After we’ve seen in Planning your RTW Trip | The Case of the Piggy Bank that it would be better to budget a little bit before leaving on your around the world trip, and how to do it right, let’s see now in details what you have to budget for. Working out your expenses will give you a good idea of how much you’ll spend around the world, so you can start putting money aside as soon as possible.

Plane Tickets

Your biggest expense will probably be your plane tickets. Prices depend on where you want to go and when. You can have an idea on how they will cost you by doing a few experimental bookings on airline websites. You could also read 8 Ways to Get the Cheapest Plane Tickets and the Top 4 Websites to Find the Cheapest Plane Tickets.

You can start looking at airfare well in advance of your trip, but you have to know that prices will increase closer to your departure date, so book as soon as you see a price you like. Bargain fares can start up to a year before your departure date. You can also keep watch of Travel Deals that we post each day.

For more details on round-the-world (RTW) tickets, stay tuned (I will cover that in a next article). And don’t forget to look at flights with low-cost carriers (Ryan Air, Air Asia, etc.) since they offer deals year-round. You can also subscribe to airlines and deals’ mailing list to receive updates on flight prices and sales.

Be careful to look at the total cost of the airfare you want to buy, since airport taxes can jack up advertised prices. Usually they’ll be part of your ticket’s final price, but in some countries you might have to pay at the airport in the local currency (it generally doesn’t cost more than US$30). Look for the information in your guidebook, or call the airline just to be sure.

Visas

Don’t forget visas when you are working out your expenses. Sometimes they’re free, but it can add up if you need a few. You also have to be careful since sometimes a tourist visa is free, but you will have to pay for a working visa and paper work won’t be the same either. The length of your stay will also have an impact on your visa cost, so try to work out how long you’ll stay so you get the best value visa, and avoid multiple-entry visas as they can push the costs up.

Travel Insurance

When it comes to travel insurance, it’s not the time to skimp or be cheap, or it will come back to haunt you at the worst moment. You should buy an insurance that covers for the entire length of your trip, in all the countries you will visit, and for all the activities you are planning to do (not all insurance will cover you if you are bungee jumping or parasailing). Maybe you will only buy peace of mind, but that’s one huge risk you just don’t want to take.

Immunisations

Go at a travel clinic at least 2 months before you leave for your round-the-world trip to discuss and get all the immunisations you need. Some shots can be free but most will cost you. It all depends where you are going, how long you will be staying there and if you are staying in tourist spots or are planning to travel off the beaten path. As for malaria, check out our Malaria Map to give you an idea of the risk you will encounter in each country.

Equipment

The temptation will be huge here, since it’s easy to go crazy and buy specialised gear and a new wardrobe before your trip. There are a few pieces of equipment that will definitely make your trip easier (such as a headlamp and a power adapter), but think about your destinations first and whether you’ll really need that equipment. You can also borrow the gear or buy it second-hand to lower the cost.

Don’t forget that everything you bring, you will carry with you the whole trip. So the less you bring, the easier it will be traveling. If it’s really vital to have that equipment, you can even buy it while you’re away. So if you need camping gear at your last destination, you can buy it over there and then you won’t have to carry it for all the length of your trip.

Luggage

Now is the time to shop, spend some money and invest in a good bag that will suit every moment of your trip. If you are choosing a backpack, which I strongly recommend instead of a suitcase, you want it to sit comfortably on your hips to take the weight off your shoulders. Trust me when I say it makes all the difference where the weight is when you are walking with a 25lbs backpack!

Accommodation

Accommodation will probably be your biggest expense on the road. If don’t want to spend a lot, aim for couch surfing. You can also do some camping, but read carefully your guidebook since camping can be as expensive at some destinations as a dry night at a hostel. Hostels is another cheap way to have a night’s sleep. If you don’t want to share a room, or take a break from fellow sleeping partners, you can book a hostel private room, or a cheap motel or hotel room.

If you are planning to stay for a while at one place, you can rent a room at someone’s condo or house (VRBO and HomeAway are two secure and well known websites for rentals), or you can even rent the whole place.

Traveling out of season and booking ahead are other ways to bring the accommodation costs down.

Food & Drinks

You will have to budget for at least three meals a day, plus a few coffees, beers and snacks along the way.

You can lower the costs if you are cooking for yourself at your hostel share kitchen. You can also get your lunch at the market.

Another way to save money is to eat your biggest meal at lunch, since most restaurants offer the same meal at midday than at night, but at a lower price.

If you are planning to stay at a motel or hotel, choose one that offer free breakfast, so there’s one less meal to pay for.

Entertainment

Visit local tourist offices or check out posters and flyers at public venues to know which free events are offered at your destination. And there are the obvious club cover charges and maybe the odd ticket to a performance that you have to think about when budgeting.

Sightseeing

Look out for discounted or free days when you want to visit a museum or a gallery, since admission fees can quickly add up. Having a student card usually gets you a discount.

Shopping

You will definitely want to have a little budget for souvenirs, for yourself or for you mom, but if you are traveling for a long time, you will also need to replace some clothes and other travel gear.

Activities

This is another important splurge, as you need to balance your budget as well as to enjoy your trip. You don’t want to end up missing on some incredible adventures and experiences just to save money. Some travelers work in the hotel or activity industry , which can be a good way to enjoy activities on your days off.

Transport

Getting around will add up, so you might want to discover your destination by foot. Public transport (bus, train, metro) is the next best thing, taxi being the priciest option.

Looking on the web is the best way to budget and to make good choices, as you might discover that rail passes or hop-on/hop-off buses are the most affordable options.

Communication

The best way to save on communication is to save up your emails, blog updates or Skype calls for when you’ll find a really cheap or a free wi-fi connection (a lot of McDonald’s all over the world are now offering free wi-fi).

Also phone cards are cheaper than normal phone calls, and texting is significantly cheaper than calling.

Laundry

The last but not the least, the laundry. It’s not much a matter of money than of time. Hand washing in the sink is the cheapest option, but it can be time consuming, and you might run out of places to get your clothes to dry. A weekly trip to a laundromat usually costs more in time than money.

This is it! Now you know in details what you should budget for your around the world trip. For more information about average costs at your destinations, please check out our Travel Guides.