The Finance of Travel: How much travel can my paycheck sustain?

If you are a regular Indian middle-class person, chances are you work a 9-5 (or 9-whatever time your boss makes you stay back) job and have a fixed salary deposited in your account every month. For many, most of that amount is divided among the following:
(i) EMI payments
(ii) Mutual funds, stock market and other investments
(iii) Household expenses
(iv) Money staying in the account
(v) Miscellaneous

Now, where does the money for travel come from? Usually out of the miscellaneous. But if your miscellaneous expenses include a movie, dinner and drinks every week, shopping every other week, then chances are that any travel, big or small, is going to cause your miscellaneous expenses to shoot up. This is the reason many people give for not traveling: I don’t have the money to spare. But you do. You just need to look at your budget a bit more carefully.

Just before Christmas last year, I sat with all my financial statements, and tried to figure out how much money I could allot to travel. This year, I want to be able to travel at least once a month, with two major trips, hopefully one abroad (but not if I can’t afford it). I have certain financial commitments and I also want to do some investments and maintain a certain amount in my savings account. So, the absolute maximum I can allot for miscellaneous expenses is 10% of my paycheck. This includes general entertainment like eating out, movies, shopping etc, and travel.

I realized that any planning of miscellaneous expenses never works, and I usually end up spending more than I budgeted. Hence I created two accounts, one for entertainment and one for travel. I put twice the minimum balance in each account, and every month I will transfer 5% of my paycheck into each. I will only carry the debit card of my entertainment account, so that I don’t go overboard with my random spending, and do all travel payments only from the travel account. Every quarter, anything left over from entertainment goes into travel. If I get a bonus for the year, I’ll put 10% of the bonus into the travel account.

I hope this will help me get a firm hold on random expenses, and have enough money to travel. What do you think? Do you think I can fund my travel dreams with this plan? Will it work for you as well, or is it more complicated than the Greek debt story?

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