The digital nomad lifestyle offers a blend of freedom and flexibility. It allows individuals to work remotely from any location without interfering with their daily tasks. People consider this alternative when they want to escape their mundane 9-to-5 routine.
As a concept, the digital nomad lifestyle has gained popularity in recent years. Thanks to the wonders of modern technology, people can travel anywhere and work without disruption or limitations. In recent years, the number of digital nomads has increased significantly. It’s estimated that there are over 40 million digital nomads, and more than 18 million Americans have embraced this lifestyle.
As ideal as all of this sounds, there are some drawbacks to the digital nomad lifestyle. The two most important considerations are finances and time management. Finding the right balance allows digital nomads to work and travel simultaneously. Entering a digital nomad lifestyle requires the right balance to ensure a person can create a financially sustainable and fulfilling lifestyle.
Financial Planning – Maintaining Stability While on the Move
As exciting as the digital nomad life may seem, there are some financial complexities that every person needs to consider. With countless expenses, regardless of where you decide to settle, ensuring financial stability is the first step toward building a sustainable foundation. By adopting smart budgeting practices, tracking your expenses, diversifying your income streams, and preparing for emergencies, you can ensure your digital nomad lifestyle won’t be burdened by financial stress.
Create a Budget
Experts often recommend following the 50/30/20 rule to ensure you get the most for your money. This ensures you cover all your bases but still have enough money left at the end of each paycheck.
The biggest chunk—50%—should go to essential expenses such as rent, bills, food, and insurance. The next 30% is reserved for non-essential expenses like travel, leisure, and entertainment. The last 20% is often for savings, allowing you to have something on the side for rainy days.
Creating a realistic budget is the first step toward a stable financial environment. You’ll need to consider your income and research the potential costs of the country, city, or village where you plan to relocate.
Let’s say you plan to take your digital nomad career to Toronto, the capital of Ontario, Canada. In this case, you will need to consider the cost of living in Toronto and become equipped with the local costs of living in such a central metropolitan area.
Before embarking, measure the total cost of your current lifestyle, including rent, transportation, utilities, and entertainment. Next, consider how this compares to the costs in Toronto or perhaps Canada.
If you’re renting long-term, consider whether you will be required to cover other expenses, such as a Toronto utility bill, internet, or other rent-related expenses. You’ll also need to put money aside for essentials, including groceries, transportation, and non-essential items like entertainment or dining out.
These are among the basic costs you need to cover each month. Additionally, it’s essential to budget for taxes, depending on your home country’s rules, and to have a bit of legroom to put towards savings, investments, or a retirement fund.
Track Your Expenses
Being on top of your expenses ensures you remain within your budget. It’s easy to get carried away and start spending carelessly, which may cause financial distress. The best way to approach this is to track your expenses; there are multiple ways to do that.
Some people manually enter expenses or check banking records for a rough estimate. While this approach works, it’s not the most precise. Entering expenses manually is a similar story. Forgetting to add an entry or making a small typo can prevent you from having a clear picture of your spending.
Using expense-tracking apps can help you navigate your finances as a digital nomad. Going through your spending and categorizing each item gives you an outline of your expenses. Not only can this help you remain within budget, but you’ll also find ways to save money.
Build an Emergency Fund
Building an emergency fund is a key component of your financial planning as a digital nomad. Unexpected things can happen, so it’s essential to have a safety net to fall back on when things don’t go in your favor. Things such as the loss of employment, reduced income, or medical emergencies are only a few aspects this emergency fund is designed to cover.
The amount in your emergency fund depends on multiple factors, but experts suggest having three to six months’ worth of expenses available in your emergency savings. The goal is to cover the most essential bills to ensure that even if you don’t have any income, you’ll have money to pay for rent, bills, food, or, in this case, purchase a ticket back home.
This is where the 50/30/20 rule comes in handy, but allocating a healthy amount to savings is a good idea. The more you can add to an emergency fund, the easier it will be to tackle any unforeseen emergencies.
