling, especially if you’re going it alone! Imagine being stuck in the middle of nowehere in a country you barely speak the language, with no money… not nice, wouldn’t like it to be me!