I first learned about the Pareto principle in my university marketing courses: it states that roughly 80 percent of sales come from 20 percent of clients. The 4-Hour Work Week applied it to personal life as well: one thing that stuck with me is that we wear 20 percent of our clothes 80 percent of the time. Even as my wardrobe has been drastically minimized, I still find myself wearing skinny jeans and a black v-neck over and over again–and laughing to myself at how predictable I am.
Even though it’s not quite the same concept, I apply an 80/20 rule to my budget when I’m traveling. Here’s how it goes: 80 percent of the time, I’m pretty darn frugal. The other 20 percent of the time, I feel free to splurge.
I’ve never actually used a budget, but I’ve always been good about managing my money. My mom instilled a few excellent money management principles in me: to always earn at least three times my rent, to use the rule of thirds (spend a third, save a third, invest a third) and to always make sure my bills were paid first.
Those aren’t always applicable on the road: I tend to work really hard and save heaps, then travel for a while on what’s in the bank–without actually touching my “savings.”
The ways I save 80 percent of the time:
- Walk or use public transportation. Things I hate about taxis: they’re expensive, bad for the environment and isolated. I’d much rather be in the swirl of everyday life, or having the freedom to stop where I please.
- Stay in hostels. I’m lucky enough to be able to fall into a deep sleep just about anywhere, as long as I have an eye mask and earplugs. As a solo traveler, staying in hostel dormitories is the easiest way to keep my costs down.
- Automatic transfers. I set up an automatic transfer from my checking to my savings ages ago–and I always forget it’s there until I see my growing savings account!
- Smart credit card use. I use a Capital One credit card because it doesn’t charge any overseas transaction fees. I also pay off my credit card every month. I hate the thought of paying any money just to put off paying money!
- Eat right. I don’t think it’s any secret that I love eating out–but I usually stick to no more than one big meal out a day. I’ll usually pick up a pack of yogurt, some fresh fruit and a few granola bars to keep in the hostel while I’m traveling: cheap breakfasts and easy dinners! I do think eating out is an important way to experience a local culture–but in the interest of my wallet and my waist line, I try not to overindulge.
- Find free things. Gallery openings, many museums, visiting a library, coastal walks: even when it’s doing nothing, there are lots of ways to do something without spending a ton of money.
- Use common sense. When I’m low on cash, I don’t spend it–even on a credit card. I’ll pick up some extra shifts, seek out some freelance work or hold off on nights out and shopping until payday.
- A good meal. Whether it’s a big night out with friends or simply a treating myself to a nice sit-down restaurant, I enjoy a multi-course meal with a few drinks every once in a while. Sure, I swear by Cheap Eats in Melbourne–but sampling haute gastronomie in Lyon was well-worth the extra Euros.
- An experience. Even though it probably wasn’t within my budget, I don’t regret paragliding over the Bavarian Alps or canyoning in the Swiss Alps for an instant. Those were unforgettable experiences that I simply can’t recreate at home.
- Quality clothing. I often moan to my best friend about my shopping conundrum: I hate cheap clothes, but I hate spending money. However, when it comes down to it, I will happily have fewer items that are of better quality–especially when I know that everything has to be worth either a) traveling with or b) paying the postage to send it home.