10 Ways to Save Money While Backpacking

I often get asked questions about how I afford to travel for so long and how to save money while doing it. Although I'm more focused on building up income from my photography so that I don't have to get by on just the bare minimum, its always handy to know how to minimize unnecessary expenses.

The full blog entry lists 10 of the areas that I think are most useful in making your budget for travel go that little bit (or in some cases a lot) further. While some things may seem obvious, there are ideas that may come as a bit of a surprise!

1. Accessing Money

   One of the biggest hidden expenses in traveling is bank fees and foreign exchange fees.

   Finding the best way of accessing money can save you up to 10% on every transaction. What is available will largely depend on the country you live in. The most common way of accessing money is now with ATM cards or Credit cards. Travelers' cheques are another common option, however personally I find that the added inconvenience and expense involved with these just isn't worth it.

   For Australians the cheapest way to access their money is currently the Wizard Clear Advantage Mastercard which I discovered only after 2 years of paying extortionate ATM and exchange fees. It doesn't have any overseas withdrawal fees, exchange rate fees, or any other fees. The only time you get charged is if you start owing money on it, in which case you'll get whacked with 21% interest.

2. Airfares

   Airfares vary in price by very large margins. The key here is to shop around and try to find out the cheapest options for a particular location. Don't assume that the price on the internet is the cheapest option - while expedia is a good starting point, some airlines and travel agents organise special rates that can be much cheaper than the online rate.

   For example when I was writing this page, the cheapest airfare one-way from Buenos Aires to Australia on Expedia is currently around $1580 on Arolineas ($2260 for Qantas) wheras a local travel agent is able to sell a one way fare on Qantas for $1025.

   A number of budget airlines don't offer booking services though third party booking agents like expedia - its worth checking whether there are any other airlines operating the same route.

   Often you'll save money by flying on major trunk routes within a region that you want to travel to that have lots of competition. Good examples include London, Miami and Kuala Lumpur.

3. Booking ahead:

   While organinsing everything in advance my give you a certain comfort - it also often bumps up the price of your trip.

   Booking accommodation and tours through a travel agent back home will usually cost you at least double the local rate, usually more. Booking online often isn't much better - the cheaper budget hotels and locally run tours just don't have the technology or experience to deal with online booking. On the other hand in many parts of Europe, Australia or the United States, the rates you'll get online are much lower than walk-in rates. A good general principle is: book ahead in well-developed countries - find another way otherwise.

   Relying on the recommendations in Lonely Planet guidebooks are often also misleading. Often a listing in these books means that the price has risen steeply since publication and service levels have dropped. Often shopping around locally will get you a much better deal.

4. Insurance

   Insurance is one of the big revenue raisers for travel agencies, and often a serious rip-off. While I think its important to have insurance, I don't think its quite as important to pay your travel agent a big commission for it.

   Lots of people shop around for airfares, but then don't seem to for insurance. The difference in price for one year of insurance can be more than $500 between the cheapest (and sometimes best) available and the more expensive options. Often the premium won't get you a better product - it simply goes into the profit margin for flight center or your travel agent.

   One of the cheapest options available that's good for many backpackers is WorldNomads. The catch with this insurance is that it has limits on the amount of luggage it covers - basically you can only get cover for up-to $3000 worth of camera equipment with a maximum of 3 items but you have to pay an additional premium, which often makes it more expensive.

   If (like me) you're traveling with a lot of expensive camera equipment (ie. more than $3000 worth) and you want full coverage, often the only option is often more expensive insurance company. Unfortunately there is usually a 1 year limit to their cover. On short trips, its worth checking to see what cover is offered by various credit card companies.

5. Know when and how to bargain

   Different countries and cultures have varying approaches to negotiating the price on goods and services. My view is that its usually best to get a general understanding of how much things should cost in a given area. Don't assume that there are any patterns governing how inflated an opening price will be - in some places its 20% more, in others (eg. tourist markets in China!) its 20 times more.

6. Travel Slowly

   Obviously if you have a limited time to travel this doesn't really apply. For those of us with a more leisurely schedule, not being in a rush can really help cut down average daily costs because transport from one place to the next can be a big component of overall costs. Often being able to catch local transport from one town to somewhere not to distant is much cheaper than catching luxury long distance options.

7. Avoid package tours

   Many people choose to travel to "exotic" countries and will book a several week tour because they don't feel safe or confident enough to do things independently.

   Many companies exploit your fear of the unknown. The facilities and resources available in most countries now make travel easy and convenient. Once you do it this way you'll wonder what all the fuss was about.

8. Avoid the Pre-Travel Binge

   The pre-travel shopping binge is a good way to get you carrying around lots of things you don't need and waste a lot of money.

   You'll see lots of blogs listing all the "essential" travel accessories that you need before you head off overseas. Money-belts, $300 wind jackets, Fleeces, packsafe locks, new hi-tech backpacks etc. What they're really doing is advertising in the hope that their little lists earn them commissions on Amazon etc.

   Apart from costing you a lot of extra cash, these items will signal to the world that you are a naive tourist and an easy target for being robbed or overcharged for services. I always find it amusing seeing Eurpoean tourists traveling Australia with money belts... do these people keep their money this way at home?

   Acting and dressing a little less like a tourist is often much more sensible.

9. Avoid Scams

   There are many scams aimed at tourists. Many of them are so surprisingly obvious that I'm amazed when I hear that people I'm traveling with have fallen for them. One of the best tools for working out what scams are in place in a location is simply to do a Google search. For example "Tourist scam Beijing" should give you a pretty good idea to avoid "art" students who have aunties with tea-houses around Tienanmen Square and the Forbidden city, and may save you from spending US$100+ on tea for the afternoon.

10. Accommodation

    In some places staying in dorm rooms in a hostel is a way of saving a fair bit of money compared with hotel expenses. In other places, the exact opposite applies - you end up paying up-to double the price of a private room for the pleasure of sharing with upwards of 6 strangers.

    As a general rule, hostels are a budget saving option in Europe, the USA, Canada, Australia, New Zealand, Argentina and Brazil. In most other places, you'll pay more for a hostel than for a room. For example in Cusco Peru, a dorm at the popular Loki hostel will cost US$11 - whereas a single room in a locally-owned hotel across the road costs US$5.