How can I travel the world on $50 a day?

Figuring out how long you can plan a holiday for, or whether you can afford to travel long-term, is a relatively simple calculation if you have the right variables. In a previous post, I illustrated a few different methods of calculating short, medium, and long term or even permanent travel, but all of them are based on how much you will spend each day.

I mentioned the figure of $50 a day, which for some, might sound entirely unreasonable. That’s how much Paul Terhorst suggested in his book, Cashing in on the American Dream, which is what inspired my husband and I to begin our current travels in large part, and was the impetus behind my most recent post, the first in a series probing the notion of the American Dream. But Terhorst’s book was published back in the 1980s, and the world is, unarguably, different today. One could even say it’s a different world since I wrote my first post in this series on the American Dream two days ago. So is travel on $50 a day still possible?

How much do you need?

Before leaving employment to pursue a life of travel, the Terhorsts added up their costs and found they spent about $50 per day on ‘basic’ living expenses.

At home, we live off less than this, and so I was surprised that the $50 a day rule seemed equally applicable today as in the 1980s. I was sure that inflation would have at least somewhat eroded the buying power of $50 – and of course, it has. $50 in 1988 USD has basically halved in purchasing power in the years since. So how can it still be possible to live off of $50 today?

What differs is my definition of ‘basic’ and Terhorst’s. The Terhorsts’ figure includes not only food and clothes, but a bunch of things I personally wouldn’t consider ‘basic’ – a maid, dry cleaning, movies, and dinner out. As well as ‘vacations, golf club dues, guitar lessons, gifts, a cigar now and then, and French cognac’.

Try adding up all of your basic living expenses. This might include your rent, mortgage payments, and/or rates – whatever you spend on keeping a roof over your head, your utility bills, your grocery and health care costs. Maintenance of assets (house, car etc.) is not included – only maintenance of yourself.

The Terhorsts ended up using their $50 a day figure as their benchmark for post-retirement travel expenditure too.

Is it still possible to travel the world on $50 a day?

In spite of inflation, I’m convinced that it is possible to live – and live well – on $50 a day at home in Australia. Simple Savings, a wonderful online community I am a member of, regularly has threads describing how members live on $20 a day, or a whole family live on $100 a day in Australia and New Zealand.

But can it be done with the extra expenses associated with traveling? According to the excellent book How to Travel the World on $50 per Day by Matt Kepnes, who has been doing so for over half a decade, the answer is a big YES! And I recently came across the folks at eTramping, who do it on even less!

Again, what is important is your definition of ‘basic’. How you define ‘basic’ will need to be much closer to my own definition – food, clothes, occasional movies and mid-range dinners out, but no French cognac, cigars, golf clubs or maids.

Daily life here in Hungary is costing us on average about $40 AUD for the two of us. (If you don’t believe me, jump onto AirBnB yourself and see what you can find!).

What does this get you?

  • Accommodation – $22 for a beautiful studio apartment with full kitchen (oven, stove, microwave, sink etc), bathroom (with laundry facilities) and secure entrance. We’re in a lovely, safe area, and have trams and buses close by, as well as shops, restaurants, and are near a beautiful park. By staying for a whole month, we got a significant discount.
  • Utilities – $0. Gas for heating, cooking, and hot water, electricity, and even wifi are included in the accommodation charge.
  • Health – $3 for travel insurance for the both of us. We got a great deal by getting an annual policy. So far we haven’t had any out-of-pocket expenses but we have savings set aside for excess and emergencies.
  • Food – $5. A weekly shop costs us about $20 (meat, vegetables, basics, some desserts), and there are plenty of cheap, filling and super tasty options to eat out that start at less than $1, although we don’t eat out every day.
  • Entertainment – $5. This includes sightseeing at around $4 a day on average (attractions we have visited so far cost between $2-15 per person, but we are visiting even more free options) and our phone, which we pay about $1 a day for (got a great deal in the UK and are charged local rates while roaming). Strictly speaking, we could get away without this convenience seeing as we have wifi here, but it’s really useful to have a live map and a translation device outside the house (although the offline versions are getting better all the time).
  • Transportation – $6. Half of this is for our monthly passes that give us unlimited travel on all public transport in Budapest. The other half accounts for our flights to Hungary, averaged out. Using Skyscanner, and sites like Megabus Simon has gotten us some great deals (e.g. tickets from Scotland to England for 1 pound!)

So that’s about $20 AUD per person. Kepnes, author of How to Travel the World on $50 a Day includes Budapest (and Thailand, which we also recently visited) on his list of destinations under $30 (USD) a day for a single traveler. His formulations not only take into account the somewhat increased expenses for a solo traveler (single rooms are usually more pricey than sharing, fewer bulk discounts), but they also allow for alcoholic beverages – something our calculations don’t.

How can I save money while traveling?

One of the biggest advantages to long-term travel over short-term holidays is the ability to get cheaper deals in the off season, flying on mid-week flights, using non-refundable tickets, and getting discounts for longer stays.

