Making a budget is reasonably easy; holding to a budget is much more challenging.
Digital money management tools quickly reveal where the money goes, and from there, where to staunch the flow. Forward planning in such tools as Quicken or Microsoft Money shows how today’s purchase affects future balances. Entering known expenses a year or two (or three) in advance makes it easier to make purchasing decisions and having the exchange goal “on the books” provides the reason for saving.
Returning from holiday with credit cards full and lines of credit extended is no fun. Nobody wants to be paying for beach-side margaritas months, or even years after the holiday. Planning ahead for flights, pleasure travel, dining and life’s necessities means fewer financial stresses there and a more comfortable situation following the exchange.
Prior to the exchange, trim expenses and bank the extra. Plan to have enough for the travel there, and sufficient spending money for pleasure travel and entertainment before you leave.
Knowing relative costs is helpful for budgeting for the year abroad. Have a general sense of relative prices, like gasoline, groceries, utilities, and vehicle insurance rates. Decide where to save and where to splurge. Plan for the bigger expenses. Remember, budgeting is not about preventing spending, but about directing it to achieve goals.