It can be tough for digital nomads who are always on the move to stick to a budget. When your location always varies, how can you accurately predict what you’ll save and spend each month?
Although budgeting as a nomad is more difficult because you don’t have predictable fixed expenses, there are still strategies you can use to take control of your finances. Here are 4 budgeting tips to help you live within your means and meet your financial goals while seeing the world.
4 Budgeting Tips for Nomads
Budget Based on Lower Earning Months
Although some nomads have a corporate remote job that provides a steady income, many others rely on gig and freelance work to get by. It’s definitely easier to budget if you have a full-time remote job that provides a stable paycheck. However, you can still learn to manage your money well if you’re a freelancer with variable income.
As a freelancer myself, my top tip is to budget and plan your expenses based on your lower earning months. That way you won’t have to dip into your sayings to cover flights and accommodation during leaner times. Plus, you’ll be able to build a nice savings buffer for emergencies when you have a high-earning month since you won’t be spending it all on travel.
Research the Cost of Living in Places You Want to Visit
Traveling to a place that’s more expensive than you thought it would be can really mess up your budget! Suddenly you’re stuck paying more for accommodation, food, and transportation than you planned. So before you hop on a plane to your dream destination, make sure you do some research on how much staying there will cost you.
Cost of living calculators like Numbeo and PayScale can help you determine how much basic necessities cost in different cities. Poking around on travel forums like Tripadvisor and NomadList can also give you a sense of how expensive your desired locale is. Don’t forget to research Airbnbs and hostels as well to make sure you can find affordable accommodation.
Resist FOMO
It can be hard to avoid overspending as a digital nomad because you’re always visiting new, exciting places. There are probably lots of things you want to see, do, and eat in the cities you travel to.
But you have to resist FOMO if you want to stick to your budget. You have to accept that there are some excursions you may not be able to afford. If you say yes to one outing, you may have to say no to something else to keep your spending in check.
It’s easy to justify extra, unplanned expenses when you’re traveling because everything feels like a novel, once-in-a-lifetime experience. However, remind yourself that you can always revisit the city later if you don’t get to do everything on your bucket list this time around. This will help relieve the pressure to do and see it all so you don’t burn through your bank account.
Try Different Budgeting Methods
There are lots of budgeting methods and tools out there, so I’d recommend trying a bunch of different ones until you find something that works for you. Many digital nomads charge everything they buy to their travel credit card so they can earn airline miles and hotel points.
However, putting everything on plastic may cause you to rack up a credit card balance you can’t repay at the end of the month, saddling you with interest charges. In that case, using the envelope system to pay for everything in cash may be a better fit.
The envelope method involves withdrawing all the cash you need for essentials and extras for the entire month. Then, grab a bunch of envelopes and label them based on your typical spending categories, such as food and transportation. Finally, stuff the amount of cash you need for each expense into the associated envelope.
Paying for all of your purchases out of these envelopes will help you keep track of your spending and avoid going over-budget. But if you don’t want to handle large sums of cash, you could use a debit card instead and keep track of your transactions with a budgeting app like Mint.
Want a more flexible budgeting method? Maybe the 50/30/20 rule would jive better with your lifestyle. It involves spending 50% of your income on your needs and 30% on your wants. The final 20% of your income should be dedicated to savings and investments. No matter which budgeting method you use, make sure you try your best to stick to it. You won’t be able to achieve your financial goals while on the road if you’re always deviating from your budget.
Do you have any budgeting or personal finance tips for nomads? Share your advice in the comments!
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.