Frugality Basics
For Travelers

Frugality is something many real-life nomads and long-term travelers have in common. The good news is that frugality doesn’t have to mean deprivation. Instead, you can learn to be a happier, more skilled and resilient individual in the process. Here are the basics.

Track Your Spending

frugality revolut spending analysis

Whether you are saving for that big trip or already on the road, managing your money efficiently starts with a good understanding of where it goes. There are now many apps to track your spending almost effortlessly. Like the app of neobank Revolut pictured above. It takes only a few minutes each month to keep track of your spending.

At the beginning it might be helpful to list every single item. You would be surprised how much seemingly small items can add up over the course of a year. If you are able to pinpoint where you money goes you can act more easily. Moreover it’s easier to stay motivated with actual numbers showing your progress.

Later on, when frugality becomes natural, broad categories such as accommodation and food are sufficient. You simply need to know that things are running smoothly. And there is good news too. Indeed, long-term travelers systematically find that their expenses decrease as they adapt to their new lifestyle.

Get Out Of Debt

Let’s be blunt. Consumer debt sucks. Yes, mortgages have their place and we are not here to condemn them. And yes, in certain cases a student loan can be a good investment in your future career. But those are pretty much the only exceptions.

Financial institutions love consumer debt. It’s a major source of income, and arguably a modern, soft form of slavery. High interest credit cards and loans are obviously at the top of the list, but even lower interest rates add up to significant sums over the years with compound interest. For example, let’s say you have a 10000$ loan at 10% and a term of 5 years. That means nearly 3000$ in interests if you crunch the numbers in a calculator.

Your monthly financial obligations also tie you to your job and physical location. That directly translates to a high opportunity cost. Many location-independent gigs are insecure at least in the beginning. So if you want to hit the road sustainably, don’t kick the can down the road. High-interest debt has to go first. Don’t even think about long-term traveling until that credit card is fully paid off.

The 80/20 Rule: Frugality Starts With Targeting Big Expenses

Frugality is associated with penny-pinching behavior. But in reality the small expenses are not always that important and sometimes even negligible. It’s worth having a basic understanding of mathematical distributions.

Many phenomena, including our spending patterns, follow Pareto distributions. You might have also heard it called the 80/20 rule. Here that means that 20% of your spending accounts for around 80% of our total budget. Actual numbers may vary, but big ticket items such as accommodation and transportation generally make up the majority of our expenses. And it’s exactly those items that are worth targeting aggressively first.

For example, let’s assume that rent alone makes up 50% of your budget. If you sublet while traveling you have suddenly a lot more money. Or your new online occupation allows you to move a  much cheaper country. Or you move into a small RV or van. You could easily cut that expense down by 80%. In other words you already reduced your annual budget by 40%. In contrast, walking for an hour to save a dollar on a bus will have negligible effects.

Recurring Expenses

Another soft target are recurring expenses. Do you really need that 5$ daily cup of macchiato? The 40$ in drinks every week? Or that monthly 50$ gym subscription? That alone is 600$ each year. Is it really worth it? Aren’t there alternatives? You can live comfortably for a whole month on that sum in many countries.

Of course if you keep track of your spending you will be able to highlight the culprits quickly. That doesn’t mean that you have to give up all your little habits. Reducing the frequency can help you appreciate it even more. Or better yet, boost your skills and replace by it with DIY alternatives for a fraction of the cost.

Follow The Locals

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A key to long-term travel is to emulate the locals. Everything aimed at tourists and well-paid expats is notoriously overpriced. Head to the bazaar instead of the supermarket. Favor regional products over luxury imports. Get a reusable jug of purified water instead of polluting plastic bottles. Try the street food rather than another restaurant.

And most importantly, interact with locals. Make some new friends. Their knowledge is gold, and the cultural exchange that occurs is at the very heart of what traveling should be.

Reduce: Less Is More

What exactly is a treasured possession is an extremely subjective topic. A Punjabi farmer will have a very different opinion from a New York stock broker. But we all have tremendous attachments to at least some items. And as the saying goes, you don’t posses your possessions, they posses you.

Being on the move part- or full-time will force you to downsize dramatically. And focus on what is essential. The key is to approach the subject gradually. An object that was precious until recently often seems pointless after a few years in storage. And that’s an excellent rule of thumb. Whatever you don’t end up using for a while, sell it or give it away.

The real benefits of this simplicity are however far beyond the financial aspect. You spend less time worrying about what would happen if theft, fire or disaster struck. Less time running after the latest gadget and fashion. You can dedicate more attention to what really matters to you.

Reuse: Buy And Sell Second-Hand

frugality
Climbers selling their gear in Australia

The consumer goods industry always wants you to buy the newest and latest products. Instead, look at quality second-hand alternatives online or in shops. You can often find similar items in excellent condition for a fraction of the cost. Sometimes even for free. It’s time to sharpen those bargaining skills!

It can also go the other way around. Try and sell what is of little or no use to generate a punctual income. Electronics, antiques and pretty much anything else can be sold on craigslist and eBay. Or try local billboards and social circles.

Buying and selling used equipment can also be the key to otherwise expensive activities during your travels. Want to learn paragliding without breaking the bank? Get a beginner wing, take good care of it and sell it again when you are ready for an upgrade. It’s not unheard of to break even.

Skills Over Money: Knowledge Is King

With the rise of productivity and industrialization we have traded a lot of skills for money. And in many cases this has been very convenient. Not many would find it worth their time to learn how to build their own computer. Or to make their own clothes. But we got a little too comfortable in the process.

Companies have been quick to jump in and fill the gap. We are now accustomed to pay top dollars for goods and services that are easy to replicate. Can you cook tasty and nutritious meals from seasonal ingredients? Instead of buying highly processed foods or going to fancy restaurants, you will have a cheaper, and ultimately also much healthier diet.

Developing your skills not only cuts down your expenses dramatically, it also makes you much more resilient financially. Your skills can get a bit rusty. However no bank, government or thief can take them away. Furthermore, if your savings or income sources are gone you still have a lot resources and ingenuity to rely on.

You can take this even a step further. A lot of skills can become a source of income if needed, all around the world. Or a way to give back. You know how to make your own bread? How to fix a car? How basic financial planning works? That can take your financial independence to the next level.

Reconciling Social Life With Frugality

A common fear is that frugality will ruin your social life. We have been conditioned to think that spending quality time with each other equals spending money. But you don’t have to live like a monk or recluse. Go for a hike instead of overpriced tours. Invite friends around for a home-cooked meal. Just be creative.

Finally, if your friends only value your company as a spendthrift then it might be time to reexamine your social circles. This can be hard to accept at times, but we humans all evolve during our lives. There are plenty of amazing and inspiring people out there who will support us in a location-independent lifestyle. Seek their company and you will prosper. Frugality doesn’t have to be synonym of sacrifice.