On AirBnB, which didn’t exist when Terhorst was giving his advice, you can get very significant discounts (sometimes up to 50%) for staying for a week or a month or longer.

Terhorst also suggests flying with hand luggage only (something we’ve been doing for the last 5 months). Often we think of this just in terms of saving on the cost of checked baggage with budget airlines, but there are other advantages too, such as not needing to use lockers or ‘left luggage’ facilities, which can cost up to $20 a day in some places, when you’re changing location.

Terhorst suggests that if you’re traveling as a couple, have just one person go in to a hotel if you haven’t booked, without the bags. They’ll be more likely to think you’re shopping around and give you a competitive rate than if the two of you are struggling with baggage and looking exhausted.

The advice to ‘choose hotels that offer what you need and nothing more’ is excellent. In Fiji, we saved $100 a night by getting a hotel room that didn’t have a bathroom attached. There was a shared bathroom right outside the door, and as it was low season, we had that whole wing of the hotel to ourselves, so we didn’t have to share anyway. The same applies to other accommodation like AirBnBs. If you’ll only have a bath once every couple of weeks and shower the rest of the time, you don’t need to book a place with a bath for every night of your stay and pay a high premium.

But why travel? The two-year test

  • If you only had two years to live, would you continue to work where you work?
  • Live where you live?
  • Treat your family the way you treat them now?
  • See your friends as often as you do now?
  • Travel about as much as you do now?

Terhorst calls this the ‘two-year test’. If your answer is ‘yes’ to all of these, take the test again in another 6 months. But if you answer ‘no’ to one or more, you need to do something about it.

Why do you live where you live?

If the answer is work, or family that you never see, or because it’s familiar, maybe it’s worth thinking about whether you could live somewhere else. Somewhere you would enjoy more, that you could meet people who share your interests, or a place that would cost you less. You might find somewhere that ticks all three boxes!

Long-term travel

To achieve affordable long-term travel, Terhorst suggests:

  • Going where the jobs aren’t. This might be parts of your own country that are cheap because of high unemployment, or parts of the world that are similar. This is applicable for both long term travelers and early retirees looking for a place to settle. Of course, some caution is warranted – links have been found between unemployment and crime, especially money-motivated crimes like burglary and mugging. Be sensible, and understand the particular advantages and challenges of the place you are visiting. I think it’s also important to be sensitive to the local environment. I often read stories on TripAdvisor of shocked and angry tourists who have had $500 phones or $1,000 cameras stolen from their hotel rooms or bags – often in countries where the average household income might only be $4,000 a year. Try to see your belongings, your mode of dress, your behaviour and your comments through this lens. Think about the equivalent if you were back at home. If the average household income is $80,000 in your home country, a $500 phone or $1,000 camera constitutes only around 1% of this. Hardly worthy of risking prison for most employed people. But to someone in a country where the same average is just $4,000, it might constitute up to a quarter of all the cash they and their family will see that year – and that’s if they’re in a job. The equivalent of $20,000 to you, in other words. Would you leave $20,000 in your hotel room unattended? Or carry $20,000 in your bag on the bus? In an ideal world, we would be able to leave any belonging of any value unguarded and not worry about theft – but in an ideal world, we’d also have far greater equality and opportunities for all, and everyone would have enough money to feed, clothe, shelter and educate themselves and their children, with some left over to enjoy.
  • Live like a local rather than a tourist. For us, this means buying food at supermarkets and markets rather than eating out at tourist traps, shopping off of the main strip, and enjoying free activities. Enjoying the views at a popular tourist spot earlier this week, frequented by tour groups and cruise ship passengers who seldom have the opportunity to explore the centre of the city, we noticed basic food items like hot dogs selling at three to four times the average cost.
  • Try living abroad for three to six months. If you’re planning a permanent move, or perpetual travel, this is a great idea. Having done this in the past, I can fully recommend it before making any permanent decisions.
  • Keep calm. You can always return to the United States, says Terhorst (well, Australia in my case!)
  • Don’t criticize, complain, or compare. Similar advice was given to me when I went on student exchange to Japan. I find nothing inherently wrong with cross-cultural comparisons though – by reflecting on your experiences, you can learn a lot about not only the place you are visiting, but as much, if not more, about yourself, your culture, and what you have been brought up to see as ‘normal’. For example, prior to going to Japan, I thought that any household without beds and mattress on the floor must be very poor indeed. In Japan, I realised that this was not the case – and that due to a different ethos around indoor and outdoor spaces and attire, as well as a different environment, it’s very possible to have a perfectly clean floor to lie your futon on (as well as some benefits for my back!)
  • Learn the language. Obviously, I completely agree with this advice – although I’m currently struggling with even the basics in Hungarian, despite my Duolingo practice! Not only does making an effort engender greater feelings of welcome, but you can often find bargains because in many countries, English-language advertising, signs and menus, and English-speaking staff understandably come at a significant premium.

