Money can be pretty tight. Particularly right now. This is definitely true for the working traveler. According to CNBC, travel and accommodation costs are off the charts! Pair the exorbitant cost of travel with the headache of endless delays, packed flights and angry passengers. Not to mention, the need to be constantly on the go while also maintaining a work presence 24/7.
Increased Travel and Accommodation Costs
Pent up demand measured by Destination Analysts driven by the global claustrophobic lockdown mandates of 2019-2021 is very high. For instance, US travelers are expected to increase the number of leisure trips from 2.9 to 3.5 in 2023. So if you were hoping for the near empty planes and the sparsely populated top-ranked destinations, think again.
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In addition to the increase in travel volume, increases in travel and accommodation costs are now the norm. For remote workers working from anywhere looking to travel to Europe, experts forecast travel rates that are 20% more expensive in comparison to the 2019. And costs are still increasing. Travel rates are estimated to be 32% higher than just last year. Travel guides also indicate that trips to Asia are exponentially higher; resulting in about 60% dent to your pocketbook.
So, for those of us living the nomadic lifestyle, we have to be careful about budgeting. Setting and working within your budget represents just one of the many challenges that you might face when you become a digital nomad. Being a traveling telecommuter heavily relies on proper planning. You must have a vivid vision of where you would start, the amount of money you’ll require, and how much you would need to be able to sustain yourself.
This means that you need to be more responsible for how you spend your money. You should start tracking and analyzing your budget. This would help you to have a concrete plan when you begin traveling.
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Choosing to become a nomad means that you can pursue your career from anywhere on the globe. You are not tied down to any geographical location. Some common nomads include freelancers, entrepreneurs, and independent contractors who do not operate in an office setup.
Save Money When Working Remotely While Traveling
We have written remote workers can save upwards of $4,000 or more annually when working from home. Money budgeting may not be so easy for nomads working in an online space. Maintaining your costs within your preplanned budget is an essential skill. It can cover for times that were unaccounted for. A good example is the emergence and aftermath of the covid pandemic, which had and continues to have adverse physical and psychological effects upon many. Starting with an emergency fund is the right way to go.
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You can then look into something like investing in an index fund. You can also start early and open a retirement account. The amount you decide to save is relative to your budget and income. Commit to saving in a tax-advantaged way and plan regularly.
Automating your savings is the easiest way to accumulate your retirement wealth. Frequently review the goals you set at the beginning of your journey to make sure they fall in line. They would also help you to determine your risk tolerance. Always make sure that you are maximizing your account’s earning potential.
Tax Advantages of the Nomadic Life
The fact that you are a traveling teleworker nomad does not mean that you are immune to taxes. You have to file your taxes every year even if you don’t owe. Taxes apply differently depending on the country, regardless of where you are residing. Depending on where you visit and how long you stay, you may need to pay taxes as a digital nomad to the country where you’re currently living and working.
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Many countries tax visitors on their income if they stay long enough or earn income in that country. Territory taxes start applying in such cases if your host country requires them. In many countries, they are applicable if you are there for more than six months.
Some of digital migrants do not have to pay their taxes. If you do not stay in your host country long enough to be considered a resident, do not receive your income from your host country, and your home country does not tax residents who live abroad, then you do not have to pay taxes.
Tax laws can be confusing, and you should dig deep before considering traveling to a county. Figuring out how you will maneuver in advance can go a long way to avoid future problems.
Tax regulations are complex. Greenback Tax Services stipulate, after reading relevant Foreign Earned Income Exclusion (FEIE) tax laws there an be some advantages. Digital nomads and expatriates residing outside of their home country (US) can use FEIE to exclude a certain amount of foreign-earned income from US taxation. While the exact dollar value fluctuates from year to year, in 2022 tele-commuting from abroad workers could exclude $112,000. By 2023, the amount of exemption from US taxes was increased to $120,000.
Keep Track of Your Income and Expenses
Being on the road quite regularly means that you need to be more critical when you manage money as an online freelancer who also travels. There are some considerations that you must weigh to find the perfect balance. The planning phase should be a few months before your departure. The plan would help you be able to track your income and expenses. This is to make you even more flexible in case any uncertainty occurs.
Some tips for managing your money when working as a virtual nomad
Get a Digital Nomad Visa
Digital nomad visas allows online professionals to come in and stay longer than traditional visas do. The concept is trying to convince more foreigners to come and help stimulate the country’s economy. This has become even more common after the covid pandemic negatively impacted a lot of countries.
