The cost of a gap year
The cost of a gap year depends on the criteria you use - length of time, age of participants, range of activity, destination, whether leisure pursuits are included etc. See the Gap Cost Calculator for things to take into account.
The Mintel report July 2005 says 'The average spend of a gap year traveller is around £4800, with the highest-spending group being those on career gaps'.
- For 18-24 year olds the average spend is £3-4000.
- For Career Breaks (25-35 year olds) the average spend is £6-9000.
- For those in retirement, the average spend is £5000 each.
Gap Cost Calculator
Use the Gap Cost Calculator spreadsheet (MS Excel file) www.gapadvice.org/files/gap_cost_calculator.xls to look carefully at the costs of each gap year company. Check for hidden costs and don’t forget you could organise it yourself – it’s a matter of:
- value for money
- the comfort of security and support
- a balance between your effort and those of a third party
Raising money for your year out
Looking to find several £000s for your gap year can seem daunting. But many people cover their costs, without relying on money from friends and family. Work out your budget first of all, to cover flights, insurance, etc (see the Gap Cost calculator). Then consider these suggestions:
- before you go and during your gap year
- Start budgeting eg
- cook food, rather than eat out
- cycle, rather than use public transport
- look in charity shops for clothes
- don't buy books, newspapers, magazines - go to the library
- Open a gap account, earning interest
- Produce a professional-looking flyer, showing what you hope to achieve, with pictures
- Get publicity in your local paper, on the web, at work/school
- eg car boot sales, garage sales, parties, quizzes, sell things on eBay
- sponsored events eg runs, cycling
- Apply for a grant
- 'Directory of Grant Making Trusts', copy in most libraries
- local charities eg Rotary Clubs, Lions, Round Table
- from your school or work
- Let your house, if you have one!
- Select cheaper options:
- make comparisons; charges vary considerably
- If under 30, for part of the year use the 'Working Holiday Visa' schemes in Australia, New Zealand, Canada to fund your travel
- arrange it yourself, if you are an experienced traveller. But you will need to do very thorough research and talk with people who have returned from the activities you plan.
University financial planning
Have a look at UNIAID: www.uniaid.org.uk 'helping students cope with financial hurdles to Higher Education'
Useful financial information
The Independent, 7 September 2008: ‘Bridging the gap year: stay out of the red.’
For those seeking the experience of a lifetime while they're still young, a gap year spent working or travelling overseas offers school-leavers and graduates the perfect opportunity for sun, sea, sand and a taste of adventure before going to university or settling down to the world of work. The experience can have a serious purpose too, and more and more "gappers" are opting to learn new skills, increasing their future employment prospects in the process. But globe-trotting does not come cheap, with figures from comparison site www.Fairinvestment.co.uk suggesting that the average gap year now costs more than [pounds sterling]4,000. So financing your extended break is just as important as deciding where to go. The key to a successful gap year is forward planning, and while you may like the idea of working your way round the world, it may also be worth getting a job in the UK before you go. This will allow you to build up a cash reserve that should be held in a low-risk, accessible savings account with a decent interest rate. Anglo Irish Bank, for example, is currently paying 6.4 per cent on its easy access account, while Bradford & Bingley offers 6.51 per cent on its Internet Saver. You should also think about making the most of your mini-cash individual savings account (ISA) allowance, as you can now save up to [pounds sterling]3,600 a year into this tax-free. Icesave is currently paying 6.1 per cent on its easy access ISA. Further, if you've already been to university and have a graduate account, you could try to negotiate a larger overdraft. One of the most important tasks is budgeting carefully. Draw up a list of all the big expenses you might encounter, such as transport, food and accommodation, and take the time to research the local cost of living. A good starting point here is <a href="http://www.lonelyplanet.com/destinations_">lonelyplanet.com/ destinations</a>. </span></span><span style="font-size: 10pt;"><span style="font-family: Arial;"> Another important consideration before you pack your bags and head off is how you are going to gain access to your savings overseas. You may be planning to use your debit card for everyday transactions, but you need to be aware that most debit - and credit - card providers levy a "loading fee" of around 2.75 per cent on all purchases made abroad. Many also charge a "handling fee" of up to 2 per cent of the transaction if you use your card to withdraw cash from a foreign ATM. "Gappers should con-sider getting a Nationwide Flex current account, because it is the only UK provider that doesn't make foreign-currency charges on purchases and cash transactions anywhere in the world," says Steve Willey, from the financial comparison site Moneysupermarket.com. He adds: "Those looking to take a credit card could consider