We’ve asked our community time and time again what the biggest thing holding them back from traveling the world was. The most common answer, every time we ask it, is money!
While traveling long-term isn’t free, it’s also not as much as people think. We know people out there right now spending upwards of $10,000 on a one-week trip to the Caribbean. We also know people who have traveled for a year on that much.

The importance of planning realistically

When you are figuring out your budget, it’s important to be realistic and honest with yourself when asking the following questions.

• How many continents do you want to visit (the more you go to, the more expensive it will be)?
• How fast do you want to go (faster = more money; slower = lower costs)?
• Are you fine with taking buses and trains most of the time, sometimes on 24-hour-long journeys?
• What types of adventures or activities will you be interested in including in your itinerary?
  • Have you started looking at costs (for things like hiking Machu Picchu, trekking to Everest Base Camp, skydiving in New Zealand – none are cheap activities)?
• Are you OK with hostel dorms?
• Are you going to want private rooms most of the time?
• Would you rather stay in hotels?
• Would you prefer to rent an apartment or house in each location?
• Do you plan on cooking?
• How do you feel about street food?

When you are telling your friends at your local bar about your trip, it sounds pretty hardcore when you tell them you’ll be sleeping in hostel dorms for six straight months, but after a week or two of actually doing it, you may want to treat yourself to something better once in a while just to keep from losing your mind. Or maybe you aren’t a 22-year-old straight out of college and traveling with your spouse. Hostel dorms probably aren’t for you, so be realistic and plan for private rooms. If you’re  a family that’s hitting the road for a big trip, there are plenty of hostels that are family friendly, but they’re not everywhere, so doing some research and legwork prior to leaving is beneficial.
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Begin by estimating your fixed costs

There are minimum fixed costs that everyone needs to factor in during the planning phase, mostly relating to transportation. This part of your budget is very inflexible. Long gone are the days when it was feasible to hop freight trains across land and stow away on freight ships over oceans. There are some creative ways of getting around, but they aren’t very realistic for most of us who are trying to keep our enjoyment levels on the high side.
Airfare is going to be the biggest expense, so it makes sense to start there. There are a lot of considerations to make when it comes to airfare.  There are round the world plane tickets available from a number of companies and airline alliances.  Most have their own rules and regulations. Learn about all of them, including the option of just buying one-ways as you go.
Our sister site, Round the World Tickets, has written a report on the state of round the world airfare, where we researched costs and reviewed customer service and usability of many companies who specialize in multi-stop tickets. Download the free round the world ticket report and check out reviews of  nine airlines/companies who sell this type of ticket.
If you’re at the very beginning stages of planning and just want an idea of how much airfare costs, simply plug your rough itinerary into Indie, BootsnAll’s multi-stop airfare tool, and you can get a price.  Once you have this general figure, you at least have a starting point. If you want or need an expert to talk to, get in touch with the folks at AirTreks. Around the world, multi-stop flights is all they do, and you get a personal travel consultant to help with your route based on your budget.
If you think you may want to buy one-way tickets as you go, then it will be a little more difficult to get an accurate estimate of flight costs. As we all know, flight costs can and do change dramatically depending on a wide variety of factors.  If you are pondering this method of flying, then you are probably doing so because you don’t want to be tied down to a set itinerary, so checking one-way flights is going to be tough since you may not know where you’re going or when. Guessing your route and checking flight prices on a site like Kayak is still a good idea, though, as it can at least give you a ballpark number.

Then take a look at flexible costs

Everything after that is completely flexible and up to you. This is when your pillars, or must-sees, come into play. You will have to start making important decisions and at the very least start narrowing down the regions you want to travel in.

Figuring out per day costs

If you wish to travel for a certain length of time, estimate how much money you will have in total and then divide it by the number of days you plan on traveling. This will give you an idea of how much you can afford to spend each day. Then you can look for places that fit within that budget and balance out a few weeks in a more expensive place with some time in a cheaper destination.
Finding these costs can be challenging at times and is one of the more frustrating parts of planning a trip of this magnitude. Guidebooks and other travel sites have per day costs for countries, but many are outdated by a few years, so adding to their estimate is a good idea. If you follow any travel blogs, they are great resources for up to date information, but not all blogs talk about costs, and finding ones that do (and are also up to date) can take some time.
BootsnAll has travel guides for each region, country, and city in the world, with estimated costs, but these are averages from our readers, so keep that in mind when using them for your costs. You’re going to hear all types of budgets – from “I traveled the world on $10 per day” to “Our family spent $200,000 traveling the world” and everything in between.
It’s important not to get caught up in this – do the legwork yourself and figure out the costs based on your situation. This isn’t a contest to see who can spend the least (or most).
Check these resources out for more help on figuring out travel budgets and per day costs:

