Daily costs

You could spend anywhere between £7000/$10,780 and £70,000/$107,800 on a year-long trip around the world, and with the myriad spending choices you make every day, it’s impossible to knock out an itemized cost sheet before leaving. If you allow some flexibility with your return ticket, just save as much as you reasonably can as you go and return home (or find a local job) when you run out of cash.

How long will your money last? Depends where you go… Picking even a slightly cheaper country can save you a fortune on a long trip. Travelling on a bare-bones, mid-range or upper-level budget, our “Spendometer” chart gives you a rough idea how long you can go with £700/$1080.

CALCULATING YOUR BUDGET

Within the range of budget travel, the daily costs can vary enormously over the course of a year. Just between the middle and upper levels, there’s roughly £12,000/$18,500 of savings to be had. By travelling in developing (read: cheaper) countries you can obviously save a fortune: £3300–13,000/$5000–20,000 over a year, depending on your comfort level. Put these together and the difference between travelling for a year on a more comfortable daily budget in Europe (£25,600/$40,000) and a tight daily budget in Southeast Asia (£4200/$6500) is pretty significant.

Select your level of comfort, then figure out how many weeks or months you plan to stay in developed or developing countries and add up the costs. For example, if you plan to spend three months in Europe, four in Southeast Asia and two in Central America, all on the lowest budget, that’s six months at £380/$600 plus three months at £950/$1500 plus about £2540/$4000 for start-up costs. Which makes a total of £7670/$12,100 for the nine-month trip. A mid-level budget on the same trip will cost roughly £12,440/$19,750. A bit of financial discipline and lifestyle readjustment will net you a cool £4450/$7000 on such a trip.

Note that all of these costs assume that you’re not couchsurfing. If you were to do this exclusively, you could virtually cut your costs in half.

LOW-BUDGET BACKPACKER (EXTREME SCRIMPING)

Expenses in developing countries: daily: £15/$23; monthly: £450/$690;yearly: £5400/$8300

Expenses in developed countries: daily: £35/$55; monthly: £1050/$1650;yearly: £12,600/$19,800

Lifestyle: Sleeping in hostel dormitory rooms; sharing rooms in the very cheapest hotels (no matter how bad the guidebook description); camping; sleeping on trains and buses. Eating cheap food from supermarkets and the lowest-priced side dishes at budget restaurants or street stalls. No clubbing and nothing more than the occasional beer. Limited museum visits and no lingering drinks at nice cafés.

MIDDLE-END BACKPACKER (BUDGET-MINDED)

Expenses in developing countries: daily: £35/$55; monthly: £1050/$1650;yearly: £12,600/$19,800

Expenses in developed countries: daily: £60/$92; monthly: £1800/$2760;yearly: £21,600/$33,120

Lifestyle: Same basic accommodation as “lowest” category but in smaller dorms, or occasionally sharing a two-person room with another traveller, plus a few coffees at nice cafés per week. Museums are not limited but adventure activities are. The occasional night on the town, but not more than one reasonably priced drink (beer, wine, cappuccino etc) per day.

UPPER-END BACKPACKER (COMFORT)

Expenses in developing countries: daily: £70/$110; monthly: £2100/$3300;yearly: £25,200/$39,600

Expenses in developed countries: daily: £105/$160; monthly: £3150/$4800;yearly: £37,800/$57,600

Lifestyle: Decent budget hotels or private rooms in hostels/guesthouses. Unlimited coffee, liberal drinking, several nights out per week and a nice restaurant and good breakfast per day.

Spendometer

How many days’ travel can you get for £700/$1080 around the world?

Note: The red prices represent an upper-end budget, yellow a mid-range budget and green a bare-bones budget (with about sixty percent of the time spent outside the more expensive major cities). See more detailed budget breakdowns of all three levels.

How do you travel more cheaply?

