This page is part of a larger series focused on empowering you with tips, tricks and inspiration to help you finance your gap year. Many of these tips come from things I personally did when planning my gap year.

Preparing Your Finances Before a Gap Year (Part 1)

1) Money, Travel and Mindset
2) Determine How Much Money You’ll Need for a Gap Year
3) How to Save for Your Gap Year
4) Pay off your debts before taking a gap year

Preparing Your Finances Before a Gap Year (Part 2)

5) Converting Money
6) Services and Fees to Cancel and/or Reduce Before You Leave for Your Gap Year
7) Other Money Related Resources

Using Credit Cards, Debit Cards and ATM’s For Your Gap Year

8) Using credit cards while on your gap year and before it
9) Top Travel Credit Cards
10) Avoiding ATM fees while abroad

1) Money, Travel and Mindset

One of the biggest detractors for people to travel, and especially to travel for an extended period of time, is money. Money of course is what enables us all to travel, but it also can be the excuse for not traveling. What do I mean by that? Well, when people are asked why they don’t travel, the largest excuse is “I have don’t have the money to travel” or “travel is too expensive.” Don’t get me wrong, traveling to a foreign destination, thousands of miles away can cost a lot of money. So can buying the latest iPhone, buying a brand new car or eating out every night of the week. I’m not saying those things are bad, they’re definitely good. However, your money is going to be where your priorities are, and your heart are, that simple. If you want to travel and take the time to do it, you’ll make it happen from a financial standpoint.

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2) Determine How Much Money You’ll Need for a Gap Year

When embarking on long term travel, these are the most common costs that you will experience and want to consider in planning:

• Transportation costs 
• Lodging/housing
• Food and alcohol
• Clothing and gear
• Experiences and activities (e.g. tours, scuba diving, etc.)
• Insurance (e.g. travel, health, etc.)
• Immunizations/health related costs
• Other miscellaneous costs (e.g. visas)

Before embarking on a gap year, you will need to determine your how much money you’ll need for the categories above, based on the following factors:

• How long will you be traveling? Will you be traveling for 3 months? 12 months? 24 months? The longer you’re on the road, the more money you’ll need. How fast will your travels be? Will you be hopping from city to city or country to country every few days or staying in a place for a week or two? Depending on the speed of your travels, your costs will vary as well.
  
• Who else will be traveling with you? If you’re traveling with a significant other and/or also children, this adds another layer of expenses, because you’re not only balancing costs amongst yourself, but other individuals. This may also work in your favor, especially traveling as a couple, you can often cut your expenses in half, as many expenses can be shared (e.g. lodging and food).
  
• Where will you be traveling? Living and traveling in certain places are more expensive than others. Obviously the more expensive the destination(s), the more money will you need.
  
• What type of traveler are you (e.g. budget to luxury)? Are you the type of traveler that needs the newest gadgets and gear? Do you prefer to stay in luxury hotels vs. a hostel? The more of a luxury traveler you are, the more money you’ll need to save.
  
• What type of new gear will you need? Living a nomadic lifestyle is going to require very much different gear than packing for your 1 week vacation. Buying quality gear, including quality clothing is important, as you’ll need it to last for different climates, weather and scenarios.
  
• What other associated costs will you incur? There are other factors that you’ll need to pay for while away. This can include: insurance (health, travel etc.), storage costs for your stuff at home, immunizations. Other hidden costs can be lost income from not working, regular bills such as insurance, mortgage and automobile just to name a few.

These are the questions you’ll want to ask yourself. Transportation, lodging, food/alcohol and experiences were personally for me were the most expensive categories, so I advise to save for them first. I saved about $30,000 for a gap year for myself, although I talked other gap year travelers who did it for much less (e.g. $15,000-$20,000) than I did. Obviously there are other travelers who will spend much more. The amount needed for every person, really depends on these factors above, but $30,000 I feel would be a good point to start for a full year of travel.

3) How to Save for Your Gap Year

The topic of saving is probably the least interesting topic for most people, but it is going to be the essential method that will allow you to do your gap year. I personally don’t believe in unnecessary debt (e.g. credit cards, personal loans, etc.), so spending money you don’t have on credit cards is something I wouldn’t recommend. However, I do use credit cards to spend money I do have! Travel is definitely a nice to have, but not a necessity. You need to pay your regular living expenses first. Please don’t go into debt to travel!

When I did my gap year, I saved up for a full year of travel and living expenses. While this isn’t necessary for everyone, as you can work abroad and make money, or work for accommodations, I personally wanted to a full year to do nothing but travel.

These are my top tips for saving money for a gap year:

1) Use a budget – A monthly budget will allow you to see where your money is going each month, and will allow you to take control of your cash flow. This will allow you to cut costs in other categories and to focus your money on your gap year fund.

2) Create an online savings account to save money – I’d highly encourage you to create a savings account that is just for your gap year. The reason why I’d recommend putting in it an online savings account, is not only will still make interest, but it will allow you to put in a separate place from your regular checking account. The fact that you have to move it between accounts will make it harder for you to spend the money on other unnecessary costs, and focus purely on saving! Two really good banks I’d recommend are Capital One and American Express Personal Savings.

3) Use automatic saving (withdrawal) feature for your travel saving fund – After you have created a budget and an online savings account for your gap year, I’d encourage you to take advantage of your bank’s automatic saving’s feature to take out money out of your regular account. You can determine the frequency of the recurring transactions, whether it’s once a month, or every week. I’d recommend to set it up for at least 6-12 months. All you have to do is set it and forget it! Later on, you’ll see cash sitting in your account, ready to use for your travels!

4) Sell Your Stuff – This is a great way to prepare for your gap year, both in a physical and monetary sense. First of all, when you sell your stuff, you’re getting rid of things you don’t need for your gap year! This is a very therapeutic practice, in which you’re letting go of those things that you no longer use. Not only that, but you’re making some extra cash for your time away. Win-win.

5) Increase your income – You may find after creating a budget that you are unable to cut costs or save enough money in a short enough time to take a gap year. With that being said, you may have to find ways to increase your monthly income. This can be done by taking on an extra side job or side hustle or even changing your main job to another one that pays more money.

6) Pay off your loans before your gap year (if possible) – Want to add more money to your budget? One area I think that is overlooked by many people is paying off their debt! This includes anything from your car loan to study loans to your credit card balance and mortgage. Prior to my gap year, I paid off all my student loans and my car loan. Not only did that allow me reallocate that money to my gap year savings fund, but it also gave me a personal sense of satisfaction and peace of mind during my gap year. I realize paying off all loans may not be realistic for everyone, but even if you can knock out just one or two loans, this will allow you much more freedom on your budget to save.

4) Pay off your debts before taking a gap year

Many other gap year resources and travel blogs talk lightly about finances but never about debt. Besides being a travel enthusiast, I’m also a finance nerd. Before I took my year-long gap year, I paid off all of my debt. Let me repeat that one more time: I paid off ALL of my debt before I went to travel long term. That included everything from my car loans to my student loans. I was debt free before and when I traveled. Boy, that was a journey of its own. You can read more about my journey to being debt free here.

This may not obviously realistic for everyone, as everyone’s situation is different, but for me not having any debts, I had pretty much no bills (e.g. rent, student loan bills, etc.) while I was on my gap year. Beyond allowing me more money to spend on my gap year, it also granted me a sense of peace of mind. That in itself, was priceless, and made my gap year even more special and of significance.