1. Remember to budget for expenses you’ll need to keep paying at home.
Don’t forget expenses you’ll need to keep paying at home, such as health insurance, student loans, annual fees, tax payments, car registration, or car insurance. You may be able to downgrade or have other options for reducing your payments without losing your coverage or incurring penalties. It’s worth a few phone calls to find out what your options are. Sort this out in advance of travelling as some options might not be available to you after you start traveling or after you’ve already been traveling a certain period of time. For example, if you want a repayment holiday on your New Zealand student loans, you have to request this within the first 183 days of being overseas.
2. Know any special circumstances that might affect your finances.
For example, if you have a credit card that provides travel insurance for trips up to 90 days or 6 months, then you might want to plan your trips so that they’re just under this amount (as opposed to just over). Also, be aware that you will almost certainly need a return ticket to and from home for this travel insurance to be valid, and meet other conditions. As frequent travellers, we’ve saved lots of money over the years by utilizing the free travel insurance that came with our Platinum ANZ credit card.
Another big consideration for NZers with student loans is that if you’re away over 6 months, you’ll be charged interest for the entire period you’re away, backdated to when you leave. If you come home for at least 32 days before the 6 months is up, you’ll stay a NZ based borrower and stay interest free. Obviously, check the current regulations yourself, which are subject to change at any time. Although I’m not familiar with the rules in other countries, they’re worth checking out to see what types of tax considerations and other considerations might apply to you as a long term traveller.
3. Make sure you’re calculating your expenses using the right exchange rate.
If you Google the exchange rate between your home country’s currency and the currency of the country you’re travelling in, you’ll get a wholesale or interbank rate. This isn’t the rate you’ll get when you use your ATM card or credit card. During a week long holiday, this isn’t going to make too much of a difference. Over the long term, it can. Sometimes you can set up a bank account in a foreign country without residency in that country. We did this in Hawaii so that we had a USD bank account. You can then use services to transfer chunks of money at better rates. There are lots of services that do this, and their fees are typically cheaper than doing a bank wire. Compare your different options for obtaining foreign currency, such as your bank or a forex company (I use HIFX), to find the best rates and fees for your transaction.
4. Prepare for currency fluctuations.
Since we started travelling in mid 2013, the NZD has been worth between .71 and .87 US cents! That’s a pretty huge difference when our travels are financed partly by rental income coming in from New Zealand. If you’re definitely planning to travel to a particularly country (or e.g., within the Euro zone generally) and the exchange rate is particularly favorable, you might want to lock in that rate by transferring savings to the other currency. You might lose out if the rate moves even further in your favor, but at least you have that certainty and can do your budgeting.