Breaking open the piggy bank: Accessing and budgeting money abroad

If you've only left the country for short bouts of time, you probably traveled with a credit card or exchanged cash at the airport. But how do you travel for months or years without paying significant amounts in ATM and foreign transaction fees? How do you avoid the temptation to splurge on fancy meals and expensive excursions on the front end of your trip, leaving you smaller amounts as the months go by? In this post we're going to cover money management abroad.

Accessing your money

Your money is only good if you have reliable access to it. Since the bank you use at home likely doesn't have branches abroad, you'll have to find a way to withdraw money while traveling in a way that is secure and not costly. ATM withdraw fees add up quickly, and that's money that could otherwise be going to some yummy food at the market.

Since cash is king in many places in the world, finding a bank that waves ATM fees is a must while traveling abroad long-term. We like the online bank Aspiration because it has no minimum balance, earns 1% interest, has no fees (they ask you to pay whatever you think is fair), invests in things we believe in, and reimburses you for any ATM fees anywhere in the world. That means we can withdraw the amounts we need and get the best exchange rate. Don't travel with large chunks of cash because if anything happens to it, there's now way to recoup it.

But like a lot of long-term travel prep, you want to prepare yourself for problems. What if my card gets eaten by an ATM machine in Lima? What if my card is lost or stolen in Belize? What if someone skims my card and depletes my entire bank account? Know that these are possibilities, and resolving bank issues or having a new card sent to you abroad is no easy task.

To minimize the risk, we have multiple bank accounts and travel with four different debit cards and a credit card. The bulk of our travel funds are kept in a bank account that is unrelated to all other accounts and we do not travel with a card to access that money. As much as we don't want to think it could happen, express kidnapping and card skimming are realities. By keeping only a small amount of money in the accounts we travel with, if we do find ourselves in one of those unfortunate situations, we don't stand to lose much. Just make sure that you are able to transfer money between accounts online and without fees.

We travel with four different debit cards but only use one consistently. That is our primary travel account. The other three cards are backups in the event that the primary card is eaten/lost/stolen.

Finally, we carry a travel credit card that has no foreign transaction fees and earns us points. We use the credit card for larger purchases like lodging and groceries because it gets the best exchange rate, and we earn points that we can redeem for any travel related expenses. A credit card is also helpful because you can use it as proof of funds while entering a country. If you enter some countries on a one-way ticket, they may demand proof that you have sufficient funds while there. However, credit cards have restrictions. In many countries in Latin America, cash is by far the easiest way to pay and some establishments may charge extra for you to pay with a credit card. Never let someone — for example, a waiter at a restaurant — walk away with your credit card. Unfortunately, there's a chance someone will copy your card information. Also keep in mind that some online services won't let you pay with a foreign credit card.

Budgeting

We know, it's exciting when you finally get to use the money you've been putting away for so long, and there are so many things you want to do/see/eat once you arrive. But if you're like us, you will no longer be getting a regular income and you need that money to stretch as long as possible.

Our budget is tight by even the biggest budget backpacker bloggers on the internet. We are travelling on $1000 a month — $33 dollars a day — for two people. That needs to cover lodging, food, transportation, and activities.

To stick to our budget, we use an app called Tripcoin. It's free, works without wifi, has automatic or manual currency conversion options, and neatly groups expenses by date, category, and country. After every taco or coffee purchased, we enter it into the app. This keeps us accountable to our budget and allows us to see every month where we spent our money.

For both budget and safety reasons, we also leave our apartment with only enough cash to reach our daily limit. If we're spending $10 a night on lodging, that leaves us with $23 for the day, so we calculate what that is in local currency. Sometimes we have to make a big purchase that puts us over our daily limit. As long as we make up for it by being under budget other days, the daily average smooths everything out. 

It can be tough to remain financially disciplined, especially when there are so many things to do. We sometimes have to make difficult choices. Regularly discussing our travel priorities helps us make sure we're on the same page. In the long run, keeping ourselves accountable to our budget will ensure that we're able to get the most out our trip.