Having a good enough income to live the digital nomad lifestyle is one thing but knowing how to manage your budget is another altogether. Many nomads struggle to afford to live in other countries, especially with the recent rising prices of accommodation, food, and travel. So here are some ways you can manage your money as a digital nomad.
Manage your debt
One of the worst things to do is to travel out with a large debt you need to pay every month. If you own property on a mortgage, for example, make sure you rent it out to at the very least cover the expenses of the mortgage together with expenses you need to cover as a landlord. Similarly, if you have more short-term debts from borrowing money, it’s a good idea to wait until those debts are cleared before traveling.
But sometimes clearing debt isn’t an option. Things like student debt can be notoriously steep and its payment can take decades. If this is the case, it is important to know that your income is large enough to cover all the digital nomad expenses even with this debt. Your monthly budget will also depend on other factors like how affordable your destination is, so plan accordingly.
Set a limit to your journey
Many digital nomads will and do dip into a rainy day fund here and there when their work isn’t going so well or when there are unexpected expenses connected to travel. And since these random expenses can happen often, it’s a good idea to have savings on the side just to be sure you can make it easily into the next month.
But most people recommend having a cut-off point for how much of your savings you should be willing to spend. Once you reach that minimum, you need to go back home and either save more money, get a better job, or possibly both. The digital nomad lifestyle shouldn’t bleed you dry leaving you with nothing but holiday photos to show for it. So set yourself a limit and stick with it.
Keep track of your spending
A good way to make sure you are not overspending in a country is by simply checking what your budget and your expenditure are. A good way to go about it is to see how much money you have left after putting a little bit into savings, paying your rent, taxes, and healthcare insurance. What’s left needs to cover everything from food, to clothes, transportation as well as fun, socializing, exercise, and the occasional purchase of something you like. Seeing how much you spend and on what helps you see how much money you have every week.
Foreign country complications
There are tons of ways in which your new home will bill you more than you’d expect. ATMs are a good example. At home, you might be used to paying virtually no fees for cash withdrawals but you might find that there are steep fees overseas. Similarly, transferring money from one account to another between two countries can be expensive. And this is not even mentioning things like being charged a higher phone bill or buying things that are more expensive without knowing there are more affordable options.
Each point has its own solution. Get a bank account that has little or no fees on foreign countries or set up an account in a local bank. Transfers between two countries can be solved by using apps like Revolute or PayPal. And you can always sign up for a local SIM card which will reduce your spending drastically.
And lastly, just because it’s cheap in comparison to your country doesn’t mean it’s still not overpriced by the local standards. Look for local shops and restaurants when searching for food and ask people who have been living in your new destination for a while. After all, getting to know your new home is half the fun of traveling.