Invest in Insurance
As a digital nomad, doing everything possible to protect yourself from unforeseen financial mishaps is part of the lifestyle. Consider investing in insurance even before you move to a new country. Travel and health insurance are among the most important coverages to consider, as both aim to keep you covered during an emergency.
Another insurance aspect you should consider as a digital nomad is short-term insurance. This option covers smaller items such as laptops or cameras in case of damage or theft.
Diversify Your Income
Diversifying your income streams can strengthen your financial situation, allowing you to overcome any financial obstacle. However, the unpredictable nature of being a digital nomad means that you may place yourself in more danger or riskier situations while traveling and working simultaneously.
Many digital nomads combine freelance work with passive income options such as affiliate marketing, monetizing content, selling digital products, investing, etc. These financial vehicles won’t replace your paycheck, but each offers plenty of diversification to boost your income and savings.
Manage Your Taxes Efficiently
Even though many countries offer specific incentives for digital nomads, most tax codes do make provisions to hold digital nomads liable for paying taxes while in the country. These tax rules will vary depending on the country you are in, the length of time you plan on spending there, and what type of industry you are working in.
In addition, keep in mind that there are instances of double taxation, which you would likely want to avoid at all costs. Double taxation is when the income is taxed in your native country and the one you’re living your digital nomad life. While most countries have tax agreements to avoid double taxation, it’s advised to research this during the planning process.
While it may seem simple, taxes can quickly become complicated, meaning you may need help. Reaching out to an accountant who specializes in working with digital nomads is the best course of action. By working with a professional, you can leverage different tax deductions and minimize your tax burdens.
Time Management – Balancing Work and Travel
With the financials aside, this section will discuss managing your time so that you can balance work and travel.
Establish a Routine
A consistent routine is the backbone of effective time management. The best course of action is to set specific work hours. Choosing the hours when you’re most productive ensures you complete your tasks quicker and have more free time.
Incorporating work-related rituals into your daily routine is another helpful habit. Small things like making coffee before you start working or walking after a workday can be beneficial. It’s the kind of things that help you transition from business to pleasure and vice versa. These rituals can also give you a sense of normalcy, which can be hard to find as a digital nomad.
Prioritize Your Tasks
Depending on the job position, you may have multiple tasks to handle, and not all of them will be equal. Prioritize your takas to ensure your day is as productive as possible. While there are multiple ways in which you can approach this, two well-known methods have become increasingly useful for digital nomads.
Firstly, the Eisenhower Matrix is a technique for categorizing tasks based on importance and urgency. This allows you to focus on the tasks that have the highest priority. Second, Eat That Frog is quite similar to the previous method. However, this method focuses on completing the most challenging task as soon as you start your work day, which helps to set a productive tone for the rest of the day.
Additionally, consider making to-do lists to prioritize and organize your tasks. Relying on planning apps can be crucial for you as a digital nomad, as these apps allow you to keep track of tasks, goals, and deadlines, ensuring everything gets completed on time. Finally, consider breaking down larger tasks into smaller segments. While this might create more tasks to complete, you will have the chance to monitor the progress of the work without feeling overwhelmed.
Leverage Time-Blocking Techniques
Many strategies allow digital nomads to juggle multiple responsibilities, and the most commonly used is time-blocking. This method involves allocating specific blocks of time to work on particular tasks or complete certain activities. These can be meetings, working on projects, or having some leisure activities. It’s essentially a method that allows you to plan your time better, so, for instance, you can focus on working in the morning and spend the afternoon exploring.
Another great technique you can combine with this is the Pomodoro method, which allows you to divide your work to remain focused and productive. Dividing your work into 25-minute intervals followed by short breaks keeps things organized while preventing you from burning out. After four short cycles, you can take a longer break to recharge.
Plan Ahead
Effective planning ensures you can combine your work and travel duties without obstacles. Before reaching your new destination, you should research potential places to work, such as coworking spaces and different network and internet options. Aim for reliable providers, but more than this, consider the environment in which you will be working and spending most of your time.