Without a number of budget tricks, you may end up travelling on a high-end budget while only getting mid-range value. The key to saving money on the road is not to concentrate exclusively on the big expenditures, but to find small savings along every step of the way. Beyond picking countries where your funds will last longer, savvy saving is about a deliberate lifestyle adjustment that rations out the creature comforts, or drops them altogether. People love to spend countless hours surfing the web and calling around to find the cheapest plane ticket. Of course, you don’t want to end up paying more than the guy sitting next to you on the airfare, but, aside from a big RTW ticket (where prices can vary by over £750/$1155), don’t knock yourself out searching for a flight or two in a massive effort that probably won’t save you more than £50–150/$77–230. Why? Because that’s not where the real savings are found. With some self-discipline – while hopefully avoiding full-blown “budgetitis” – you can reduce your daily budget by as much as £15/$23 or by £25/$38 if you’re couchsurfing. Over a three-month-long trip, that’s a saving of over £2250/$3465. Even on a one-month trip, that’s over £750/$1155 you can leave in the bank.

STARTING COSTS

Backpack: £100–160/$155–245

Travel gear, toiletries, medical kit, emergency kit (depending on what you have already): £100–325/$155–500

Insurance for 12 months: £275–650/$425–1000

Vaccinations: £70–250/$108–385

RTW ticket or other long-range transport: £1300–3250/$2000–5000

Approximate total: £4000/$6150

Discount cards

There’s no magic wand to wave to guarantee savings everywhere you go, but for £2.60–16/$4–25 an International Student Identity Card (ISIC; web_icon isiccard.com) comes close. ISIC also issues youth cards (for under-26s who aren’t students) and cards for teachers, all of which offer similar discounts on museums, city transport tickets, plane tickets and more; in fact you may even make up the cost of the card on the flight over. The trick is remembering to ask for the discount. It won’t help you much in restaurants, but nearly anywhere a ticket is required, be sure to ask. Also, you can use it as a back-up ID card to leave behind when renting bikes and so on.

Another popular discount card is the Hostelling International Card (£15/$28, or £11/$18 if you’re 55 or older; web_icon hiayh.org), which, on top of many of the transport discounts available with the ISIC or youth cards, gets you reductions on about two thousand affiliated hostels around Europe. The card will pay for itself within four nights. The downside (or perhaps upside) is that these official hostels invariably don’t pack the party atmosphere of private hostels and are often not centrally located. You’ll need to buy this card before leaving as it’s only available in your home country. Before you splash out on that, you may check out the section on accommodation to find out if you like the sound of hostelling.

If you find you’re staying at a number of Australian-managed VIP-affiliated private hostels ( web_icon vipbackpackers.com), of which there are roughly 1200 in more than eighty countries worldwide, you might as well pick up a 12-month VIP Backpackers International Discount card (about Aus$47, £32 or $49 online with shipping) while you’re on the road. The discount is only one percent off at VIP Backpackers hostels but has substantial savings on transport and activities and comes with a free SIM card for local and international calls.

Fake versions of some of these cards (including journalists’ press passes) can be picked up in Cairo and Bangkok for under £10/$15 each.

BUDGETITIS SYNDROME

When you first start travelling, spending comes naturally. Almost too naturally. A beer here, a T-shirt there, a few museum passes, a nice meal. Maybe you’re too caught up in the excitement of arriving or spending to cushion your landing into a new culture. Whatever the case, after a few days or weeks, you’ll probably realize that you’re over budget; you’ll begin to feel the stress of your money belt getting thinner. The natural response to this relentless stream of expenditure is an attempt to stem the outflow. And when you meet other travellers to compare notes, boasting rights go to the one surviving on the lowest funds. When it gets competitive, that’s when budgetitis really sets in.

Symptoms include: walking an extra twenty minutes to find a bread shop whose loaves are three cents cheaper; full-blown arguments with taxi drivers over the equivalent of 25 cents; and skipping a meal because the local supermarket prices seem a little high. In extreme cases, you might party all night (without drinking… well, not much), then sleep in a park during the day. You’ll only travel by hitchhiking and show up at soup kitchens for food, paying with the minimum donation. This is one of the most common budget travel afflictions (followed closely by exaggerated storytelling) and at some point during a long trip you’ll likely suffer from it.

If you can sense this happening, you have to take a step back and remember why you’re travelling. It’s fine to save money while you’re on the road, but you need to balance this with the fact that you’re not travelling in order to save money. Better to come home a week or two early and suffer a little less.

