Updated September 21, 2016
How much money you spend every day of your trip and travel budgeting is predicated upon what kind of traveler you are: what you like to do, whether you like to buy things, eat at restaurants vs. street carts vs. picnics, stay in hotels, hostels, guest houses or apartments.
All these things determine daily expense. To gauge how much you will spend you’ll have to look at your own spending habits.
You knew all this, though. So how do you know how much to budget?
SavingForTravel.com has built an interesting tool to help budget travelers. It tells you how much you can expect to spend in countries around the world. This was probably a very daunting task since people’s traveling styles differ vastly from one another, making an accurate “daily expense” amount nearly impossible to measure.
To better tune their figures they’ve narrowed the field and stated that budget traveling should consist of hosteling and eating as cheaply as possible on a daily basis, and warned against killing your bare-bones budget with “minor” splurges. (Don’t let anyone tell you otherwise, that white-water rafting trip will be so worth it.) In other words, take their numbers with a grain of salt.
SavingForTravel’s tool uses mostly tangible things in their calculation, those things mentioned in the first paragraph. There are intangible things as well that effect how much you’ll be spending on any given day in any given country, such as the ratio of your home currency vs. the currency of the country in which you’re traveling.
The Big Mac Index
A good indication of the value of the US dollar versus other countries’ currencies is what The Economist once termed the “Big Mac Index”. Since the McDonald’s Big Mac is in a huge percentage of the world’s countries, it was a perfect and, um, digestible way to measure the purchasing power of the dollar against other currencies.
This chart can be used to gauge however interpretively the value of the dollar around the world. Note: if you’re hungry in Norway, do NOT go to McDonald’s.
Exchange rates have a lot to do with how far your dollar will take you. Generally speaking the more of a currency you can buy with your own (relative to its history) the better chances you have of making it last longer in that place. Take a hotel night in Paris for example, that cost doesn’t change, but when the dollar buys more Euros you can buy more nights.
Depending on what your currency does versus the one in the country your traveling to, for budget travelers you really have two choices, albeit tough ones:
- Hedge the dollar’s decline by traveling to a country sooner than later, so that you can use its current standing before it declines farther.
- Wait until you see signs of a recovery.
These things of course shouldn’t (necessarily) determine when and where you travel. Trying to visit a country during a favorable exchange rate period may be a recipe for frustration and not worth the trouble.
Fortunately, your enjoyment of traveling doesn’t need to hinge on such arcane things as currency and economics, but it can affect your finances, especially at foreign ATMs. Get back at the bankers by traveling to low-budget destinations and take away the guesswork.
And don’t forget, there’s a wealth of other factors that can contribute to prices and how far your money goes on a daily basis: hotel vacancy rates, political turmoil, price wars, special events. It goes to say that you can always find deals to make traveling absolutely budget friendly.