As a digital nomad, you can travel as much as you want. While it sounds tempting, there are some drawbacks to this lifestyle. For starters, when relocating or looking to travel to a new destination, try to remain in place for an extended period. This helps with the stress of moving the whole time and ensures that you have a base from which you can work without feeling overwhelmed.
Depending on your job position, you may be required to work in certain parts of the day, where time-zone planning comes into play. Whenever you move to a different timezone, you’ll need to factor that in and consider the time difference. Many digital tools and apps can help you manage your time more effectively, allowing you to remain productive throughout your working day.
Minimize Distractions
Working in unfamiliar environments can be a struggle for any digital nomad, as it can lead to many distractions. Remaining focused is key in these situations, so creating a dedicated workspace whenever possible is ideal.
You should consider a quiet corner in your accommodation, a local café with good internet, or a coworking space. The fewer distractions, the better. To aid yourself, consider investing in good noise-canceling headphones to block out noise and any possible distractions.
Many people depend on social media, and as a digital nomad, you may find yourself in a similar situation. Limiting access to these platforms and other non-work-related websites during your working hours can help further enhance your productivity. While smartphones have numerous useful features, you should consider dedicated apps that offer valuable features that can be tailored to your needs.
Experience the Local Culture Without Sacrificing Productivity
As a digital nomad, you will have plenty of opportunities to indulge in local cultures while traveling. However, this often comes at the sacrifice of your time, which can affect productivity hours or time that could’ve been spent completing more critical tasks.
Immerse Yourself in the Local Life
To experience a destination to the fullest, you’ll need to go beyond the common sightseeing locations you may have found online. Aiming for accommodation in the residential areas rather than the touristy parts will allow you to immerse yourself in the local lifestyle.
Shopping in local markets, attending community events, or dining in family-owned restaurants are only a few activities that will allow you to spend more time with local residents.
Digital nomads often aim for countries where English isn’t the primary language or is largely spoken. Despite English being the most spoken language in the world, as a nomad, you shouldn’t expect everyone to understand your language. You don’t need to master the native language; learning simple phrases and expressions will be helpful along your journey.
Balance Work and Leisure
The most important thing you should consider is finding ways to balance your work and professional life so that you can manage both simultaneously. Plan your exploration trips based on your work schedule.
For example, you can visit local landmarks in the afternoon after completing your work day. Consider leaving more elaborate traveling or activities for your off days or weekends. Traveling between destinations, especially greater distances, usually means spending some time commuting. You can use that time to complete smaller tasks to ensure you’re still on time with your duties without sacrificing much of your time.
Build Community Connections
Connecting with the locals and fellow digital nomads is a great way to enrich your experience. Joining coworking spaces, attending meetups, or signing up for online groups is a great way to network with others and get insights into the local culture. Most popular destinations have expat or digital nomad groups, allowing you to connect with like-minded individuals who can help you professionally.
Volunteering in your free time is another way to engage with the locals. This allows you to give something back to the community and form a deeper connection with the locals. Skill exchange is a big part of living a digital nomad lifestyle. It involves offering a service or skill in return for affordable lodging, transportation, or assistance while traveling in a foreign country.
Conclusion
The digital nomad lifestyle offers unparalleled freedom and the option to explore. While the general idea sounds tempting, it’s not a simple approach, and there is some planning that you should think about.
A digital nomad lifestyle may allow you to work from anywhere in the world. However, upon closer inspection, there are plenty of moving parts that you should take into account before setting off on your adventure.
Leaving your comfort zone behind it’s not as straightforward as some may think. Being a digital nomad means you’ll need to tackle multiple obstacles. Learning to balance work, finances, time management, and the nomadic lifestyle will provide endless opportunities to explore uncharted territories.
Featured Image Credit: Photo by Andrea Piacquadio; Pexels
