Budgeting for your digital nomad journey: financial planning tips

Talking about budgeting in traditional terms often revolves around the prospect of living in one location and maintaining a consistent income. However, the digital nomad lifestyle doesn’t quite fit within these traditional methods of budgeting. The nomadic life is filled with fluctuations in income, changing currencies, and inconsistencies in expenses like accommodation and travel. Given these complexities, it’s crucial to maintain a flexible yet robust budget. 

Let’s see what we need to start setting up a budget. Read on: 

1. Do an initial research

As with most things related to travel this first step of planning and researching is quite important for your budget as well. Especially if you’re just starting your digital nomad journey. 

Start by defining the first destinations you want to visit. When you have the initial list, do your research and see what is the cost of living in those countries. This will give you an idea of how much you can expect to spend there. 

Now do the same with different ways of transportation between those countries to see an average cost of that as well. We often think only about what we’re going to spend in the country and forget about going from point A to point B. Sometimes those flights are the most expensive part. Questions you could ask yourself at this point are :

• Am I going back home between destinations? 
• Am I going directly to my next destination?
• Are there direct flights? Are there convenient flights between my destinations?

2. Examine your financial situation

Before we delve into different budgeting types, there is something more important. We have to consider what our financial situation is currently. Are you using up your savings or you’ll have a recurring income during your travel? This will be a leading factor in your budget set up. 

3. Track your budget

There are many options to do that. Most of those tools can be linked to your bank account. No matter which option you choose, make sure you’re consistent when you monitor it. This way you can be more flexible in amending your budget if necessary. 

• Wise
• Revolut 
• Cleo
• Mint
• Honey due
• Splitwise (ideal if you want to track shared expenses)
• Excel spreadsheet (A bit more work involved but a pretty straightforward way to start) 

Remember that if you decide to start with a spreadsheet you’ll need to define the spending categories yourself. Those include, but are not limited, to : 

• Accommodation
• Transportation
• Groceries
• Going out (restaurants, bars etc.)
• Coworking
• Insurance
• Entertainment (attractions, tourist sites etc.)
• Phone plan 
• Savings 

A quick note on the cost of accommodation : this is typically the one that will vary most when you travel if you book your accommodations the traditional way. It might be almost impossible to predict your housing costs, especially if you stay for shorter periods of time in each city. 

On the other hand, if you prefer to stay for more than 2 weeks/destination, then Subscription living might be the best option for you. Subscription living allows you to pay a fixed monthly rent, but live in different locations around the world. This comes pretty handy when you want to plan your expenses for the next few months. 

4. Choose your budgeting method 

With a budget tracker in place, the next step is to choose a budgeting style that suits your lifestyle. Here are a few popular methods:

• Zero-Sum Budgeting: In this method, every dollar you earn is allocated to a specific category. The goal is to have your checking account balance at zero by the end of the month, because every dollar has been assigned to a specific category.

• The 50/30/20 Rule: This simple method involves dividing your income into necessities (50%), wants (30%), and savings (20%). As a digital nomad, these ratios might need to be more flexible.

• Envelope System: This method involves assigning a specified amount to each spending category and sticking to that limit. Keep in mind that this method might be too rigid for the nomad lifestyle because of costs like transportation that might vary greatly month to month. 

• Pay Yourself First: This method focuses on saving first. The moment you get paid, a predetermined percentage is transferred into savings. The rest is used for other expenses.

5. Review and implement changes

With a budget tracker and a proper budgeting method, you’ll need 2-3 months to start having enough data to make an informed decision. Now it’s time to start optimizing your spending. Your budget can help you identify areas that you can optimize. 

Maybe you noticed transportation is a big chunk of your budget. You can consider switching up the flight dates to cheaper options, generally weekdays (Tuesday and Wednesday) tend to be less expensive. If the accommodation costs are too high you might want to check off season destinations or more affordable cities. 

Remember, the key to effective budgeting is flexibility and adaptability – so don’t hesitate to make changes as per your needs and circumstances.

Ready for your next adventure? Check out the Subscription plans.