Facing the Finances of long-term travel

piggybankOne of the questions most people have when considering long-term travel is about the financial side of it all. We know we need to have the money available, but the logistics of finances of long-term travel can be a convoluted mess to try and sort out. I’ve written about this a few times, but I did it after the fact – a few years after I went through the process.

My friend Jessica is just now launching into her new adventures, and has been wading through the muck and mire of setting up and organizing finances for that. I asked her to write a post outlining and detailing the minutia she needed to consider and what kinds of problems she encountered.

As you read through this post, I hope it gives you some ideas of what kinds of things to think about, but be aware that this is only one family’s approach. It will be interesting to come back to Jessica in a year, once her plan has been put to the test, and see what ends up changing and morphing. You can follow along with their adventures at Goodie Goodie Gumdrop.

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Our family is planning a lifestyle change that involves long-term travel which requires us to research and develop various systems for handing our finances. I don’t know about you, but when I have to deal with money management and multiple bank accounts I get sweaty in places I did not know could sweat, my heart rate rises and I back-burner this task every time. Last week we hit a wall on our “to do” list and it was time to face the finances. It is a daunting task to say the least, but I did find some ways that helped make it more manageable.

  • Network: A week before you plan to dive into what appears to be the black hole of finances go to your traveling “tribe” and ask them which banks and credit cards they use and why. It is amazing what you learn when you take your questions to the social media world.
  • Identify: Make a list of the areas you want to explore, for example, credit cards, brick and mortar banks, online bank, accounts receivable. Then establish how many bank accounts you want of each.
  • Schedule: Make a schedule that includes what needs to be accomplished and focus on one item per day. Once you have it outlined and broken down into manageable tasks you will be surprised at how easy it flows.
  • Breathe: Remember to breathe. I know when the topic of money comes up many of us freeze and forget to breathe (myself included).

Now that you have everything broken down into manageable tasks it is time to identify what you need to consider within each area.

CREDIT CARDS

  • No annual fee: It was important for us to have a card that had no annual fee. The $100+ annual fee may not seem like a big deal today, but once you have a couple of cards (and a limited budget) it can become costly.
  • Interest rate: This was not a major consideration for us because we only plan to use the credit cards for emergencies and for large purchase (flights, hotels, etc). When we do use it we plan to pay it off immediately, but if your trip will be funded partially by credit cards you will want to get the lowest interest rate possible.
  • Foreign Fees: This was a big one for us. If we did find ourselves in a country or situation where we needed to solely survive on our credit card we wanted to make sure we were not racking up the foreign fees. Also, find out if your credit card company waives all foreign fees or just fees from select banks. Remember, even if they say they waive foreign fees you will still be charged a fee from the bank who owns the ATM.
  • Chip: When we were in Paris for the summer this one became an issue several times. One situation I remember vividly was when we were trying to buy train tickets from a kiosk. Our credit card needed the chip in it and since none of ours had it we needed to wait in the long line to deal with an actual teller, we almost missed the last train to Giverny. Do your research and determine whether or not the country you are traveling to requires a chip in their credit cards.
  • Annual fee versus mileage: I know one of our cards had an annual fee if we wanted the mileage earning feature. Do you want to pay the annual fee in order to get the mileage? I guess this depends on how much you plan on flying. If it is a one year, around the world adventure it might be to your benefit to pay the annual fee and rack up the miles.
  • Travel protection and Insurance: Do you want to have at least one card that offers travel protection or insurance for rental cars? We specifically kept our American Express for this reason. We did consider canceling it because it is not accepted at many establishments on the ground, but it has great perks and if you lose your card they will have another one to you within 24 hours.