• Travel Is Not as Expensive as You Think (from a Career Break perspective)
• How much does it cost to travel the world (exact budget from a couple who did it)?
• Budget for an 11 month solo trip around the world
• How to budget for a RTW trip
• Tips for budgeting for your RTW tip from BootsnAll
• How to plan a travel budget that works
• How to create a travel budget you’ll stick to

Accommodation costs

Everything you add on top of the Bohemian/hippie method is completely up to you. For example, a dorm bed in a hostel in Madrid might start around $15-20US per night (that same dorm room bed can be had for around $5 in places like Latin America and Southeast Asia), but many people don’t like large dorm rooms full of strangers. If that’s you, you might be spending more like $40-50US in Europe ($15-30USD in less expensive regions) for a private room.
It’s always a good idea to check out different hostel booking sites and start researching costs.  This will give you the best idea of what you’ll be spending. Figure out what your minimum standards are and work from there. It’s always a good idea to add a little extra padding. Even if you are fine with camping or roughing it, after several days or weeks, you may want to splurge on a treat for yourself.
If you’re a traveling family, look into all your options. Don’t discount hostels right away, especially if you’ve never stayed in one. There are tons of family friendly hostels around the world now, so look into them.
If you’re an older, married couple or simply looking for a bit more comfort and privacy, then consider renting an apartment, condo, or house from time to time. These options are available all over the world. Start with sites like VRBO and Airbnb, and keep in mind that you can find many rentals that aren’t advertised online once you get to a destination, many of which are similar to what you’d pay for a hostel. BootsnAll editor Adam Seper and his wife rented an apartment in Buenos Aires for $750US for a month during their trip, which comes out to $25/night, or the same cost as a private room in a hostel in the same city. And they had their own apartment with kitchen, refrigerator, and balcony.

Food costs

On the food side of things, it’s rather easy and often really enjoyable to get by on very little money, particularly if you’ll be staying in a lot of hostels, as they usually have a public kitchen where you can store and prepare your own food. Things like bread, cold cuts, pasta, and soup are always going to be cheap and easy to get. But is it really worth going to Madrid and not going to a few tapas bars for snacks and a couple beers? Be sure to budget for at least a few nicer meals in local restaurants. You don’t need to splurge on a multi-course gourmet meal, but a meal that you don’t have to cook yourself will be appreciated every few days.
If you plan on traveling in regions like Southeast Asia or the Middle East, street food is everywhere. Some travelers have reservations about street food, but it is typically amongst the best and most authentic food you’ll find in a place, and it’s dirt cheap. It would be a shame to miss out on it. Just be smart and use common sense. Visit stalls that are busy with high turnover and lots of locals. They know the good spots.

Entertainment costs

Some of the best travel experiences are completely free – browsing the central market and getting lost in a city’s narrow streets, for example. But it would be a shame to miss out on some potentially amazing experiences like viewing one of the world’s best museums or rafting down a pristine river because you don’t want to spend the few dollars to do it. In each location you plan to visit, think about the experiences you most want to have, and be sure to budget enough money to cover them.
Don’t forget to budget for those really big expenses and activities that you have been looking forward to for years. While backpackers like to gain street cred for how little they spend, remember that you’re taking this trip of a lifetime to do the things you’ve always dreamed about. Though hiking the classic Inca Trail will cost upwards of $500US, if it’s something you’ve wanted to do since you were a kid, not doing it because of high costs is just silly. Just remember to factor those large expenses into your budget now, well before you hit the road.

Overland transportation costs

Chances are you will traveling overland quite a bit during a long-term, RTW trip. It’s certainly cheaper than flying, and in countries like Bolivia and Laos, it’s practically free (once you travel there, you may think they should pay you!). But overland transport does add up after a while, particularly when taking 24+ hour bus and train rides. Remember that overnight travel negates the cost for accommodation, so that saves quite a bit of money right there. But it’s still important to factor in overland travel costs.
It’s pretty straightforward to add up estimated transportation costs and then figure out a workable daily budget for each country or city you plan to visit, but even beyond that there are some surprise expenses that will inevitably hit you on a very regular basis.

