Financing a family gap year: Setting a budget

So, what’s the secret? How is it that so many families have discovered the silver bullet and are travelling long-term? We’re not the digital nomad sorts, so opportunities for making money on the road are limited. I’d pour over Instagram feeds of families having an amazing time exploring the globe and wonder how they made it happen.

Fortunately with a little bit of planning and quite a lot of good luck, our plans took shape very quickly. Before I had enough time to panic and call it all off, we’d packed up our belongings, rented out our house and hopped on a plane. We are living off a budget of £95 per day for the three months that we are in SE Asia and £58 a day for the three months travelling in New Zealand. Here’s how we did it.

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During the planning stages, I really struggled to find good information on financing a big family trip. Money was a huge factor in determining where we’d go, how long we’d be away for and what sort of places we’d stay in. I was desperate for information to reassure me that if we had £x per day, then we would be just fine. This is why over the next few weeks, I’m going to share in detail how we handled the financing and budgeting side of things.

Our fantastic new friends that we met in Bali, the Normal Nomads, are documenting how they are living on $50 per day total for two people. I found their week by week analysis of spend helped to demystify the full-time travelling lifestyle and I wanted to do something similar for families wanting to travel. In this first blog, I’ll explain how we went about setting a budget and determined how much money we would need for the six month period that we are away.

1. Set up a spreadsheet

I love a good spreadsheet. It is the best way of capturing all of our incomings and outgoings and is an essential tool in the budgeting process. If set up right, it can take a lot of the hard work out of the financial side of things.

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The all important Family Budget – an essential tool

We use Google Sheets. It tracks both the high level expenditure and projected income by month, as well as the spend against our daily budget.  I’ll talk through in detail how we’ve set up our budget and share a budget template in a future blog.

2. Establish known income

Long-term travel is something we’d wanted to do for some time. My upcoming maternity leave seemed like a perfect opportunity to try and make it happen. The deal was sealed when my husband was offered voluntary redundancy and left his job the day before my second daughter was born.

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Freedom! Escaping home and work life feels good

Obviously, the first step in establishing our budget was to determine exactly how much money we would have available while travelling. We have four main streams of income:

  • My maternity pay
  • My husbands redundancy pay
  • Income from renting out our home while we are away
  • Income from my husband’s photography

All of this information has been captured in our spreadsheet, on a month-by-month basis. Sources of income for other people may include savings, benefits or income from ongoing work while travelling.

3. Consider costs at home

It was important for me to be confident that we’d have enough in the bank to comfortably cover expenses back home and to plan for the unexpected. For example, just two weeks before we were due to leave, our boiler started making a terrible clunking noise and packed in. Fortunately, we had money put away for the repair bill and were able to pay without eating into the travel budget.

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A weight off my mind knowing finances are in order at home

Our ongoing costs at home while we are away include:

  • Mortgage payments on our family home
  • Utilities (gas, electricity, water, broadband)
  • Mobile phone bills for me and Tim
  • Savings contributions
  • Lump sum for any unexpected expenses

The income from renting out our home goes most of the way towards covering the mortgage and utilities and we’ve left enough in UK bank accounts to cover all remaining costs for the months that we are away. This means that we don’t have to think about costs at home at all – pending any other broken-down appliances!

4. Determine any fixed costs or one-off costs

A big chunk of our costs over the six month period are fixed costs or one-off costs. This includes our return airfare to the UK which cost £2,600.

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Fixed costs – include travel insurance and flights

Other fixed costs include:

  • Travel insurance (long stay family cover)
  • Car insurance and tax for our London car
  • Home and contents insurance for our London home
  • Tax due on my husband’s photography business

5. Set a budget

Once I’d established our income and our outgoings, it gave me a good idea of how much money we could have to support us while we were away.

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Our budget allows for the occasional splurge

Across the six months of travel, we decided we would allocate a budget of £95 per day for the three months that we are in SE Asia. This includes all regional flights, transport, accommodation, food, activities and miscellaneous expenses. We budgeted a bit less for the three months travelling in New Zealand – £58 a day – as we knew we would be able to save money by staying with friends and family for some of the trip. This may sound like a lot, but when you take into account housing costs, groceries, bills, transport expenses and nursery fees, we calculated that it was actually more cost effective for us NOT to live in London during my maternity leave.

6. Do a sense check

This was a really important part of the process for us. We could travel for a longer period, but would need to spend less on food, accommodation and transport. Alternatively, we could go for a shorter period of time and have more available in our daily budget. Were we happy spending that level of money on our trip? Other families may use this part of the process to determine a savings target, as they work towards putting money away to fund a family gap year.

As accommodation makes up the lions share of our costs, I used this to help determine our daily budget. We knew that we would be happiest in two bedroom apartments or villas, in central locations, ideally with access to a pool. I searched booking sites, like Airbnb and Booking.com, to find examples of the right sort of accommodation for us. Across the countries that we would be visiting in SE Asia (Malaysia, Indonesia and Vietnam) I then determined that a daily accommodation budget of £40 would be sufficient. In New Zealand, this drops down to £20 a day.

In my next blog on finance, I talk about the budget breakdown in more detail and what this gets us in terms of accommodation, activities, food and other expenses including the occasional splurge.

Have you found this useful? What more would you like to see know about setting a budget and financing? Let me know in the comments below! 

6 thoughts on “Financing a family gap year: Setting a budget

  1. Megan Richardson says:

    There are some really great tips here. We are also a family of four travelling long term and definitely agree with what you said – we live by our spreadsheet and have a strict daily budget ($100 AUD for everything) and have managed to travel for 9 out of 11 months now. Agree that it is cheaper to travel than to stay home! Thanks for the post. Looking forward to checking out your others.

    • Mum Travel Diaries says:

      Thanks so much for reading! I’m glad you found it useful. We’ve been learning a lot as we go along and it’s definitely been a weight off my mind keeping on top of the daily budget. You probably do something similar – each evening, we sit down after the kids are in bed and tot up the expenses for the day. If we are a bit over, then we know we can moderate spending over the next day or two to get things back in the green. It’s good knowing exactly where we stand. Well done for sticking to your budget!

  2. deahh says:

    Great analysis here. When we left for our year abroad, we rented out the house and happily had no home expenses, so that freed us from that worry. We definitely did not make it on 100 a day but in the end, we felt like we had done and seen everything we wanted to see. We are heading out again in 8 months, for a year again- or possibly longer if it feels right and everything aligns- and I’d love to see our expenditures sliiiiightly less. I enjoyed reading your post; it gives me hope that I can do it!

    • Mum Travel Diaries says:

      Glad you like it! In the planning stages, I searched for people’s real life experiences and found it helpful to look at other people’s costs. I think we could have easily spent more!! But also, we could have done it for a lot less. So exciting that you have another trip planned. I’d love to hear your plans. I’m sure as soon as we get back to London, I’ll be plotting our next Big Trip…

  3. juliswanderlust says:

    Great post! Very interesting! I would love to go on a long-term travel, but the problem is limited vacation days, if one doesn’t want to give up the job. However I like the idea with the sheet to determine expences, this way we can do a long-term plan for the time when we finally have time 😉 I read some other post from people who traveled long term. They chose the cheapest countries in south america, this way they could reduce expences and travel for longer. New Zealands seems so expencive to me!

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