Read more about Digital Nomad Visas here:
The visa is, however, not applicable in every country. Countries that do not have special visas for traveling workers offer more relaxed policies for tourists. It is a quick alternative to visas and offers an appealing path to residency in their country.
Build an Emergency Fund
Emergencies are always bound to happen. Be it lost luggage, political unrest, injuries, or even natural disasters; we do not control everything that happens to us. This, however, does not mean that we cannot do anything about it.
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You should always be prepared with cash in hand and the bank. Insurance at times takes a long time to react even if something is covered. Traveler’s checks also work, and they are a better alternative. They can be replaced in case you misplace, or it’s stolen. However, they are quickly falling out of favor since fewer outlets accept them.
Go Digital: Use Opportunities to Earn More
Once settled, you should start to build your income and ideally create multiple income streams.
Here’s a few suggestions to get you started:
- How to run your own business as a working from anywhere professional
- Making money online while living and working overseas
They are more flexible, and you can earn your money doing what you’re good at such as software development, graphic design, photography, etc. You could even look to set up a borderless freelance company to work with clients from all around the world and maximize your presence.
Use Digital Tools for Productivity and Cost Containment
Whether you are content working for a large multinational firm or would like to pursue virtual job opportunities on your own, it is clear that access to and expertise in using online tools will determine your revenue. And, help you to maintain your costs in relation to the time you’ve personally expended to complete an assignment without digital tools. To help you maintain and increase your productivity, we’ve written these commentaries.
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You should also look to polish up your digital skills which would make your life so much easier and ultimately allow you to build financial freedom as well. Some skills like designing, managing social media marketing, blogging will help you create more value to your clients and work seamlessly from anywhere in the world.
Take Advantage of Time Zone Differences
On this platform, we present a lot of tips for maximizing your income. For workers who travel and tele-working, unlike tele-commuting employees, time zone differences can be an advantage. TAG Heuer reports Karibati, the farthest west location, is the earliest time zone on earth! For instance, “if it is Sunday where you are,” they write, “it’s probably Monday in Kiribati.” The World Atlas notes the Howland islands (an unincorporated unorganized US territory) is the farthest east location. Therefore Karibati and the Howland Islands are 26 hours apart! Others to consider:
- United Kingdom time zone can be up to 13 hours difference in comparison to Tonga and Tokelau,
- United Kingdom time zone can be up to 10 hours difference between Hawaii, Cook and Aleutian Islands,
- Singapore is 12 hours ahead of NYC, while
- Hawaii on the west coast and NYC on the east coast of the US are 6 hours apart.
Perhaps none of these destinations are of interest to you, but you get the picture. If you have the energy and are in good health, you should exploit differences in time zones to your benefit.
Avoid Becoming a Victim of Crime
What the best way to stretch your money? Don’t become a victim of crime. The US National Institute of Justice shares crime statistics demonstrating that the direct tangible costs to victims of crime are collectively about $105 billion. This figure includes expenses related to doctor and medical visits, losses in revenue (as small business owner), lost earnings, and societal programs offered to the public to support victim assistance initiatives. While this figure is pretty high, costs to the victims of crime are increased substantially when you add pain, suffering and reduced quality of life.
While these expenses can be talked about in the abstract, just know that workers living, working and leading the nomadic life should take all of the necessary precautions to avoid becoming a victim of crime, particularly while out and about traveling to far away destinations.
More details on how remote working tele-commuters can prevent becoming a victim of crime are explored below:
Utilize Tools to Help Organize Your Finances
It can be quite easy to overspend when you are frequently traveling around. This is especially the case since you will be using different currencies in different countries. Besides, managing finances is a time-consuming and stressful task to handle so it’s ideal if you can utilize SaaS tools or outsource to personal accountants to help you organize your money and make sure of the legal compliance.
For example, you can track your finances as a working from anywhere freelancer or employee with tools such as Xolo, the all-in-one platform that brings together accounting, business compliance and banking in one place and helps you manage the boring sides of running a solo business.
Bottomline
There are a variety of ways to lead a digital nomad lifestyle. The essential part is being aware of your finances and being on top of all your dealings. You will be able to spend more time tele-commuting while still traveling and having fun. There’s no single way to make this lifestyle work, but the one thing that will make your journey successful is planning.
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