How to Manage Your Finances as a Digital Nomad

Being a digital nomad sounds incredibly exciting and adventurous, doesn’t it? Nevertheless, preparations for the trip and managing your finances while on the road is everything but spontaneous. Quite the contrary, you will have to pay even more attention to your spending and saving habits compared to a situation when you have a 9 to 5 job. As much as it is beautiful and fulfilling, travelling and working at the same time is financially rather demanding, so here are a few pieces of advice on how to do your best.

Prepare for the trip

It’s not enough just to pack your bags and set off. Perhaps you have your travel all figured out, but what about your current finances? Do you have any debts to your name? If so, start getting rid of them immediately. You simply cannot afford to go abroad and leave your credit card bill piling up, waiting for you to come back home.

Also, it is advisable that you started saving for the trip on time. It’s difficult to predict your financial influx in the following period, yet you are going to have expenses just as if you were back home, and don’t let the domestic currency confuse you. Ideally, you should have enough money saved for at least 3 months to live abroad without any income.

Calculate the expenses

In order to save up the right amount, you have to know how much you’ll be spending every single day. Bear in mind several factors: accommodation and utility costs, transport and food, as well as eating out, going to the cinema or theatre, or some other form of entertainment. See which kind of accommodation is the most suitable for you. If you choose something near the city centre, you will definitely save money on transport expenses, for instance.

Finally, always add up to 25% of the sum you have calculated, as there are always some unpredictable expenses (medical expenses, presents, sudden moves…).

Bank accounts

Of course, first, you should start with the bank account back home. Do you really have to keep it open if you’ll no longer be a resident in your country? Whatsmore, some banks will even not allow you to have it if you decide to set off on a digital journey. Make sure you deal with all the issues prior to leaving.

In addition, you should open a new transactional account for receiving your funds and making payments. Fortunately, nowadays there are lots of options and you can easily find the best one. We recommend you find a savings and transactions account with no transaction fees (yearly or monthly). Though some transaction fees may seem negligible, they will certainly add up over the year.

Rules, regulations and taxes

There are two types of taxes you should be concerned about: the ones in your home country and the ones where you are living as a modern-day nomad.

When it comes to your homeland, pay a visit to your local tax office and ask about all the rules. Perhaps you can be allowed tax exemption for one year while you are travelling. It does sound wonderful, but not every country permits it, so make your enquiries carefully.

Secondly, you must study the tax systems in the country where you are living and working and know them like the back of your hand. You will probably end up surprised with all the possibilities. While some countries do not mind you having your income without any taxes since your financial source is located outside their borders, others are entitled to a part of it by their law. On the other hand, some countries calculate taxes depending on how long you are staying and earning within the borders. Hence, you must always be absolutely confident about the rules and regulations, wherever you happen to be living and earning.

This is not a vacation

Finally, a word or two about your awareness of the path you are going to take.

Being a digital nomad is wonderful. You get to see so many countries you have always wished to visit and you can really get to know different cultures. No wonder the movement is going mainstream. However, because your current office is a sandy beach and you’ve got the summer breeze instead of the air conditioner, it’s only too easy to lose touch with reality and spend a proper amount of time relaxing rather than working. Of course, you are entitled to a holiday, but don’t lose track of your income, and always monitor your earnings and spending.

So, are you still up for it? Perhaps no one has told you, but every digital nomad is his/her own accountant, too, and you often have greater financial responsibility than when you were working back home. Take our advice seriously and you should be able to keep everything under control and indulge the fruits of your labour, too.

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Created on Dec 18th 2018 10:54. Viewed 554 times.

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