BANK ACCOUNT FOR PERSONAL

  • Brick and mortar versus online banks: You need to decide if you want to use brick and mortar banks or online banks, or maybe a combination of both. Often there are different perks with each. We found that the online bank did not have a lot of the fees that the brick and mortar had, but the brick and mortar could offer a personal customer service that the online could not.
  • Minimum balance requirements: Does your personal bank account require you to have a minimum balance in your account? If so, how high is the monthly fee? Will you be able to maintain that balance or should you maybe look for a bank that does not have a fee? Will your bank allow you to have several accounts (checking, savings, business) at their bank and use the total in all accounts to meet the minimum balance requirement?
  • Transfers between banks: It is likely (or should I say I highly recommended) that you have multiple bank accounts from different institutions. Make sure your bank can transfer money between your different banking institutions without a fee. Also, are you able to do it personally online or does a representative from the branch need to do it?
  • Waive ATM fees: Find out where you can use your ATM card without having a fee attached to it. Some banks have specific locations that you can use, some specific countries and some charge a fee every time. Remember that your bank may have a fee and the bank that owns the ATM will have a fee. You want to do your best to reduce or completely eliminate the fee your bank charges because the ATM will always have a fee.
  • Wire transfers: In the case of an emergency will your bank transfer money for you? How much will it cost and do you need to be there in person at a branch to make this happen? (Note from editor: This is HUGE. One of our banks required that we were physically inside one of their branches to send a transfer. That was problematic when we were in South America.)
  • Linking accounts and transfers within the bank: Make sure you have linked all your bank accounts within one institution together and you are able to access all of your information online. Do this before you leave!
  • Kids accounts: If you have older children who might need their own account and access to it you want to try to find a bank that can hold all of these accounts. Make sure you can easily transfer money online into the kids accounts as needed.
  • Foreign fees: I mentioned this one above.
  • Overdraft protection: I would get this with your personal bank account. There are no fees associated with having it and it offers you an extra level of protections should your account go empty.
  • Throw away account: It was recommended by a friend that we have one account that is a stand alone account at an online bank. This card would be used for those situations where the ATM seems a little sketchy. The idea is to only transfer a small amount to this account and then withdraw it.
  • Scan paper checks: I suggest trying to avoid having any payments made to you via paper check, but if you must then be sure to check with your bank to clearly understand how someone at home can take a picture of it, use an app and upload your check for a deposit.

BANK ACCOUNT FOR BUSINESS

  • Accounts receivable: If you will be receiving payment from clients while you are traveling then you need to consider how you will handle this. There are many options, paypal, direct deposit, scanning paper checks (last option, see above), etc. If you contact your business bank they will be able to describe all the options that are available to you.
  • Accounts payable: Check with your bank before you hit the road, you would be surprised how many options are available for accounts payable. Banks offer the service of sending money via email which the receiver can transfer immediately, they offer the service of sending a check payment for you so you don’t have to actually write and mail the check and if all else fails there is always the old school, wire transfer route.

LOCAL BANK

  • Brick and mortar bank (at your destination location): Some travelers like to open an account at their local location if they plan on staying for a longer period. Also, if you use a large global bank (e.g., Citibank), you can keep your account at home and open a new account at your destination. Doing so will permit you to make a no-fee cash transfer between your home (pre travel) account and your destination (active travel) bank account. Check with your bank in advance as policies often change and jurisdictions where non-fee transfers are permitted can be limited.

OTHER THINGS TO CONSIDER

  • How many bank accounts do you want? Checking or savings, or both? How many credit cards will make you feel comfortable?
  • Do any of your banks have the ability to do a quick loan, at a good rate, if necessary?
  • Do you want to carry some traveler’s checks just as an extra precaution for a rare situation that none of your accounts are working?
  • Make sure your cards will not expire while you are traveling.
  • Let you credit card companies know you will be out-of-town. It would be unfortunate to land in a new city and find that your cards have been block because the company thinks it is suspicious activity.

I truly hope this has been helpful for any of you readers thinking about hitting the open road. I have to admit that it was overwhelming when we started, but as we slowly moved through that checklist for finances of long-term travel we did start to feel an intense sense of accomplishment. Now that we have completed the finance part of our travel planning I realized that like anything in life it was time-consuming, but not as hard as I had anticipated.

Follow along with Jessica and her family at Goodie Goodie Gumdrop.

books by Nancy Sathre-Vogel

About Nancy Sathre-Vogel

After 21 years as a classroom teacher, Nancy Sathre-Vogel finally woke up and realized that life was too short to spend it all with other people's kids. She and her husband quit their jobs and, together with their twin sons, climbed aboard bicycles to see the world. They enjoyed four years cycling as a family - three of them riding from Alaska to Argentina and one exploring the USA and Mexico. Now they are back in Idaho, putting down roots, enjoying life at home, and living a different type of adventure. It's a fairly sure bet that you'll find her either writing on her computer or creating fantastical pieces with the beads she's collected all over the world.

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2 Responses to Facing the Finances of long-term travel

  1. Angela August 10, 2014 at 3:28 pm #

    Hi Nancy!

    I was wondering specifically about banks/credit cards. You named Citibank, but do you have a list of banks and card companies you may reccomend? Like AMEX? I am not a credit card person, but I do see the benefit to having one with us, and for sure don’t want to pay the yearly fees.

    • Nancy Sathre-Vogel August 13, 2014 at 10:04 am #

      @Angela, The specifics are constantly changing, so it’s worth doing your own research. My understanding right now is that the Capital One and Schwab One debit cards have no ATM fees anywhere in the world. Again, things change, so do your research.

      As for credit cards, I like AMEX for the points, but it’s not very useful for most things outside the USA. We used it for flights, but that’s about it. Everything else was paid for with cash that we withdrew through ATMs.

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