Deciding to become a Digital Nomad is the first step of your new life, but if this is a long-term lifestyle, you need to create a financial plan
Before starting your digital nomad journey, many questions about money and how to manage your finances probably cross your mind. For example, how much money do I need at the start and how long will it last? You also might wonder what expenses you need to keep an eye out for. Having questions is normal because this lifestyle can be pretty overwhelming at the start. It’s a common topic in the digital nomad community. In this article, we give you helpful tips about how to manage finances for digital nomads.
Create a financial plan to become a Digital Nomad
Start saving money ahead of time
Once you jumpstart your digital nomad journey you will find out there is a lot to pay for. So you must have enough cash to sustain yourself during the first stage. We advise you to start this journey with some savings, especially if you don’t have a stable income stream yet. How much you will need depends on your travel itinerary. So best practice is to include the estimated local cost of living in your budget. Do your research, look for more economical-friendly places to kickstart your journey if you are on a tight budget.
Track your money?
Tracking your expenses sounds easy but in reality, this might be more challenging. Why? Because you easily forget about it when it’s a completely new habit for you. Before you know it, days or weeks have passed without tracking. The only way to successfully track your money is to commit to it and make it part of your daily habit. After a week you can see how you spend your money and where you want to make adjustments. Perhaps you are spending 3$ on coffee 5 days a week? You end up consuming 780$ on coffee a year!
You can use a spreadsheet or another easy way is to use an app. Your bank might even have an option to just scan your receipt, categorize it and create a monthly report. Here are some apps we hear other nomads used to track their expenses.
- You Need a Budget (YNAB)
- Mint App
Cut back on your unnecessary expenses
5 coffees a week equals an international flight. You see, cutting down on those small expenses during the week can save you a lot of money. You still need to enjoy the little things in life but you can try what you really need and what is less important to you.
If a coffee a day nurtures your happiness or productivity you can perhaps switch to making your coffee at home and only treat yourself once a week. Our golden tip is this: When you consume things just because you are used to it but you are conscious about it, try cutting it out for 30 days to see if you really need it. Take this advice as an exercise to challenge yourself.
Make a list of what you can spend and how you want to spend it
Having a budget is one thing and the next level is to cut up your budget like a pie. Not knowing how much you can spend can be tricky, especially if you never manage your money. It’s easy to overspend on unnecessary things or run out of savings. So, to make sure this doesn’t occur come up with a budget and stick to it.
First, you need to figure out how much you earn, what amount you want to save, and then set your budget so you can start budgeting.
We also recommend thinking about future and unexpected expenses. We made a list of the most common costs while traveling.
- Eating and accommodation
- Going out
- Mobile phone, sim card
- Transport (including daily transportation and flights)
- Funds for your technology equipment (phone, laptop, camera, charger…)
- Extra expenses
Figuring out the exact number of all costs is highly unlikely, but this is a good start. Your living costs will always vary depending on your location and your standard of living. You just need to know what you need, start tracking habits and manage your money.
Tips to save money as a Digital Nomad
Learning how to manage your money and create a budget plan is crucial. In fact, this is part of being an adult. We listen down a couple of extra digital nomad hacks that help you save up money while traveling.
- Eat like a local – Touristy restaurants are great for Instagram content but will make you spend more. Eating where locals go will not only save you money but you will also experience the authentic taste of the traditional dishes.
- When you have access to a kitchen make your own food – Cooking can take a lot of willpower and imagination, but it’s much cheaper than eating out. Take advantage and save some extra money there.
- Don’t explore like a tourist – Tourist attractions, guided tours, and all those tourist activities tend to be expensive. Do some research, walk around and explore, take advantage of free tours, free museum schedules, and open attractions.
- Focus on affordable accommodation – This expense is probably the highest one, so make sure that you like the place but also that the price enters your budget. Read more tips about digital nomad accommodations here.
Money apps that will make your life easier as a Digital Nomad
- XE App: real-time currency exchange
- Trabee Pocket: it helps you control the money that is coming in and out.
- Splittr: When traveling with a group of people it allows you to split costs easily.
Start traveling smart and save money!
When you create a financial plan to manage your money it can be exhausting and sometimes nerve-wracking at the beginning. Start with the steps we just shared. The most important thing is that you stick to it.
Find the balance of what you want and the plan around how to achieve it financially, prioritize and make an effort. Starting a new life and adventure is never easy but take it step-by-step!
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