Finance 101: What You Need to Understand Before Traveling the World

What You Need to Understand Before Traveling the World

What You Need to Understand Before Traveling the World

In the wake of the Great Resignation that the world experienced after the pandemic, more companies are offering sabbatical programs. With the Society for Human Resource Management reporting 16 percent of employers are now offering sabbaticals (both paid and unpaid), thousands of employees and potential workers are now able to take time off to see the world.

To travel around the world over the course of one year in legitimate and safe ways, you can expect to spend around $20,000 to $35,000. The exact amount would depend on whether you choose certain luxuries or not. To prepare for such a trip, you’ll want to be aware of some factors that will help you get into good financial shape. 

It’s Important to Keep Your Credit Healthy

Your credit score will still be important as you travel across the world. Not only will this affect what financial options are available to you, but also determine how much you’ll be paying for credit interest rates. Even if you plan on mostly paying via cash, you should still be prepared for moments when you’ll need to use your credit card. 

It’s also worth considering the state of your credit if you plan to take out a travel loan for your sabbatical. Upgraded Points notes that loan applications will require a hard credit check, which takes up around 10 percent of your total score. To make sure your score will still be in good standing after taking on a hard inquiry, expect a hit of up to 5 points to your score (with an even higher drop if you have plenty of inquiries at once). 

From there, you’ll also want to save money while traveling so you don’t come home to a problematic credit report. As listed in our guide to budget traveling in the United Kingdom, it’s a good idea to stick to trains and cycling when traveling locally, avoid peak times to get the best fares, and max out on discounts from promos, hostels, and credit partnerships. 

Location Will Affect Your Budget Differently

As fun as it may seem to let the winds take you where they may please, it’s better to be specific about your plans in terms of location. A certain amount of money won’t be spent the same way in different locations because of costs of living, currency differences, and international fees. Make sure you do enough research about the city you’re going to. 

Take the popular destination, Rio De Janeiro. There are plenty of seemingly good budget options here that you should actually avoid if you don’t want problems in the long run. For instance, it’s better to avoid eating hotdogs and boiled green corn from street stalls and look for other affordable meal options. 

Also, keep currency exchange rates in mind. According to Reuters, the U.S. dollar will rebound against most currencies in 2023. This can greatly affect how much each dollar counts when making your budget. 

It’s Good to Seek Out the Best Deals Actively

So, you’ve laid out your plans for your trip. Once you’ve booked everything and started off, this doesn’t mean you should stop actively looking for the best deals. You’ll find that there are plenty of promos and discounts you can make use of as you go along your journey. 

Do your research on active deals for accommodations, flights, other forms of transport, and tours to cool destinations you might want to stop by. You may also find some limited opportunities and even free events that you can enjoy. 

For example, Shanghai has plenty of awesome free things you can enjoy. This can be really helpful for travelers considering that the city is one of the most expensive ones you can visit. Some of the free attractions you can spend some time in include the Shanghai Museum, Jade Buddha Temple, and Singles’ Market. 

Certain Travel Adjustments May Improve Your Experience and Budget

It’s easy to think that the most premium option is always the best, but you’ll find that making the right adjustments can net you more savings and even improve your overall experience. 

One major consideration to make is taking on long layovers. While many people try to avoid these because of their stigma, long layovers can open your travels up to more locations and extra moments of exploration. It also doesn’t hurt that these types of flights tend to be cheaper than direct ones. 

As we mentioned in our article on “Making The Most of Long Layovers And Seeking Them Out”, you can make the most out of these boring segments in your trip by catching a glimpse of the little hubs you stop over at. There are even countries that wave visas for brief stays. 

Just make sure you consider tourist taxes in your budget, as Euronews reports both new and increased taxes introduced by multiple popular tourist spots like Thailand, Venice, and Barcelona to combat overcrowding. 

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