Being a remote worker has its advantages as well as its drawbacks, and it is necessary to consider all of them in order to see if it will be a transition that will benefit you. It’s very important to have a strong financial plan ready prior to becoming a digital nomad. The last thing that anyone needs is to be stuck overseas trying to make ends meet without a backup plan or any idea of how to keep their head above water.
That being stated, here are 4 steps that you should consider in order to stay on a solid financial footing if you’re seeking to live as a digital nomad.
Find an Inexpensive Location to Reside in
Having the flexibility and freedom to pick a location where the cost of living is significantly reduced is one of the best benefits of being a digital nomad. Instead of being restricted to where your workplace is, you can discover a place that fits you, as well as greatly reducing your expenses.
However, a major factor when considering where you live should be the overall quality and typical speed of the internet connection available to you. This suggests that you will most likely need to live in a metropolitan area as opposed to a more remote or rural location.
The good news is that because you don’t have a lot of belongings with you when you are on the go, you won’t require super-large accommodation, which is a major cost saver. Smaller-sized accommodation typically costs much less to rent, which will definitely reduce your monthly living expenses.
Always Buy Top-Quality Work Equipment
Buying high-quality equipment will always require larger upfront costs, but think of it as an investment, as it should last a long time. Also, when you buy better equipment, it means that you don’t have to spend time and even more money on frequent upgrades and troubleshooting tech issues. Quality electronic devices are an absolute must for digital nomads, the main ones being a reliable smartphone and a dependable laptop.
Know About Taxes
Remember that you still have to file taxes if you’re an American citizen, even though you’re based overseas. Even if you don’t owe the US government taxes, you’ll typically still have to at least file them with the IRS. It’s always best to err on the side of caution when it comes to your tax obligations in the United States. One wrong move can result in penalties, potential audits, and other headaches that you simply don’t need.
Create the Right Budget For Your Lifestyle
Putting aside a substantial amount of cash is a smart thing to do when you have any huge change that you’re going to make in your life, and becoming a remote worker is no exception. You need to be able to pay for moving costs, plane (or bus/train) tickets, possible vaccinations, and visas. You also need to scrape up the cash for your new apartment, including your first month’s rent deposit, or any other lodging accommodations.
Additionally, you’ll likely need to create some sort of financial safeguard in the event that the unforeseen happens. This fund should cover the price of a plane ticket home on a minute’s notice, temporary living expenses, and daily food and personal necessities. For example, you could lose a client, experience a drop in sales due to a recession, or have a medical emergency. You always want to plan for things like this.
It’s best to start with an estimation of what you believe your recurring living expenses will be so that you can make a practical month-to-month budget.
Living the life of a digital nomad can be extremely exciting and rewarding. Having a sound financial plan, quality equipment, and doing a bit of due diligence before traveling can make your transition much easier and help you recover faster if the unexpected happens.