Buying cheap international flight tickets

There is some truth to the airline axiom that savings come with restrictions, discomfort and stopovers. But only some truth – it is possible to get reduced prices on direct flights with reputable airlines as well.

A good basic guideline to follow before booking any flights is to do a little checking on your own so you’ll know a good price when you see one. Many flight search engines will now show you the cheapest available ticket during the period you’re searching so you’ll know your target price. Start looking on your favourite sites, then try a few others just to compare. The major online players include: web_icon expedia.com, priceline.com, travelocity.com, kayak.com, hipmunk.com and skyscanner.net.

All things being relatively equal, it can help to book with a well-informed travel agent just so you have someone to call in a crisis. Imagine, for example, that you’re stuck in an airport because an Icelandic ash cloud or an Ebola outbreak has grounded flights. You may not have many online tools at your disposal and the queues are likely long. Wouldn’t it be great if you could make a call and get rerouted while the others are waiting around? In that sense, it’s like insurance. Plus a good travel agent can point out things you can easily forget while booking on your own (such as a flight that leaves at 6am from a certain airport will cost you more because there’s no cheap transport running to the airport at that time).

Bear in mind that:

Whether you’re with an agent or surfing the web, play around with dates. Often just a day or two can make a surprising price difference.
If you know where you want to go and when, sign up for online alerts so you can grab deals as soon as they become available.
Once you find a good deal, check that airline’s site directly to see if they’re offering any other special promotions to places nearby that are even cheaper.
Keep in mind that the cheapest fares are often less direct, less conveniently scheduled, and may involve an airline you’ve never even heard of. If you have more time than money, this is a fine way to grab a deal.
There’s no need to let your frequent-flyer plan get in the way of finding the best ticket. First, look for the best deal, then if two or three similar fares come up, pick the one that fits with your mileage plan.

Buying a train pass before you leave home

If you’re doing anything more than zipping across a country by rail (and even if that’s all you’re doing), your best bet will most likely be to buy a rail pass, whether you’re in Europe, Japan or North America.

Most rail passes can only be purchased in your home country, but with the internet, this isn’t such a problem. If you’re already there, or on your way, you can order it online, have it sent to your parents or friends and then get them to forward it to you. The more difficult task is selecting the right type of pass.

In Europe, for example, it is well worth considering a flexi-pass (valid for a certain number of travel days within a fixed time period) instead of an unlimited travel pass. You won’t want to spend every day on the train anyway. Then, supplement your flexi-pass with cheap, shorter trips; this is a good option typically if the journey lasts less than an hour and you’re not on a high-speed train. If you’re only travelling, say, the 97km from Florence to Siena in Italy, it’s going to be cheaper to buy a ticket at the window and save travel days on your pass. Check too for weekend deals before using your flexi-pass.

Don’t be afraid to use flights just because you have a rail ticket. You need to balance this, of course, with your environmental philosophy. But you’d spend a few days of your trip on the train (and use up a few days of your rail pass, plus some not-so-ecological packaged food and drinks) to get, for example, from London to Portugal or Greece. With cut-throat budget airlines practically giving tickets away, chances are you can find a one-way flight for less than £75/$115, possibly even less than £40/$62. That will save you time and roughly £75/$115 worth of travel on your flexi rail pass; not needing to pay overnight and reserved-seating supplements will push the total saving to over £100/$155.

As a rule of thumb, the less flexible the rail pass, the cheaper it is. In other words, if you know more or less where you plan to go (and you don’t feel obliged to hit every single region or country), you can get a much better deal.

If you only want to travel in one country and can’t decide which, bear in mind that some single-country passes cost more than others. In Portugal, you get roughly two days of travel for the same amount that buys you one day of travel in Norway.

Finally, if you plan to stay in one spot for a while, try to time it at the beginning or end of your journey so your active pass isn’t sitting idle more than it need be.

To purchase passes directly from the sellers, visit web_icon eurail.com or raileurope.com. seat61.com has more money-saving tips, too.