Nationwide Gold, Abbey Zero, Post Office Platinum and Thomas Cook, as none of these levy foreign-exchange fees on overseas purchases." If you are stuck with an uncompetitive debit or credit card, you may want to pack a prepay currency card, which can be "reloaded" with money either online or by text. "The FairFX and Canton FX prepaid cards are good options," says Mr Willey. "They can be topped up easily by your parents if need be, and they are good for budgeting as you can't spend money unless it is on the card." Further, you are gaining a strong measure of protection from criminals. "The chip and pin technology makes it much harder for fraudsters to clone the cards," explains Stephen Heath from FairFX. However, you need to be aware that while prepaid cards offer both convenience and security, some can carry quite punitive charges, such as a monthly fee of up to [pounds sterling]5 and an application fee of around [pounds sterling]7 on average. Many of the cards will also charge you for taking out cash at an ATM. Brian Brown from financial analyst Defaqto adds that as cash soon runs out, and credit cards can be lost or damaged, it may also be worth taking a "mixed wallet" that includes some traveller's cheques as a back-up. One of the key things you need to pack in your luggage is a travel insurance policy. If you head off without cover and are involved in an accident, say, you could find yourself with medical bills and repatriation costs that run into thousands of pounds. If you are travelling in continental Europe, you are strongly advised to carry a European Health Insurance Card (EHIC). These cards, which replaced the E111, offer reduced-cost or sometimes free medical treatment in 28 European countries. However, they are not a substitute for comprehensive travel insurance in that they won't cover you for major expenses such as an emergency flight home. Moneysupermarket.com recommends a policy offering at least [pounds sterling]2m of medical expenses cover, [pounds sterling]1m for personal liability, [pounds sterling]3,000 cancellation cover and [pounds sterling]1,500 for baggage. If you already have annual travel insurance, do not assume this will protect you on your gap year travels as many of these policies cover short trips only, limited to, say, a month. One option is a specialist insurer offering an extended policy of up to 18 months. This may also include cover for adventurous sports such as parachuting, bungee jumping or white-water rafting. "Many specialist insurers will cover you for such activities as standard but there are some that do not, so check the exclusions within your policy before you leave as you may have to pay extra for this," says Peter Gerrard from Moneysupermarket.com. "Also remember that your insurance needs to cover belongings such as your iPod, phone, and any other items of value." If you think your travel plans could be subject to change, check the cancellation cover as some policies don't include this. Lana Clements, from the insurer More Than, warns: "Make sure you declare all medical conditions prior to travelling, as failure to do so can invalidate policies. And, when drinking abroad, bear in mind that many policies will not cover accidents as a result of alcohol consumption." Further, when taking out insurance, make sure that it covers all the countries you want to visit, and remember that no insurer will pay out claims relating to countries that the Foreign Office has advised British travellers not to visit. Go to <a href="http://www.fco.gov.uk/_">fco.gov.uk</a> for an up-to-date list. </span></span><span style="font-size: 10pt;"><span style="font-family: Arial;"> Finally, if you plan to call home from overseas, think carefully about your mobile phone deal and use. "If you are staying in one country for a while, then buying a local Sim card is your best option," says Mr Willey. "But if you are globe-trotting then you need to weigh up whether buying a global Sim card or signing up to your provider's international discount tariff is likely to work out cheaper."
From The Observer 2 July 2006. By Lisa Bachelor, extract.
For most school-leavers heading off on a gap year before university, the concept of financial planning is probably alien. Getting the money together in the first place is usually the biggest challenge, with the average year out for someone on a tight budget typically costing between £3,000 and £5,000. But once holiday jobs, generous parents and car boot sales have brought in the required amount of cash, 'gappers' will want to keep as much of that as possible away from banks, insurance companies and travel agents. So where do you start?
Tickets and vaccinations
Round-the-world tickets are the most popular - and often the cheapest - option for gappers. Basic fares start at around £1,000, with more expensive routes typically costing twice this. Trailfinders sells an Escapade ticket, which uses Air New Zealand, Singapore Airlines, Silk Air and Virgin Atlantic and goes from London to Singapore to Sydney then Auckland and back via Los Angeles. It is the cheapest RTW ticket and costs £1,020 including taxes.
For larger itineraries, especially for those wanting to route via the US, Pacific, New Zealand or Asia, Trailfinders says the Star Alliance ticket is ideal. The ticket price is calculated according to the number of miles flown, with the cheapest fare based on 29,000 miles for £1,339 plus service charges and taxes.
