Budgeting tips for digital nomads

To make the most of a digital nomad lifestyle, it’s important to budget. The freedom to travel anywhere can come with significant expenses. Living constantly on the go is more accessible when you set a budget. Having a plan can take a lot of guesswork and stress out of your finances and allow you to enjoy your nomadic lifestyle. 

Why it’s important to set a budget 

Having a budget allows you to balance your income and expenses. You’ll be able to allocate what you need for your routine bills and plan for unexpected costs, like medical bills or emergency travel. It’s also important to have a plan for savings, retirement, and investments. 

Creating your budget is the first step in tracking your spending, and knowing your expenses can save you money in the long run. Certain expenses can qualify for deductions, and understanding your regular cashflow can help you find opportunities to save money. 

Having a budget and tracking your income, spending, and expenses can also help you stay organized. This organization becomes even more important if your travels lead you to locations that use different currencies. Managing currency conversions can add extra complexity. Automated bookkeeping and simplified record-keeping can make things easier. Done properly, budgeting provides clarity and control over your finances.

How to plan your budget as a digital nomad

Digital nomads looking to build their own financial success should start with a budget. If you’re taking advantage of the freedom to travel this lifestyle offers, you probably understand the challenges that come along with it. However, with planning and organization, it’s possible to create a budget that gives you control over your finances, even on the go. 

#1 - Assess your finances

Before you begin, you have to know what money is coming in and going out each month. Begin by taking stock of your current total income. Tally up your living expenses. Be sure to include rent or average lodging, food, transportation, and other routine costs. As best as you can, make allowances for unexpected bills or discretionary purchases. Note where you can potentially make cuts to reduce costs.

#2 - Consider keeping two bank accounts

Some digital nomads recommend keeping one bank account for bills and another for saving. This may allow you to more easily track your finances. You can also be sure you’re setting money aside for bills and expenses. 

#3 - Break down your monthly budget 

Separate your budget into categories. Once you’ve done so, you can set percentage-based spending limits. This means you’ll have a certain percentage of your budget to spend on bills, unexpected costs, leisure activities, and savings. Planning how much you’re allowed to spend in each category can prevent you from overspending. This can ultimately make bookkeeping and staying within your budget easier.

#4 - Take into account your lifestyle 

It’s important to take your lifestyle into account. Whether you move frequently or remain in one location for an extended period can affect your expenses. These factors can also change the costs you’ll have to account for, like visas, moving expenses, and transportation. 

#5 - Have flexibility in your budget

Just like any budget, digital nomads should include room in their finances for leisure activities. Chances are you became a digital nomad so you could explore new locations and have experiences. It’s important your budget has extra space to accommodate these costs. 

#6 - Develop a savings plan 

It can give you peace of mind to have a savings plan. A strategy to build a savings is to set aside a certain amount of your income each month. You can then use this saved money for emergencies or large expenses, like a laptop or a plane ticket. 

#7 - Use apps and other financial tools to help you stay on track 

There are a lot of software and mobile app options that can help you keep track of your budget. Many options can record your expenses, scan receipts, and track your spending automatically.

Tips for digital nomad budgets

For digital nomads, creating a budget can be more complex than for the average person. But if you’re living a nomadic lifestyle, managing your budget is essential. Maintaining control of your finances can also help you be sure you don’t overextend yourself. Taking advantage of some helpful tips can help you further maximize your budget as a digital nomad:

Research different payment methods 

Look into different payment methods as you travel. Credit cards and online payment apps can provide convenience. Be sure to research the options. Some apps or credit cards can also help you save on transaction fees or offset currency exchange costs.

Country-hop to save money 

Many digital nomads make use of country-hopping as a money-saving strategy.‌ They optimize the time and duration of their stay in a country to keep their costs as low as possible. This strategy takes planning. However, by moving from country to country at the right time, rent, transportation, and food can be much cheaper.

Consider coworking spaces 

Coworking spaces can help digital nomads save money over using traditional office space. If you need to take advantage of office amenities, like desks, internet connection, and other equipment, coworking spaces are a great option. You can save money, network with like-minded people, and make use of a productive work environment.

Negotiate for better deals 

When possible, try negotiation. This doesn’t have to mean literally haggling with a shopkeeper. Instead, it can mean navigating your plans based on research. Look for discounts and promotions before settling on your next destination. Shop around for the best deals before committing to a reservation. Check to see if there are any available rates for digital nomads for the lodging or services you’ll need.

Take advantage of free activities 

Typically, there are plenty of free activities at the different locations you’ll visit. You might attend a local festival, wander an outdoor market, explore a public park, or check out a museum. Often, just taking a walk around your new surroundings can teach you a lot about a new place. Keep your eye out for free or low-cost activities.  

Join a nomadic network 

There are many resources available to digital nomads. One of the best ways to make your journey more affordable is to make use of a nomadic network. These resources offer a range of benefits, such as discounts on transportation and food. You can save money and connect with a community of support.

Tax tips for digital nomads

Taxes can be one of the most complicated parts of being a digital nomad. Keep track of your finances, filing your returns, and keeping track of tax deadlines can all seem daunting. However, there are some simple tax tips for digital nomads you can follow to keep from becoming overwhelmed: 

Understand your filing status

Just like any other taxpayer, digital nomads need to know their filing status. As a digital nomad, you’ll always be considered a United States citizen. However, depending on where you live part time, you may be considered a resident or nonresident of another country for tax purposes. This can influence the amount of taxes you’ll owe. It can also qualify you for certain credits.

Know your tax deadlines

You’ll need to know the deadlines for all the taxes that apply to you. In many countries, like the United States, you’ll have the option of filing electronically or by mail. Knowing deadlines, filing methods, and each country that requires you to pay taxes will help you avoid excessive tax penalties. 

Keep good records

Good bookkeeping is vital for digital nomads. Tracking your income and expenses can help to make filing your taxes and accounting for deductions easier. You’ll need to have records of wages, commissions, royalties, and any other streams of revenue. Then you’ll need to have documentation of any expenses.

Take advantage of deductions and tax credits

As a digital nomad, you can often reduce what you owe in taxes. You might take advantage of deductions for travel-related expenses. Additionally, you may qualify for specific deductions like the foreign earned income exclusion, foreign housing‌ deduction, or a foreign earned income tax credit. 

Manage your taxes wherever you go

Being a digital nomad can be complicated, and this can make taxes even more complex. The right tools and organization can help you manage filing and deadlines. Taking advantage of a well-constructed budget can also help you save on your taxes. With ComplYant, you can access resources and keep track of deadlines. With a simple budget and a solid strategy to manage your taxes, you can set yourself up for success on your digital nomad journey. Start by creating a free account today.