The extended bus tour

You don’t need to buy bus passes (popular in Europe, Australia and New Zealand) before arriving. The hop-on-hop-off buses are easy to use and make it even easier to meet fellow travellers, but they do remove much of the navigating as well as contact with locals. There are sometimes kickbacks involved as buses may stop at some “preferred” restaurants along the way. That doesn’t make them bad, just something to keep in mind.

Bus tour companies

AUS ozexperience.com
Europe busabout.com, contiki.com
NZ kiwiexperience.com
South Africa bazbus.com
< Back to 5 Costs and savings

The trick to buying individual bus tickets

Buses, unlike trains, tend to be run by private companies and are not subject to the sort of regulation that trains are. Which means that on most popular routes in developing countries, you can (and often are expected to) haggle for your ticket. This can be some of the most intimidating bargaining you’ll ever do, as bus touts often move about the station in packs, then swarm you with offers, all speaking at once. If you trade stocks on Wall Street, you’ll probably feel right at home. If not, it takes some getting used to. The coaches vary dramatically in quality from third-class “chicken buses” to fully reclining sleepers. So, just because you hear someone shout a nice price doesn’t mean it applies to the bus you want. Ask questions to find out how many stops it makes (some make local stops while others offer express service), if the seats go all the way back and if there’s air conditioning. If you’re planning a long-haul trip, ask if the bus has a working toilet.

The best approach is to politely but firmly get past the touts, insisting you know where you’re going, and make for the ticket windows of the various companies, where you’ll hopefully be able to play them off against one another. A few will be selling tickets to the same location. Get the timetable, information on the bus and the best price from the person at the window. Thank them, then walk off and gather information on the others. Once you have them all (this shouldn’t take more than ten minutes), decide on the bus you want and approach the window. Say that it was cheaper with another company, but that their buses didn’t look as nice and you heard a tout mentioning a special price with this company (pick a price a little under the one they originally offered) and if that’s the case you’d like to buy a ticket. And let the bargaining begin. If they can drop their price they probably will. If they don’t, chances are you should try the next company. If you want to skip the hassle and buy a ticket from a local travel agent, keep in mind that this service is likely to cost you between ten and forty percent extra.

In the UK, Megabus ( web_icon megabus.com) offers discount deals around the country for as little as £10/$15, and has started taking passengers to other parts of western Europe as well, and even expanded to the US. Otherwise, Eurolines ( eurolines.com) provides the main long-distance bus service in Europe, Greyhound in North America ( web_icon greyhound.com) and Down Under, Greyhound Australia ( greyhound.com.au).

Saving on accommodation

One of the best things you can do to save money on the road is get accustomed to sleeping in no-star accommodation. That means sleeping in dorm rooms when available, trying to share a room with another traveller if there are doubles with lower rates, and not letting yourself be put off by places described in your guidebook as basic, or even grungy. If you’re armed with earplugs and a good sleep sheet, you’ll be fine. These are some other money-saving facts about and suggestions for bottom-end digs.

Hostels and pensions in large cities pay the most rent, and pass the costs on to travellers. It’s almost always cheaper to stay in small towns and rural areas.
Ask about sleeping on the roof. In fair-weather climates this is often possible for roughly half the price of a room. Many places provide mattresses.
Make a point of getting addresses of travellers you meet, and stay with them if you’re heading to their home town. Try to give a few days’ or weeks’ notice with an email.
Head to campsites just out of town and rent their walk-in tents (with real beds).
Check out accommodation at universities over the summer. Empty dorm rooms are often rented out at cut-rate prices.
In Eastern European countries, you can find deals at train stations; often, old ladies wait around to try to rent out their spare rooms (typically those no longer occupied by their adult children) to travellers.
A hotel that notices that it is listed in a guidebook is likely to raise its prices, so don’t be surprised if your book is slightly off the mark.

HOW TO BENEFIT FROM THE SHARING ECONOMY

A range of new travel-related services are grabbing the limelight, and for good reason. This sharing economy is a movement born out of the idea that, instead of everybody constantly buying new stuff, we should borrow or rent each other’s stuff. This had never been possible on a large scale before information technology allowed us to bypass established businesses and connect directly with other individuals.

