Writen By nomadicadam | February 22, 2016

How to Save Money Traveling with the 3:1 Rule

How to save money as a Digital Nomad

Most of the questions I get from people about this life of perpetual travel I lead is quite simple: “Adam, how do you afford it?”. Today I’m going to give you an insight into a tried and tested method I developed whilst on the road to continue this dream.

For most travellers, life on the road indefinitely is something of a pipe-dream. Most have given up their jobs and saved significant amounts of money prior to their hiatus from the ‘real world’.

Unfortunately for most, escaping the corporate world full-time is farfetched and unrealistic long-term, as they constantly check their bank balance to see a savings account battered by adventure, perhaps returning home empty handed in regards to cash, but richly filled in regards to memories.

And therein lies the ultimate battle and conundrum, my friends: travel, while possibly being the most liberating thing you can spend your money on, is ultimately dependent on paper notes. And if you don’t have enough paper to sustain that liberation, your opportunities for freedom will abruptly come to an end.

There’s not really a positive spin to put on this – more so a harsh reality that everybody needs to understand. It’s why saving money on the road is such a fundamentally important concept, in addition to utilising it effectively and not carelessly in a manner that doesn’t enhance your happiness or enrich your travel.

I am not claiming that everybody can travel forever. Indeed, even for myself, the concept of travelling indefinitely is not something I intend to do (without breaks along the way at least).

But what if I told you that I’d created a system and specifically tailored it towards long-term travel in order to help you preserve money efficiently in a way that not only enriches your travel experiences but also prolongs them as well?

Well, I have created such a system, and today I’m going to share it with you.

Nomadic Adam’s 3:1 Rule

I have applied this rule, based on my monthly income (or savings, perhaps, if that’s what determines your spendings) to food / drink consumption, accommodation, transport and activities, and for each component, it works brilliantly.

So what is the 3:1 rule exactly, and how does it help enrich your travel experiences and save a boatload of money in the process?

It works like this: for 3 days, you spend in a prudent, refrained manner, with a clear ‘maximum’ spend allocated to those days. For example: if your budget is £1,000 per month, then your daily spend would be roughly £33 – very doable for most individuals on a daily basis. However, that would assume that every day would be of equal ‘value’ in regards to doing activities, transporting to new locations, and going out getting wrecked with fellow backpackers and waking up with a monstrous hangover. If you follow this model of spending, you need to be extremely diligent and

If you follow this model of spending, you need to be extremely diligent and unsusceptible / inflexible to any immediate change to your schedule that you come across. I’ve met people time and time again who overspend and end up having to cut their trips short because they follow this model: it isn’t flexible, it’s more fanatical to think that you’ll spend exactly the same amount every day.

The 3:1 rule overcomes this because it forces you into a period of prudent, diligent budgeting for 3 days, before giving you a real treat on the 4th day: the ability to be fully liberated, to spend freely without fears of overspending, and to maximise those experiences because you’ve earned your reward.

Taking our £1,000 example previously used, what I would do is the following: spend £20 for the first 3 days (£60 total spend) and then have a budget of £72 for the 4th day, where I can either treat myself to a fancy meal, upgrade accommodation (unlikely) or go and do a day of ziplining, kayaking or something else exciting depending on where I’m staying!

The 3:1 rule is superior because many times, people don’t even end up spending the increased allowance on the 4th day, and even end up saving money as opposed to needlessly spending a daily budget.

The problems with splitting your expenditures equally over a monthly period is that you assume that every day will be the same, so you often force yourself to spend recklessly on each day just because you think you should, when in reality you’d be in a better position to bank the money and use it to extend your travel for a more prolonged period or to enhance your experiences without economically stifling yourself and worrying too much in the process.

Here are some ways to effectively apply the 3:1 rule on the 3 days you’ll be in ‘saving mode’, following a restricted budget but still allowing yourself the chance to have fun and freedom:

  • Eat local street food or shop in a supermarket for your groceries (food)
  • Stay in a mixed dorm with more people or use Couchsurfing to bring costs down (accommodation)
  • Go walking, hiking or photographing where you are – focus on your self-development by interacting with locals, meeting up with them or simply people watching, reading books in coffee shops (this one is actually great as it truly makes you appreciate and acquire knowledge of the local populations and indigenous people).
  • Stay in the same location and work on the above, don’t travel to another province and take time to appreciate your surroundings and what they have to offer you.

The biggest critique I have of the 3:1 rule is this: “Adam, you claim this allows you to be flexible, but it’s anything but because travel is spontaneous and you never know when you’re going to go out for a drink with new people from the hostel, when an opportunity to experience something may arrive or when you have to move on in a hurry in order not to miss out on something cool happening elsewhere”.

My reply is simply this: I’d be the first to advocate nobody passes up opportunities like this, but you have to understand that travel requires discipline. If you want this to work for you in the long-term, then you need to be diligent, smart and efficient, and if you’re reckless with spending then you will pay the price with an early trip home and a lack of these opportunities in the future. So sure, go for those few drinks with your fellow travelers, enjoy the sumptuous restaurant they’re all talking about that they tried the night before, but the next day, get back to the 3:1 formula and make up for breaking it. If you were 1 day away from your ‘overspend’ day, you’ll have to now do 4 days of prudent spending to compensate for it.

Travelling long-term is ultimately dependent on economics and being disciplined. If you want to create epic memories in the long-term, you need to be efficient with your finances. You’re running your own establishment, remember – don’t let it collapse before you’ve even begun to fully reap the rewards of long-term memory creation!

What do you think of my 3:1 rule? Do you employ something similar when you’re on the road as well? I’d love to hear your thoughts and opinions on what money saving tips you have, so please share them below.

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