The digital nomad lifestyle seems like a fever dream. Who doesn’t want to work while on a beach or in a forest? But once you enter this world, you’ll have to deal with an unstable income and endless documentation. So, creating a budget for digital nomads is a must. Read on to learn some tips.
Budgeting essentials for digital nomads
How does money management work? Let’s break it down. Money management is more than simple budget planning; it includes:
- Retirement preparation;
- Saving funds;
- Investing;
- Debt management;
- Current budget planning.
Treating your money like a system will achieve the best results.
- Start by writing down these five elements. Remember that it’s only the tip of the iceberg in how to manage money.
- Add the next-level elements. For debt management, recall all your credit cards, loans, overdrafts, fines, etc. Try not to miss anything. Use online services like Miro or Lucidchart for simple visuals.
- Prioritise certain elements, but don’t abandon others. If one gear stops working, the whole system will break.
- Decide how to manage money for each element and stick to it.
To clarify, we’ll cover some tips for creating a budget for digital nomads.
Retirement preparation for digital nomads
Before deciding how to manage money, you should pick a country for your retirement. The reason is that the earlier you start paying social contributions there, the higher your pension will be. Of course, you can change your mind in the future, but some long-term planning is needed anyway.
Check in advance
- Your home country's pension policies
If you've officially worked and paid taxes in a country, you have a right to get this money back after hitting retirement age. However, the conditions vary. For example, if you were a UK citizen and have over 10 years of National Insurance records, you can apply for a pension even from abroad. In other countries, this may not be the case.
Moving countries is a part of the digital nomad lifestyle. While it sounds appealing, it requires extensive research, so before deciding on your next destination, explore the local pension schemes.
- Amount to be saved
Calculating the cost of living of a digital nomad and how much you need to save before quitting your job is an eye-opening experience. Use online retirement calculators and keep track of your progress.
- Health insurance
Unfortunately, getting old means having more health-related concerns. Check the health insurance options for retired people and plan ahead on how to manage them. Also, plan ahead for other benefits; search for some unemployment schemes, for instance.
Digital nomad lifestyle tips: Have at least a common understanding of how your financial situation will look like in the future.
Saving for digital nomads
How does money management work if you often change locations and have to deal with new realities? Saving basics are similar in every part of the world.
Open a savings account.
For expats, digital banks are a great option. See the offers of Revolut, Wise and N26.
Revolut
No minimum; you can deposit even a small amount of the currency;
Immediate access to money;
2.5% AER for a Standard plan. The percentage may be different in your country;
Daily gains.
Wise
Wise doesn’t have a separate savings feature, but you can earn on interest there:
No minimum;
Daily gains;
Interest rates constantly change;
Growth is not guaranteed; you may even lose some funds.
N26
No deposit limit;
The rate is 0.55% per annum for a Standard plan account;
Immediate access to money;
You’ll be paid on the first day of the following month.
If you feel like savings accounts are not your thing, try more traditional ways.
Spend less to save more
Start by reducing the cost of living for digital nomads.
- Try to lower your Internet and mobile bills. We didn’t tell you that, but some providers lower prices if you’re about to switch to their competitor's plan. If you’re not sure what to say, read this script.
- Save on utility bills. We shared some tips in our article; check it out.
- Revise your grocery shopping list. Purchase what you really need and avoid impulsive buying.
A digital nomads’ lifestyle is nothing without entertainment. Good thing, you can also save on that.
- Check out free museum days.
- Monitor festivals and open-air events.
- Replace gym with home workouts.
- Join movie nights in parks or community spaces.
- Use local libraries or co-working spaces.
- Look out for live music in bars or plazas.
- Invite friends over instead of going to a restaurant.
Don’t be trapped in our consumer culture and explore free entertainment—people can have fun without spending money.
How to earn more: Salary negotiation tips for expats in Europe.
Save on sending money abroad
Creating a budget for digital nomads without putting transfers back home isn’t realistic. Expats often have to send funds to support their families or for business needs. To escape hidden fees and bad exchange rates, use Profee. Here is what we offer:
- First transfer special offer;
- Little to no fees;
- Unmatched rates;
- Top security of a licensed service;
We know that the cost of living for digital nomads is high, so we try to reduce it by offering beneficial transfers.
Digital nomad lifestyle tips: Take advantage of the Profee referral programme and earn rewards—side income at its finest.
Travel smart
The main perk of working remotely is exploring the world freely. Here are some tips for saving money while travelling.
- Cook your own meals.
- Pack light. You can wear one outfit for two to three days; the world is not going to end.
- Walk as much as you can. Transportation may be quite expensive, and walking is good for your health.
- Don’t rush and search for budget options.
- Invite friends to spill the bill for accommodation.
If you already know these tips for saving money while travelling, read these pro hacks:
- Go to restaurants with a local menu only. They are usually cheaper, compared to those offering an English menu.
- What locals say: watch vlogs and read articles made by the people who live there, not the tourists.
- Use a VPN to compare flight prices. Same route, different numbers.
- Don't be shy to ask for takeaways. If you can't finish your meal, just ask to pack it. It’s sustainable and will save you some funds when you become hungry again.
Remember these budget travel tips for digital nomads when planning your next trip.
Investing for digital nomads
Investing is a topic worth hours of talk. Here, we'll share some resources that will be helpful for beginner investors. Experienced players will tell you better how to manage your money on the market.
- Youtube: The Money Guy Show, Ben Felix, The Compound;
- Podcasts: We Study Billionaires, The Intrinsic Value, The Dividend Cafe.
- Books: A Random Walk Down Wall Street, Common Stocks and Uncommon Profits, The Most Important Thing, Psychology of Money, The Intelligent Investor.
- Blogs: Klement on Investing, Firstlinks, My WallST.
Education first; once you know the basis for investing, start acting.
Debt managing for digital nomads
When creating a budget for digital nomads evaluate all of your loans—yes, even the 10 EUR you owe your friend. Getting rid of them should be your first priority task. Start with loans and credit cards that charge fees, then move to the debts that are less urgent.
Budgeting for digital nomads
We’re closer and closer to creating a budget for digital nomads that really works.
Accept that we’re irrational. Humanity has created many budgeting methods, such as envelopes, 50/30/20, zero-based, and more. The core idea is the same—get rid of unnecessary spending. It's obvious and logical, but why don't people save? We're irrational beings, and a nice t-shirt or tasty cake are often more appealing to us than saving money for the unknown future. There are some psychological tricks to fight this pattern.
Hack your mind. Setting realistic and personality-fitting goals is the key to successful money-saving. Based on your Big Five personality traits (take the test here), Openness, Conscientiousness, Extraversion, Agreeableness, and Neuroticism, you can find a goal that will really motivate you to save money. For example, if it turns out that you're highly agreeable, your best motivation could be saving to help your loved ones and not buying a property (buying a house for your mother will work, though). At the same time, a more open-minded person will be driven by the idea of having the best holiday trip ever. Don't believe in personality tests? Recall moments of the biggest motivation, analyse why you felt that way and apply it to your budgeting.
Turn it into a game. Adding fun to your financial digital nomad lifestyle will make a difference. For example, you can download a Fortune City app to track your spending and build a city. Or treat your budget like a side quest in your head; it may also help.
May be interesting: How to create an emergency fund.
Conclusion
Creating a budget for digital nomads means evaluating all of your current and future spending and being several steps ahead. Deal with your retirement, debt, savings, investing and budget planning; follow budget travel tips for digital nomads, and send money back home with Profee; it’ll be a cherry on top.