The sharing economy is particularly well-suited to travellers. Being able to tap excess capacity has long been a fantasy of pragmatic travellers. (“I know every house on this street has a washing machine, and I need to wash my clothes. Why can’t we work something out?”) The only way to get something like that together before was to knock on doors or put up a note at the local supermarket, and then hope for the best. Now, smartphones and apps make the connection possible.

In the case of the pioneers at Uber ( web_icon uber.com), the service is transportation. When you want to go somewhere, you open the app on your smartphone and Uber will let you know which driver is closest to you and send them your way with a single tap. Airbnb ( web_icon airbnb.com) does basically the same for places to stay. It’s not free, either, but it opens doors (literally) to thousands of unique homes you would never have access to otherwise – and there is nothing to stop you from renting out parts of your own home, if your living situation allows it. Another useful site is Gumtree ( web_icon gumtree.com), a noticeboard that can help you ease the process surrounding work, accommodation and socializing if you plan to stay put for a while in, for example, the UK, Australia, South Africa or Singapore, where it is most popular.

As with all infancy businesses, there is a certain amount of fuzziness concerning exactly what the sharing economy is and isn’t. Some say that as long as you’re charging for a service, you’re not really sharing anything. It’s still a monetary transaction and nothing like the “gift economy” it was supposed to be. But most often as a traveller, money is all you have to offer. Other times, you can put your skills to good use, for example mowing somebody’s lawn in return for getting to do your laundry. Or tutor someone’s kids in English so you can borrow their car over the weekend.

Apart from lower prices (although that is not always the case) and convenience, many curious travellers enjoy the interaction with “real” people, as opposed to tourism professionals. There are benefits both in authenticity and in the satisfaction of sidestepping The Man. Because for all the talk of consumer choice, the tourist economy has not been very interested in increasing the freedom for travellers that has come out of the sharing economy.

Having said this, the size of the sharing economy is still miniscule compared to the global tourism behemoth, causing some to accuse the industry of “Uber-reacting” when they sue and lobby for legal protection. Airbnb, for example, is said to have only a one percent share of New York City’s tourist accommodation market, and most business travellers will probably continue to prefer the non-adventurous reliability of a chain hotel. For the rest of us, it’s as if an online swap shop for services has just opened up – one that’s worth looking into both for savings and for more authentic experiences than the traditional tourist industry can provide.

The sharing economy as a whole has spawned a community of enthusiastic supporters. Many of them cluster on sites like Shareable ( web_icon shareable.net), where you can find news and insights and make connections. New sharing economy sites are popping up all the time, but you can find some of the most useful ones in the Directory.

Flat rentals

Another route is to rent someone’s flat or even just a room in it. Airbnb ( web_icon airbnb.com) jumpstarted an entire industry and turned almost everyone into a potential b&b owner. It’s a great way for hosts to augment their income and visitors to find a reasonably priced, authentic local place to crash.

Backyard rentals

Yes, you read that correctly. Thanks to the new website web_icon campinmygarden.com, people are now renting space in their backyards for travellers who bring their own tents and just need a place to use the toilet and perhaps get access to wi-fi (all depends on what the owners specify they are willing to provide).

Finding free accommodation

Besides being a great way to meet locals, couchsurfing is probably the single most effective thing you can do to save money during your trip.

At the original site web_icon couchsurfing.com and the similar sites which have since sprung up (see the directory at the back of this guide for more), you’ll find a network of people willing to host travellers for free, and a network of travellers happy to get a free place to crash. It has proven overwhelmingly popular with younger travellers, and now has over ten million members around the world. It works like this: you register your “couch” for free and agree to let travellers stay for free when it’s convenient for you; in return, you get access to everyone else’s sofas or guest rooms.

If you don’t mind staying in one place a bit longer, you might consider a house-sit via web_icon caretaker.org. For an annual membership fee you get access to a list of homeowners looking for someone to water their plants, turn the lights on and off, feed the family pet or help keep an eye on grandma. Some will even pay you for your house-sitting skills.

