Next week I’m doing a week of posts for people in their 20s and 30s. I figured I usually do a frugal post and I wanted to write about travelling.  So I decided to ask the question is it frugal to backpack?

Yes and No.  Yes, in the sense that backpacking cheapest way to travel.  Staying in hostels can be fun and cheap.  You get to meet a lot of interesting people.  One danger is of theft.  You often have to take your belongings with you everywhere.  Also it can be unnerving to share sleeping space with multiple people in a room.  But previously, not sure about now, rooms could be had for $20/night.

But why is it not frugal?  Well personally, most of my friends after college who backpacked ended up running thousands of dollars in credit card debt.  Why?  Because they didn’t work during their time backpacking and without income, they had to find a way to survive.  Sure some had some graduation money, but even 3 months of backpacking can be expensive.  Eurorail passes or train tickets and public transit within the cities can add up.  Add in eating out most of your meals and the money just flows out of your pockets.

But the biggest loss is the lack of income.  If you spend one year backpacking and run up say $6k in debt, the truth is it’s more likely you’ve lost opportunity cost of $10-20k.  You’ve lost the $6k+ interest you’ve had to borrow, plus potentially $10k in savings you might have stashed if you were working.  And if you had invested $5k in a Roth IRA, then you’d be $200k richer in retirement.

But like I said, it can be a once in a lifetime opportunity to go backpacking in Europe, Asia, South America, Africa.  In the future when you have the savings to go, you likely won’t have the time off away from responsibilities to go.  At least that’s what I’ve found.

Stick around for other topics next week facing young adults.