I’m leaving for Lima, Peru in less than two weeks, and the trip planning is going strong. I’ve got a packing list ready, dug up all my backpacking essentials and I’ve briefed my dad on how things are going to go. We’ve decided to head north from Lima to spend a little time on the coast to soak up the sun, sand and surf for the first week or so. It will make for a nice holiday before the adventuring begins!
To be honest, there isn’t that much to plan since I prefer more of a spontaneous and plan-as-you-go approach to travel. We’ve got our flights booked, and I will book us a hostel for the first few nights in Lima. I’m also arranging for airport pickup to the hostel since we will be arriving around 1am so I don’t really want to deal with the taxis. They are notorious for overcharging or trying to bring you to a hostel run by their brother/best friend/third cousin instead of where you want to go.
For me, this is the first time I take an unpaid leave from work for travel. I went backpacking through Europe during university and I took six months off to backpack across South East Asia, Australia and New Zealand after graduation. But this is the first time where I actually have to consider the loss of income as a real expense. This got me thinking about all the other “hidden” costs of travel. This trip might end up costing me a lot more than I had anticipated.
Tangible Travel Costs
This includes your flights, accommodation, food, overland travel, activities and spending money while travelling. This is what I generally think of as the total cost of my trip, and makes up a large portion of the total costs.
Bonus Travel Costs
These are costs directly associated with your trip that are generally paid before your departure. This includes visa application fees, travel agent fees, travel insurance (don’t travel without it!) and any immunizations you are required to get before you leave for your destination.
Travel Gear Costs
If this is your first big trip, then the amount of gear you need might add up to a lot of cash. Think luggage/backpack, packing cubes, travel-sized toiletries, travel towel, or new walking shoes that you will be spending hours a day in. Some of these items are non-negotiable for an efficient trip, so factor in these costs. This could also include the cost of a new camera, books for the plane, or going to the tanning salon to get a base tan for your beach getaway.
You may be gone but your lifestyle back home isn’t going anywhere. You will still be left with the mortgage or rent payment, your car insurance, your cell phone bill, you cable bill and your gym membership fees. You may be able to put some of your expenses on hold while you are away, but there will certainly be some extra bills to pay, even if you aren’t using the services.
On all my previous trips, my only recurring bill had been my cell phone. And on my 6 month adventure, I’d even arranged for someone to take over my phone and contract. So this cost will be quite larger than I am used to!
Lost Income Cost
This is the money you would have made had you stayed home and worked instead of taken a leave from work. For me this is actually the biggest chunk of change since I will be losing more income being away from work than I will be spending while away: South America is a pretty budget-friendly destination.
It kind of makes me cringe when I have to include this in my costs of travel. But the reality is, the money I’m not making while away is money that is not going towards my financial independence, and it’s a big hit.
Lost Benefits Cost
If the loss of income wasn’t a big enough hit, then there are also the lost benefits from taking a leave of absence from work. My employer doesn’t cover their portion of my benefits package while on leave, so there’s an additional cost there. I also don’t receive any matched RRSP contributions from my employer, which is free money that I have to forfeit for the duration of my leave. Depending on your employer and their policy, this might be different for everyone, but it’s definitely not a cost that I had ever considered related to travel before.
When you add it all up, the true cost of travel is much more than just the tangible travel costs. Compared to the days when I was a student, travel is much more expensive! It really does put the cost of travel into perspective for me. It is that much more motivation to create sustainable passive income streams and work towards reaching financial independence!
Are there any other costs of travel that I may have missed? Do you consider all these related costs when you budget for your trip?