Finding reasonably priced good food

Cosy restaurants and old-world cafés are tempting places to relax, socialize with other travellers and people-watch. They’re also nice places to run down your budget: those double café lattes add up in a hurry. Minimizing these little luxuries is going to be the first unpleasant step. Here are a few others:

Stick to restaurants that don’t take credit cards or have English menus. Places smart enough to do this are usually smart enough to jack up their prices as well. Another approach is to choose places where you don’t see other foreigners.
Look for restaurants near universities. Students worldwide have little money for eating, and there’s almost always a cottage industry set up to serve them.
Sample the street food, find a few favourites and make meals out of them. Two full days of street-vendor-bought meals costs the equivalent of one decent restaurant meal.
Cook in hostels (or the flat you rented). Check your guidebook for hostels with kitchen access. It’s always cheaper to cook as a group, so don’t be afraid to stick your head into the lounge and ask if anyone wants to pitch in and make a communal dinner.
Supermarket-dining works. You’ll soon learn how to survive on fruit, yoghurt, sandwiches and crisps.
Try the samples at supermarkets. During weekends and busy shopping times in large supermarkets in developed countries, you can often find a tremendous range of free samples available. With a little luck, you can get an entire meal, as long as you don’t mind getting it in fifteen small servings.
Walk for ten minutes away from major tourist areas and watch the prices drop by the block.
To increase your options in markets, keep a kit of salt, pepper, olive oil, knife and spoon in a small container, and use it to prepare salads and the like.
Bring food onto trains. Throughout the world, trains are united by one common theme: bad food at ridiculous prices. Bring more than you think you’ll need, plus water. And if you walk a block or two from the train station, chances are you’ll find a better-priced and better-stocked supermarket.
Buffets and salad bars: look for a cheap salad bar or buffet and then stack your plate about a metre high. This may require some advanced engineering skills.
Pizza gathering is not officially recommended, but it works. Travellers have been known to hang out in franchise pizza joints, order a small salad, then grab the untouched slices from other tables when groups get up to leave.
Waiters may play more tricks than just serving warm drinks and seeming to squeeze in a round of golf before getting the food to your table. They may also incorrectly add up the bill, conveniently in their favour. Always double-check it. If the menu says that tax is included in the prices, make sure that an extra tax charge isn’t being added on top.
Likewise, avoid places with a cover charge (or “service fee”), a charge for just sitting down at the table. If you’ve asked, and there isn’t one, make sure it doesn’t magically appear on the bill.
Order economically. A restaurant is a great place to rest your feet and socialize, but to keep the bill down consider ordering one starter and a few filling side dishes instead of a main meal.

IS THERE A STANDARD RULE TO TIPPING IN RESTAURANTS?

In the USA, it’s 15 percent for respectable service, 20 percent and up for exceptional service and 0–10 percent for buffets, or if you want to make a statement to a particularly bad waiter. In Iceland and Japan there’s no tipping at all. Beyond that, not even Stephen Hawking has successfully unravelled the complexities of global tipping. You can take some comfort in knowing that it baffles nearly everyone, often including the people who live in the country you’re visiting.

Many restaurants utilize a service compris method, meaning a 10–15 percent service charge will be summarily tacked onto your bill no matter what you think of the service. You can usually find this information on the menu or bill, but you may have to ask. The thorny part is that, if the service is anywhere from decent to superior, you’re often expected to give a little extra, from a few small coins for lunch in a café to 10 percent for immaculate service at an upscale restaurant.

One approach is to simply wait for the bill total, then round up. If your lunch tab comes to, say, $5.60, you might leave an even $6. With a tab of $9.80, round up to $10 for service you could have just as easily done without and $11 for excellent service.

In a crunch, you can always ask a fellow diner or your hotel concierge for some guidance, or play it safe and give ten percent when service isn’t included. But the final decision is up to you. Give what you feel is appropriate and leave the restaurant with confidence.

Museums – worth the cost or the wait?

It can be painful to cough up £20/$31 for a museum – and many travellers in the budget mode opt not to go. But also remember to put this in an equation that factors in how much it cost to get there and when you might be returning. Pity to pay £1000/$1540 to get there, then skimp on the last £20/$31. Though, to be fair to those who’ve balked at the fees, many of these cultural wonders do seem to be pushing the limits of what they can get away with. The most strapped travellers have been known to try to hop onto a tour group entering a museum and try to pass themselves off as a member of the paid group.

