There were over 38 million flights undertaken globally by the airline industry in 2018  - a staggering number that would be inconceivable just a few generations ago. How lucky we are to live in a time when world travel is the most accessible it’s ever been. And it seems that the easier it becomes to travel the world, the most our collective wanderlust grows.
According to Booking.com, 45% of us have a ‘travel bucket list’ , commonly including items such as seeing one of the wonders of the world, taking an epic rail journey or road trip, experiencing a unique cultural event or visiting a world famous theme park.
Whatever’s on your bucket list, it’s likely that the key to getting there is a sensible budgeting and saving or investing strategy. First you’ll need to tot up the cost of the things you want to do, and then work out how to get the money together.
How much money you need to travel to different destinations
According to research by Hoppa , the difference in cost between the world’s cheapest and most expensive destinations is more than £300 per person, per night. The cheapest destination reported is Manila, Philippines, at an average of £74.53, while the most expensive, New York City, USA, costs an average of £375.28.
The top five most expensive travel destinations in 2019 are in North America and Western Europe:
- New York City, USA (£375.38)
- San Francisco, USA (£305.56)
- Amsterdam, Netherlands (£302.31)
- Zurich, Switzerland (£297.21)
- Palma de Mallorca, Spain (£289.37)
While the five cheapest travel destinations are in Asia and Eastern Europe:
- Manila, Philippines (£74.53)
- Sofia, Bulgaria (£74.55)
- Antalya, Turkey (£75.30)
- Kuala Lumpar, Malaysia (£75.86)
- Ho Chi Minh City, Vietnam (£76.09)
All figures are per person, per night.
Bear in mind that these costs are an average, so your own could be well above or below the amount stated depending on factors like the season, and your style of travel.
How much money you need for different styles of travel
You don’t need us to tell you that staying in all-inclusive resort comes with a much bigger price tag than budget backpacking. But for anything between the two, it can be harder to discern what your overall spending might be.
To help you work out if your travel costs will be more or less than average, here are some of the different levels of costs within the budget areas we’re looking at (we’ve simplified, so this is a guide only). Your trip will likely include elements of all three columns, so consider the proportion to which each might be involved.
Hiking or travelling by bicycle
Travelling by public trains and buses
Budget airlines and error fares
Private transfers and taxis
Group travel by coach or minivan
Travel above standard class
No additional cover
Additional cover for minimal valuable items
Addition cover for some specific sports and activities
Additional cover for several valuable items
Additional cover for many sports and activities
Food, drink and living costs
Self-catering using locally-produced food
Self-catering using international food
All-inclusive food and alcohol
How much money you need for long-term travel
Conventional wisdom suggests that a long-term trip would cost proportionally more than a short one, but the truth is not that simple.
People tend to spend more per day on shorter trips for a number of reasons. Firstly, as some costs (perhaps your flights) are one-off, so will have a higher cost-per-day for short trips than longer ones. Secondly, longer stays can sometimes allow you to get better cost-per-day deals on things like accommodation. Thirdly, you have longer to do all the things you want to do, which may mean you do less activities per day. Similarly, you might be more flexible about when you do them, so you can take advantage of last-minute or off-peak discounts.
Since most international trips are short in nature (the average UK resident spent 10 days abroad in 2017) , the average costs per day you’ll see reported for most destinations are higher than those you’ll encounter on a longer trip.
It’s difficult to calculate how much you might save on this basis, but it’s worth considering that when planning for longer-term trips, a little more money might allow for a significantly longer stay.
How to save for travel
Whether you decide how long to travel for and base your budget on that, or decide how much you can afford and base your trip duration on that, you should now have some idea of the total sum you’re aiming for.
The next step is to work towards this target.
You’re probably excited to set off and plan to save for less than three years, but for a trip-of-a-lifetime, you might be saving for three years of more.
If this is the case, it’s worth considering investing as an alternative to saving in a cash account. Here’s the difference
- Saving is best for goals you intend to reach in the next three years. It’s low risk, so you’ll get back roughly what you put in (plus any interest, minus any fees). If you save for longer than three years, you’ll need to be aware of the inflation risk of saving; the risk that your interest rate will fail to keep up with the rate of inflation, and the buying power of your savings will diminish.
- Investing is a longer-term strategy for goals that are more than three years away. Investing has better growth potential than saving, but also a higher risk that you could lose some or all of your money. The longer time-frame allows the opportunity for you to recover any losses on your investments throughout that period.
If you’d like to know more about saving and investing, read our article comparing cash ISAs vs stocks and shares ISA, to help you come to a decision on which you might need to achieve your travel dreams.
It can be daunting to consider the total cost of your trip, particularly if you think it will take more than three years to accumulate the money. But if the thing standing between you and your bucket list goals is dedicated and regular contributions to your travel fund, and the right investment strategy, the sooner you get started the better.
When the saving gets difficult, remember the wise words:
“Travel is the only thing you buy that makes you richer.”
With investment your capital is at risk. The tax advantages of ISAs may change in the future and also depend on your individual circumstances.
Opinions given within this article are the authors own personal views. The views and opinions are effective from the date of publication but may be subject to change without notice. This article is not intended to constitute personal advice and no action should be taken, or not taken, on account of information provided.