For those wanting to visit South America, Australia or South Africa, the One World ticket, which uses BA and Qantas amongst others, is calculated according to the number of continents visited, with a starting price of £1,329 plus service charges and taxes. Trailfinders says that apart from choosing the route carefully, there are other ways of keeping the costs down. It recommends:
< Plan your itinerary to travel in one global direction and avoid backtracking
< Choose the right departure date - the only date that affects the ticket price is the date you depart the UK. The cheapest time is generally 15 April-15 June
< Remember that destinations off the mainstream routes will push up the price of a round-the-world ticket
< Consider open-jaw sectors such as flying to Bangkok and out of Singapore, making your own way between the two.
Those taking a gap year will typically shop around to save money on a ticket, only to be shocked to find they have to fork out a few hundred pounds for vaccinations. But as tempting as it might be to avoid a pain in the arm - and the wallet - the cost of skipping injections could be far more than a few quid if you end up with a nasty disease. How much you pay depends on whether you go private or not. Your GP will be able to advise you what you need but will not be able to offer all vaccinations for free. The advantage of private clinics, according to the health experts on Gapyear.com, include reduced waiting times, potentially more up-to-date advice and weekend and late-night openings. Gapyear.com says the typical traveller should expect to pay £175-240 for private injections.
It's worth comparing prices at different places, however. A pack of 50 Doxcyxline malaria tablets costs £35 from the BA travel clinic at Piccadilly, £25 from Trailfinders' travel clinic in Kensington and £15 at The Observer 's local pharmacy in Clerkenwell . BA charges £26 for a typhoid jab, Trailfinders charges £20 and our local charges £18.
Travel insurance will add £200 or so to a trip but is another expense gappers should not forgo. Medical costs, particularly in the United States, can be exorbitant and young travellers should make sure they get adequate cover. Gap year insurance is different from standard travel insurance policies in that it offers cover for 12-18 months. Halifax and student insurance specialist Endsleigh have a number of policies for different budgets, though they are not the very cheapest.
Peter Gerrard, of Insuresupermarket.com, says gappers should examine their policies carefully. 'For example if you're going to be doing a dangerous sport such as bungee jumping or scuba diving make sure you're covered. Most policies that offer cover for scuba diving will only do so up to a certain depth while Insure and Go, for example, will only cover up to three bungee jumps in a year.' Backpackers also need to check if any exclusions apply on personal belongings cover. Some policies may not accept claims for belongings that vanish from a beach hut or a shared hostel room. Some policies will offer cover for set areas only, which is cheaper if you know you're only going to one or two countries. For example, Insure and Go's worldwide policy is £235.45 a year whereas its Australia and New Zealand policy is £184.12 for the same level of cover. If you're not sure where you'll end up don't risk being without insurance - go for a worldwide policy.
Most young gappers will have had their account with the same bank since childhood. There are advantages to staying put, such as a potentially generous graduate overdraft and the use of a credit card - something that may be hard to get elsewhere. But going abroad for a lengthy spell is a good time to reassess your bank: the transaction fees it imposes can add up over a year (these are typically 2.75 per cent on every cash withdrawal and purchase made overseas). Nationwide is the only provider not to levy such a fee anywhere overseas via its Flexaccount. Those gappers harbouring a stash of cash for emergencies might want to transfer some or all of this into a savings account before setting off. Icici bank currently has the best rate at 5.15 per cent on its HiSave account. Prepay cards
Prepay cards are being touted by the companies selling them as a safer alternative to debit cards or cash. The cards are preloaded with money before setting off and can be topped up -usually online as well as over the phone - by the cardholder as well as family members.
'The main benefits of these cards are security, convenience and control,' said Robert Kenley of moneysuper market.com. 'Like debit cards, if you lose them or they are stolen you are not liable for losses but at the same time you can budget easily by only topping up with what you're willing to spend.'
Transfers made online or over the phone instantly credit the card, which can then be used in cash machines (ATMs) worldwide as well as in shops that accept the payment badge (such as Mastercard) displayed on the card. The cards do come with a number of usage fees, however, such as charges to top-up and to withdraw cash, so compare these and consider your usage before signing up. Moneysupermarket.com compared the fees for Cash that a cardholder would pay if they topped up a pre-pay card with £600 a month online using a credit card, made eight £50 cash withdrawals and 20 £10 point-of-sale purchases in Australia. The total cost monthly of these transactions in card fees was the lowest with Speedcard at £28.78 and Liquid Card at £ 28.83. The same person would pay £48.23 using the Post Office Travel Money card and pounds £53.78 using the Cashplus card. For just the ATM fees, Speedcard was again cheapest at £4.80 for those eight withdrawals, compared to £27 with the Post Office.