The earning potential and flexibility of the digital nomad lifestyle make it a profession enviable by many. After all, who wouldn’t like to jet off abroad and work remotely in the sun and sand? However, the job isn’t just beaches and remote work. There’s a lot more than meets the eye when it comes to the reality of becoming a digital nomad.
One aspect you need to understand before taking this kind of job is the financial feasibility of the role. There’s a lot you need to be prepared for, so here is our overview of the financial side of being a digital nomad.
Becoming a Digital Nomad: Budgeting
Budgeting is a financial essential for most of us but is particularly important as a digital nomad. Due to the sporadic international travel, a lot of money goes towards travel costs and accommodation. This means that a large portion of your income is irregular. You need to budget accordingly to make sure you can afford everything you need to.
You need to know where your money is going each month and how much you’re saving. That will allow you to plan all expenses, so you don’t risk overspending. The best budgeting apps can help you get a full picture of your finances and monitor your spending. This is especially useful if you don’t always have access to your bank.
Don’t Forget About the Taxes
Being a location-independent freelancer means you’ll likely be out of your country of residence for prolonged periods. If it’s more than the best part of a year, then you might be able to avoid paying tax obligations. Of course, the tax rules and regulations change abroad, so consulting tax and finance specialists can help you understand the options available in the country you’re traveling to.
You need to know the difference between personal and corporate tax and under what rules they need to be paid. You can also explore avenues such as becoming a non-resident or a tax exile, but this will depend on the country you’re working from.
Think About Your Future
Traveling the world is the dream, but you should also keep your future in mind. Unlike other careers, being a digital nomad can lack the security of a state pension plan. Planning for retirement is definitely easier when you’re in one place. It’s important to have a plan in place for the future, whether you choose to relocate somewhere permanently or your career path changes.
There are many effective ways to plan for a fruitful retirement, such as investing in equity markets or saving in a self-invested personal pension. Both require some degree of technical and financial know-how. Paying for a professional financial advisor will benefit you in the long run.