Passes covering a number of attractions in the same city or country are often worth looking at, especially if extremely popular places are involved. The Paris Museum Pass, for example, pays for itself in just a few visits and lets you stroll by the snaking queues. Even a single pass to the Louvre is worth picking up in advance. Several museums in London request a donation, but are completely free and plenty of others around the world offer one free day (or evening) a week.

Changing money – the cheaper way

Changing money, even when there is no black market, isn’t as straightforward as moneychangers would like you to believe. It’s not exactly a science, but there are a few tips that will help you save a bit of money:

Minimize transactions. Take a moment to calculate what you’ll need because every time you change cash, travellers’ checks or withdraw money from a bank machine, you’re paying for the transaction. Cash machines typically tack on fees of up to £5/$8.
Use a cash card. In addition to the ATM fees, credit cards hit you with ungodly interest on cash advances. If you’re going to use a credit card, try to do so nearer to your monthly payment date so the interest is minimized.
Avoid changing money at hotels and bureaux de change. They’re well situated, have great opening hours and typically charge you for all that convenience. Don’t be fooled by nice rates. They specialize in sneaky transaction fees.
Always compare before changing money. The rates can differ even on the same street. Check banks or the post office.
Some countries require official exchange receipts if you want to change your leftover currency back on the way out. That doesn’t mean you need to keep every receipt. Just enough to cover your leftovers: one or two is plenty.
If you’re comfortable with hi-tech solutions, try out WeSwap ( weswap.com) which matches travellers crossing currency boundaries and gets them to change directly with each other. Their app can handle up to sixteen currencies, all bouncing onto and off your WeSwap MasterCard as you trade.
Make deals with other travellers who are leaving the country and have some extra money. By eliminating the third party you can both get an excellent deal. Just check at one of the changing offices and use the rate halfway between the buy and sell price for that currency. Or check online.
You can’t easily exchange coins, so if you don’t spend them or get them converted to paper money, they turn into souvenirs when you leave the country.
Be wary of black-market changers (they’re the people who approach you about thirty times a day as you walk down the street to see if you want to change money). They can be the best deal in town if you bargain and make sure you don’t get ripped off – but always count your money (see “Drug-buy” scam).
Change money in larger cities. Rural areas are less likely to give you a competitive price.

FINDING THE BLACK MARKET

In most places where there’s an active black market, this is something you won’t have to worry about. Just walk down the street in all your Western-ness and it will find you. In fact, in places like Kathmandu, you’ll be convinced that your name has been changed to “Change Money”.

Peter Moore, Author, Wrong Way Home and No Shitting in the Toilet

The art of bargaining

Shopping isn’t always as simple as bringing an item up to the till for purchase. Sometimes you’ve got to haggle for it. The golden rule of bartering is to keep a smile on your face. It’s okay to be firm with your offer, even walk away at an impasse, but if you think of it as a game and keep the atmosphere light and friendly, it’s hard to go wrong.

Getting an excellent price on an item, however, is another story. The first thing to do is find out from a local or fellow traveller who’s familiar with the market what the real going rate is. Now you’ve got a goal. You may not get the local price, but if you come close, you’ve done well. More importantly, this little bit of research will help you recognize any serious swindling.

Take a look at what you’re wearing. It’s hard to haggle a price down with a ring on every other finger or a watch on your wrist that will tell you the time 300 metres under water. Leave the expensive camera, jewellery and sharp clothes in the hotel room if you know you’re heading to a market to do some bargaining. Then go early. Many vendors share the belief that a sale early in the day will bring them good fortune, so they may be more likely to lower their prices than they would otherwise. This also increases your chance of being alone with the vendor, which works to your advantage. With other potential customers browsing within earshot, the vendor may feel pressure to keep prices high.

The next step may be the most difficult: hide the true extent of your interest. That is, you don’t want to hold something up to show your travel partner and say: “Look at this. It’s perfect!” The vendors may not be fluent in English, but this exchange won’t escape them. If you have a salesperson hovering around you, look at the item closely and wait for them to pick it up. Once they do, start to back off. “Why would I want that? I don’t even know what it is.” Let them try to sell it to you. “It’s an X. It does this and that. And I’ll give you a good price.” If you do decide to pick it up, don’t hold onto the item very long, or give any other clues that you’re becoming attached to it. Instead, you might start out by lifting it for a moment and casually asking how much it costs.