There are a number of books and blogs that teach you how you can save and invest so that you can quit your job, and have the freedom to do what you like, whether that be creative works, charity, time with family, indulging in hobbies, or extensive travel.

Cashing in on the American Dream stands out in that a) its author quit his job over three decades ago, b) it outlines a plan that requires a considerably smaller stash of cash than most suggest, and c) he and his wife have used their freedom to travel.

Most books on retirement encourage the reader to calculate their net worth – to measure what  assets they have and then project what income they can receive, so they can work out when they can retire. Another key difference between Terhorst’s book and others is that while most similar books encourage the reader to calculate their net worth without including their house and car, Cashing in on the American Dream includes the home and car – the key components of the modern American Dream, because, as the title indicates, it suggests cashing them in to achieve long-term, or even permanent travel.

Cashing in on the American Dream

So you’ve established a benchmark of how much you usually spend, and researched some places that you could get by on even less. Long term travel might sound tempting. But where do you get the cash to do this?

The title of the book comes from Terhorst’s main strategy of using your home equity for investment purposes. He argues that housing takes up a third of people’s income, and that percentage is going up, and recommends selling your home and putting the equity into Certificates of Deposit (CDs).

In Australia, the Sydney Morning Herald defines “mortgage stress” as spending more than 30% of your pre-tax income on your loan repayments. Apparently 3/10 Australians with home loans are in this predicament (meaning that the majority – 70% of Australian mortgagors – have more affordable housing costs than Terhorst assumes back in 1980s USA).

Unfortunately, this is the one area in which I think Cashing in on the American Dream really shows its age. Back when Paul wrote the book, his wife, Vicki, who was doing the investing, was able to get an 8% return on CDs. Today, a 1-year CD yields just 0.57% in the US. A one-year term deposit in Australia earns a maximum of 3.2% at current rates. Considerably better than the US, but considering if you deposited the average home equity held by each household of around $297,000 for a year, you’d end up $9,504 per annum – which works out to about $26 a day. Essentially, while much of Terhorst’s advice on philosophy and the practicalities of travel remains applicable, it is best to look elsewhere for investing advice.

Instead, I would view this tip as one about right-sizing. Perhaps your house is surplus to your needs, and can be sold for a smaller one? Perhaps you don’t need a house at all if you are going to be travelling for a long time, and can find some other investments that will allow you to live off of the income? Perhaps you can rent out your home or part of it while you are away rather than hiring a housesitter?

I had a much easier time with the advice to convert other assets to cash, as aside from your house, most other assets, like a car, not only cost you money to look after but depreciate. Again, your personal situation is highly individual, but if you are aiming to travel the world for an extended period, it’s very unlikely that you need a car sitting in someone’s garage rusting.

Before we left, we reduced our belongings down to the capacity of a family member’s van, so that we didn’t have to pay expensive moving or storage fees. Everything else, we gave away, donated to charity, or sold on eBay. Being a bit of a sentimental person (especially when it comes to books!) as well as having a bit of a depression-era mindset (‘this might come in useful one day!’) I found it difficult, but Marie Kondo’s excellent advice in The Life-Changing Magic of Tidying Up helped me greatly.

Terhorst has a few suggestions to help us review our personal belongings:

  1. Has this been or is it likely to be an important part of my life? > If yes, keep it.
  2. Did I buy this to satisfy my drive to acquire, enhance your ego, or impress your friends? > If yes, sell or give it away.
  3. Which of my remaining assets are likely to bring in a worthwhile sum? > If you have any, sell them.

Regardless of whether your intent is to retire early or at the standard age (or even into your dotage if you love your job!), whether you want to travel far or near or not at all, or whether you have already fulfilled the watered-down ‘American Dream’ of owning a house and a car, or see this as something you could only achieve by moving overseas or perhaps not at all, I think taking stock of the things we have accumulated every now and then is excellent advice.

If the things you are spending money on acquiring, using, and maintaining are standing in the way of the things you want to be – your real dream as it were – whether that’s a traveler or an activist or a parent or an artist – cashing them in could just be the best decision you ever make.

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Be inspired by Paul and Vicky’s travel

Read more tips on $50 a day travel

and sub-$50 a day travel!

Today’s featured image is a map of Budapest and some Hungarian forint!

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4 thoughts on “How can I travel the world on $50 a day?

    1. Thanks so much for your comment Maria. Yes, I have been amazed at some of the accommodation prices too. In some areas, like central London, it’s still impossible to get affordable rates even using the likes of AirBnB, but if you’re happy to stay a little out of the city and use an Oyster card to travel in, it’s very easy. It all comes down to whether you’re happy to add a little travel time so that you can have nicer accommodation and your own kitchen, bathroom and privacy, or whether you would prefer to stay more centrally where you can only get a hostel bed for the same price. This option has certainly made overseas travel more affordable – and, I’d argue, more interesting too! ??

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