Other expenses to consider

Transportation, accommodations, food, entertainment, and activities are all budget items that everyone knows of. But if you’ve never taken more than a couple week vacation before, there are plenty of other expenses that you probably aren’t thinking about. And though many are small, they all add up, especially over the course of several months or a year. So while you may not have specific categories for these on your pre-trip budget spreadsheet, you need to keep them in mind and possibly add a few dollars to your daily budget to cover them.
Airport transportation
Most airports are located on the outskirts of cities, so getting into the city center is going to cost you. In larger cities it may actually be cheaper to get into town because they will most likely have some form of cheap public transport, but there’s a good possibility you’ll have to buck up and take taxis in other places.
Local transportation
Walking is the preferred method of transport once in a new city, but there are going to be times, particularly in larger cities, where you’re going to need more than your own two feet to get around. Buses, subways, skytrains, tuk-tuks, rickshaws, and taxis all add up after a while, so keep this in mind when planning your budget.
Laundry
Yes, you will do a lot of your laundry in sinks yourself, but after a while, you’ll realize that this method does not clean your clothes as efficiently as a machine, and if you are traveling with other people, particularly your family, this ins’t a realistic option. Sending your laundry out is actually pretty inexpensive in most developing countries, but it’s not free.
Internet
Many hostels and hotels offer free wi-fi these days, but not all. And if you’re not traveling with a laptop, phone, or tablet, then you will have to spend some time in internet cafes. While most countries don’t charge a ton, there are others (hello New Zealand) that charge a ludicrous amount for using the internet. Be sure to factor this into your budget.
Bottled water
Tap water is not safe in most developing countries, so that means lots of bottled water. While it is a fraction of the price compared to places like the US and Europe, it still adds up, particularly when it’s really hot.
Visas
Visas are something you should research long before leaving. Some you can take care of before leaving home, some you will have to purchase on the road. You will be shocked at the amount of money some countries charge for entrance (it’s different for all nationalities). These can add up quickly.
Vaccinations
Vaccinations are expensive (particularly if you are in the US). There’s no way around it. Deciding on what’s necessary or not is totally up to each individual, but some vaccinations are non-negotiable. Many countries won’t even let you in without proof of certain vaccinations. Make sure you do your homework and get the right ones, and shop around because costs vary dramatically.
If you are a traveling family, your needs will most likely be different as you probably won’t be willing to take the same kind of risks with your kids as you would if you were a 22-year-old. Read the special Vaccinations for Traveling Families article for more information.
Gear
You may have to purchase a backpack, which is no small expense and one that you really don’t want to go cheap on. Your back will thank you a few weeks into your trip. Travel specific clothing, while not necessary, can be really nice, but it can also be really expensive. It’s not too difficult to spend $500-$1000 on pre-trip gear. Keep in mind that people wear clothes all over the world, and you will purchase clothes as you go, so there’s no need to buy and pack for every single contingency.
Foreign transaction fees
Most cards, debit, credit, and ATM, charge foreign transaction fees on top of charging you to yank money out of an ATM. Check with your bank and shop around before leaving as some offer much better rates than others (Capital One is excellent for charging minimal foreign transaction fees).
Now that you have a general idea of what your trip may cost, you may start to freak out a bit, but don’t worry! The next step will be figuring out how much you can save per month.

Costs of RTW Travel Checklist

1. Research airfare costs
2. Estimate costs by plugging your rough itinerary into Indie, BootsnAll’s RTW Trip Planner, to get an immediate, bookable price, OR
3. Contact AirTreks if you’re looking for advice and and expert help planning and pricing flights for your trip.
4. To estimate buy as you go, check one way flights based on your rough itinerary. Factor in a cushion to be safe
5. Think about accommodations – hostels vs. hotels, dorms vs. privates, rentals, and start researching costs
6. Check out guidebooks, blogs, and other travel websites to estimate a per day food budget
7. Factor in entertainment and activities to your budget. Don’t forget to add in those large expenses like any guided tours that are on your pillars list
8. Research different countries overland travel options and websites. Many have schedules and costs, so get familiar with average costs for bus and train travel
9. Don’t forget your miscellaneous expenses. Remember costs like airport transport, local transport, laundry, bottled water, internet, visas, vaccinations, pre-trip gear, and foreign transaction fees. They all add up!