They’ll either respond with an inflated price, a decent price or this question: “How much will you give me for it?” If you’ve done your research, you’re in good shape for any of these. If you get an inflated price, offer a price that’s equally below your target price. The vendor will immediately dismiss it as unfair, and you – and here’s where that smile really comes in handy – can say: “I was just having fun. Maybe we could start the bargaining over again, but this time at a more reasonable level.” Your next offer should be just under your target price. On the other hand, if the vendor starts the bargaining at a very reasonable level, don’t expect it to go down much. Pick a price just under your target and be prepared to come up in price fairly quickly. They may simply not be in a mood for bargaining much. And finally, if you’re asked to start the bidding, you might say: “Actually, I spoke to a few locals who bought these as gifts, and they told me I shouldn’t pay more than [insert the local price here].” The vendor will immediately know that you’ve been doing your homework, but may not be ready to give it up to you at that price. If that’s the sense you get, you can say: “Perhaps that’s the local price I heard about. As a visitor to your country, I’d be willing to give you a little more.” Then offer a price that’s one or two percent higher.

Often, sellers like to point out the unique craftsmanship in defence of their inflated prices. To counter, you might say: “I’m sorry, I’m not a professional craftsman, so some of the details are difficult for me to fully appreciate.” There’s no need to insult the quality of their merchandise during the bargaining. A more subtle way to express your sentiments is to pick the item up and inspect it closely, letting your face show your indifference, then say: “Well, I’d be willing to give you £X for it.”

If you’d rather take a more complimentary approach, you might say something like this: “It’s certainly a very nice [whatever it is], and I appreciate the time you’ve taken to point out its features and fine craftsmanship. And I certainly believe you when you say it’s worth [his last offer]. Unfortunately, I’m not able to pay that price. I’m embarrassed to say that it’s not within my budget. If you’d be willing to grant me a very special price, I would very much like to bring this home as a memory of my journey, and I’d be most grateful. If not, I completely understand.” Of course, you should be prepared to walk off if you get a no. But if you leave on such a friendly note, there’s a good chance the vendor may beckon you back after you’ve made it halfway down the street. If they don’t, and you still want it, you can either return with your tail between your legs or simply buy it somewhere else.

Another more businesslike approach is to introduce yourself to the vendor and tell them that you’re considering doing all of your shopping in their boutique. Say that you’re familiar with the typical market prices for each of the items and if the vendor is willing to give you a good price on them this could work out well for both of you. You’ll be asked to pick out the items you’re interested in and then take a seat. After some small talk (and complimentary tea and snacks in Arab countries), the vendor will probably let you steer the conversation to prices. If you’re still not close by the second round, let them know that you’re sorry it doesn’t sound like it’s working out and thank them for the tea. They’ve already paid for some tea and won’t want to lose a fairly substantial customer so probably won’t let you go that easily.

In the end, it should be a win-win experience. And if you keep the negotiation friendly, keep your cool and only buy at a price you feel good about, it will be. Despite any dramatic claims of losing money, a vendor will never sell you merchandise at a loss, so you shouldn’t leave feeling guilty that you obtained an unjustly low price.

LEARN THE EXCHANGE-RATE TRICKS

Let’s say you want to change £100 to Thai baht. Bank 1 is offering 44 baht to the pound with a two percent commission and a 41 baht minimum fee. Bank 2 is offering 43 baht to the pound with a 1.5 percent commission and a 120 baht minimum fee. And bank 3 is offering 45 baht to the pound with a six percent commission and no minimum fee. At bank 1, you’ll get 4271 baht. At bank 2, you’ll get 4116 baht. And at bank 3 (the one with apparently the best exchange rate) you’ll get 4230 baht. Earning about £4 for a minute of elementary-level arithmetic may sound OK on paper, but it seems like cruel and unusual punishment when you’re there.

Of course, you can bypass all of this by using an ATM.

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Costs and savings