Travel the world

How To Manage Finances For Travel (And Life)

Hey Jonathan,
I’m curious to learn: how do you manage finances for travel? I mean I know you earn income while you are traveling, but how do you budget/allot money? I want to travel a lot as well so any input would help.

The money question comes up a lot as we are traveling.

  • How do you afford to travel?
  • What pays for your travel?
  • How do you manage your finances while you are traveling?

We’re going to be writing more in-depth specifics about what we’ve spent over the past two years, and how we’ve paid off tens of thousands of dollars in debt while traveling.

We’ve traditionally not been good at budgeting.

Budgeting requires you to set an amount you will spend in advance of spending it.

This is logic trying to supersede emotion.

For us (and much of the world), emotional reactions are about 16 times more powerful than logical reactions.

So putting together a “logical” budget is great. But in the moment I want to buy something, I’m not thinking logically. I’m thinking emotionally.

I used to budget.

I did it in 1999 and ended up $10,000.00 in debt as a result of my own inability to stick to it.

As a couple, we tried budgeting off and on for a couple of years in 2006-2007.

But we (mostly me since I’m the spender in the relationship) overspend our budget.

A budget causes me to feel constrained and unable to move forward.

However, after achieving a giant financial hole of 2001 ($10,000 in credit card debt – Thanks Mom and Dad for loaning me the money to get out of it – and helping me see it in a different light), I read Rich Dad, Poor Dad in the fall of 2002, along with Think And Grow Rich.

Using a model I learned from Rich Dad, Poor Dad (Income, Expenses, Assets, Liabilities), as well as my mediocre (at the time) skills at Excel, I built a simple way to track money.

I started tracking every penny I spend and every penny I earn.

Carrie has done the same since 2004.

This means that we track even the smallest purchases. Little trinkets (we buy very few of these), stops at coffee shops, a quick bite to eat, clothes, etc. all get tracked.

Another way to say this is, if it gets spent, no matter how little, it gets tracked.

Some people use automated services to accomplish this.

They use or a desktop manager which logs into their various accounts and grabs all the details.

I tried a lot of these in 2006 and 2007.

I also had paid an accountant during that time to track for me.

Those services base their numbers on your bank accounts.

For me, a bank account, individual credit card statements, or even an investment account, are very poor representations of how our financial picture actually looks.

With a bank account, deposits come in automatically, expenses go out automatically, and cash spending (as well as cash received) isn’t tracked at all.

And yet, most people look at their bank account to decide whether or not they can spend money.

They also use their bank account and/or investments to decide whether or not they’re “getting ahead”.

For me, these feel like inaccurate measurements of how I am doing financially.

What I want to know, at the end of a day, week, month, or year, is whether or not I ended up positive for the year.

What did my cashflow look like?

Did I spend more than I earned? If so, why?

Where did my money go?

We hear a lot of people saying “I feel like I never have any money.”

But they don’t know why they don’t have money, or why they feel that way.

By tracking everything we spend and earn, we have accurate answers to those questions.

Many of the online sites or services which connect to bank accounts (like, or Microsoft Money) are great.

However, many times they mis-categorize a purchase, which makes it difficult to get a true sense of what’s actually going on.

So yes, every day, we take 2-3 minutes and track everything.

We do this in an Excel sheet.

That excel sheet is the “secret” to how we’ve paid off significant debt while traveling to 35+ countries in the past 2 and 1/2 years.

So today, I’m giving you access to this “secret”. It’s something that has made a world of difference in my life, and Carrie’s any my lives together.

If you don’t already have a system for knowing what your financial picture looks like, I recommend you try just 1 thing, for 30 days:

Track everything you spend, and everything you earn.

If you earn nothing for the month (i.e. you are living on loans or the goodwill of someone else, or living on someone else’s inheritance), put nothing for income, and just track your expenses in the appropriate places on the sheet.

Get the cashflow statement worksheet here

Commit to doing this for 30 days.

You can learn some very interesting things about yourself in the process.

If you are in a committed relationship (especially if you have joint banking and have ever disagreed about money), then you and your partner agree to work on this for 30 days.

Track everything you spend and everything you earn.

Below you will see a video I made of how to use the cashflow worksheet.

Please be patient. The video may take a minute or more to play.

I know this is of significant value.

But at the same time, I wonder how many people will actually take this seriously.

(If I charged $495.00, the people who purchased would do something with this. I may do that actually, and create some step-by-step videos and a backend support system for people to show the exact steps we took (and are taking). That entrance fee would allow me to really help just a few committed people… people who would take it seriously. Hmmm… another business idea. If you are interested, let me know. If you have any kind of significant credit card debt, I’m sure we can help you save a lot of money right away. Regardless, if you plan to use this, I recommend you get this sheet and use it while it’s still available for free.)

Daily tracking of income and expenses is one of those things that (like my friend Patrick Shaw says) is easy to do and easy not to do… like doing 10 pushups every day or listening to 10 minutes of a good book. It doesn’t seem that people are willing to stick with things very long.

So you be different.

If you do decide to download the sheet, please commit to using it for the next 30 days.

Tracking will take no more than 2 minutes/day, and you’ll learn some valuable points about your spending habits by the end of 30 days.

So in answer to your question Pravin (long answer to a short question), we don’t really budget.

Instead, we track our cashflow.

We review what we spend at least once every month, and at the end of the year (or usually in the middle of the year sometime as well), we do a big review to see what we can cut, and what we want to add.

Tracking daily takes discipline, but it’s easy and takes very little time, even when you’re new at it.

After you’ve tracked for a couple of months, you can get a good idea of where your money really goes, and then it becomes easier to build a plan for how you want to move forward.

In any case, I hope you’ll commit to this for at least 30 days.

More than any other single factor of our lives, this Excel sheet has had the biggest impact on our financial well-being. Looking at where we’ve come from helps to overcome the emotions of the moment, and lets us know that the work we’re doing now to bury in our debt hole is well worth it.

Get the cashflow statement worksheet here

Side note: There were some times in 2006 and 2007 that were scary financially. We didn’t even know how scary at the time. But in October of 2007, we had $23,000 in credit card debt, most of it at interest rates between 25% and 30% (which means paying nearly $7,000/year in interest).

But we now have a clear picture, on a daily basis, of how things are going financially.

And even though it doesn’t feel like it at times, we have made massive progress.

All credit card debt will be gone in January 2012. (WHOO-HOO!)

Thanks to Carrie for the commitment she has to doing this every day. When things look a little scary or when a lot of red shows up in the bottom line numbers, that is when it is most important, and most difficult, to continue tracking. During our travels in the past 2 years, Carrie has taken this work on 100%. Thank-you Carrie!

Get the cashflow statement worksheet here.

Leave a Reply

Your email address will not be published. Required fields are marked *