The most common question I get from people about traveling the world is: "how can you afford it?"

It's clear that when it comes to traveling for an extended period of time, money is a huge consideration and fear for many people. Besides the question of how to afford travel, it can seem like a daunting task of simply managing your money and finances while you are away from home. Just because you are away from home does not mean that the bills will stop coming, and what happens if you get pick pocketed and lose all of your bank cards?

Of course, when it comes to affording your trip, there are many unique approaches you can take to both budgeting the right trip and saving for one, but one thing that every traveler shares in common with one another is the need for a system that manages your money for you. A good system will go a long way in alleviating much of the fear and stress surrounding your finances and travel.

Automatic Transfers and Bill Pay

You have money coming in and out of your bank account from a variety of sources at different dates throughout the month. If you are logging into your utility company's website once a month and manually paying your bill, you are allowing unnecessary tasks to clog the wheels of your mind, creating subtle anxieties and slowing down your mental performance, and in the event you are traveling, you might find yourself in a situation that does not allow you to access the internet.

I used to have calendar alerts on my phone that would tell me two days in advance every time I had a bill approaching. Every time the alert popped up I would extend it another 12 hours or so, telling myself that I would do it later in the evening or the next morning. After hitting the "snooze" button several times, I would finally scramble at the last minute to pay the bill, and sometimes I would miss the deadline and have to pay the fee. It may seem like a minute inconvenience, but when you consider how much time is wasted thinking about having to pay your bill, manually doing it, and adding that up across every transaction that demands your attention in a month, you have a big negative impact on your productivity. Set up automatic transfers for all credit card bills, utility payments, and savings.

In fact, the concept of managing systems as opposed to individual tasks is useful to employ in all areas of your life. Any time you can eliminate the need to think in favor of an automatic system or habit, you save yourself precious mental resources that can be used for important creativity and productivity projects. I used to lose my keys all the time. One day after tediously searching the apartment for them, I swore I would never lose them again. I put a bowl on my dresser and quickly internalized the habit of placing my keys in the bowl anytime I took them out of my pocket. I eliminated the need to think about where I placed them, and I never lost my keys again.

Open An Online Bank

Online banks can be a scary thought for people. Online banks certainly lack the comfort you get from the physical representation of security that traditional bank buildings offer, but this is largely a superficial comfort. For travel, online banks are going to be an invaluable resource for us. So what are the advantages online banks have over traditional banks:

  • Earn interest on checking accounts. This is a perk that is absolutely unheard of in traditional brick and mortar banks, but it's par for the course when it comes to online banks. You can earn up to six times the rate that traditional banks offer.
  • Better perks like ATM fee reimbursements. This is actually the main selling point for using an online bank while you travel. I use Schwab's high yield investor checking account and they offer unlimited ATM fee reimbursements. That means that if I find myself in the middle of [scary isolated place that sounds cool] and I need cash out of the only ATM available for the next 100 miles, I don't even blink at the exorbitant fee tacked on to withdrawing money, I know it will be automatically deposited back into my account.
  • Overall lower to no fees. You won't have to go through the hoops you have to go through with traditional banks to avoid paying a monthly checking account fee. That means less stress, and more spending money.

In addition to these perks, online banks are going to be our main source of cash while traveling. More on this in a bit.

With your well-oiled financial machine working for you, you won't need a fat wallet like this.

Choose The Right Credit Card

Choosing the right credit card is important because it will be one of your primary methods of payment while traveling. Consider the benefits of using credit to handle transactions while abroad:

  • Earning rewards and points on purchases while traveling will save you money in the long run, especially if you will be doing a lot of travel-related spending which may be eligible for higher rewards on certain cards.
  • When it comes to disputing fraud and illegal spending, credit card companies are surprisingly diligent and helpful at resolving those issues for you in ways that traditional banks are not.
  • Syncing your card to services like Mint will track your spending, categorize it, and alert you if you are about to go over budget for certain categories. It is easy to overspend on a trip, so having a service that handles your budget for you can be useful.

The right card for you will depend on the type of trip you want to go on. Some cards offer huge bonus points for immediate spending, so if you have an expensive plane ticket to buy, you might be able to save hundreds just by opening a new account and purchasing the ticket with the new card. Some cards offer great perks and rewards for hotels, while others will give you great deals on airfare.

I use Capital One's VentureOne Rewards Card which is a great card for general use and travel. The card offers 20,000 bonus mile rewards if you spend $1,000 in the first 3 months; this will save you $200 off your plane ticket. In addition, you earn 1.25 miles for every purchase, there is no annual fee, there are no foreign transaction fees, and some travel expenses are eligible for upgrades.

You can compare the pros and cons of different cards with and Google.

Make sure that before you go overseas (if you are leaving the United States) that your credit cards and ATM cards are equipped with the latest EMV Chip technology. These square chips on the front of the card create encrypted pins every time you use the card which dramatically decreases the risk of fraud, and most European merchants will not accept any card not equipped with the technology. Most major credit and bank institution uses these now so if any of your cards are missing it just request a new card.

And of course, let your financial institutions know before you leave that you plan on traveling so they don't lock your accounts when they detect unusual spending.

![chip card only](/content/images/2016/02/chip-card-only.JPG)
A ticket terminal I saw in Brussels, Belgium that only accepts EMV Chip card technology.

Sync Your Accounts

So you have a credit card, a traditional bank at home, an online bank that offers ATM fee reimbursements, and all you are on board with the concept of automatic transfers and bill pay. While traveling, how do you use these accounts together to serve you best?

Your home bank is your home base. You should have one account where all the income gets funneled into, and then transferred out to various sources, and this is most likely going to be your traditional bank at home. All your bills will get paid automatically from this account, and anything you are transferring to yourself or to your savings accounts will be regularly transferred out from here. If your income will be suspended while you are traveling, make sure you have enough in your account to cover all your bills and expenses for the months you are gone.

You're going to use your credit card to pay for things as much as possible because the rewards will save you money, and any fraud that occurs on your credit card is going to be resolvable. This is not always possible of course, you will often find yourself in places where cash is the only available method, and that's where the online bank comes in handy. Think of your ATM card as cash. If someone pickpockets you and steals that card, it's possible they could clean out your account before you can protect it, and anywhere there is an ATM you can get cash easy. When it comes to cash, you want to have enough on you so that you can get out of an emergency and pay for simple necessities where credit is unavailable, but you want to limit that amount so that if it is stolen or lost you're not going to cry about it.

Come up with a reasonable but limited amount you think you will need each week in cash and set up automatic transfers from your main bank to your online checking account for that amount. This will ensure that you always have a steady flow of cash available for withdrawal but it keeps the actual balance at any given time low so that if the account was compromised for any reason, there is not much at stake.

With systems in place to regularly pay your bills, transfer money into your savings and investment accounts, and transfer an allowance to yourself, you may never have to log in to your financial accounts while overseas. The result is less stress, higher security, and altogether a better trip.