Almost everyone I know who has become a digital nomad, particularly at a young age, tends to run through their digital nomad budget quicker than they expected. Your first months could even be akin to being a kid in a candy store. Once you get your daily work done, it’s like you’re on a vacation that never ends!

The way I see it, budgeting as a digital nomad requires a shift in perspective. It’s easy to spend money like a drunken sailor when you’re in a new country. You have to be more disciplined than you were at home.

Therefore, you’re going to need to see yourself as more of a local. While you won’t have access to all the same rental prices as they do, for instance, you still need to do your due diligence when researching accommodations.

Join me as I break down what a digital nomad budget looks like. I’ll help you strategize and give you tips and tools to make budgeting more efficient.

What is a Digital Nomad Budget?

A digital nomad budget is a detailed financial plan that takes into account the unique challenges and requirements of a digital nomad lifestyle. Unlike a vacation budget, which is typically designed for short-term trips and leisure activities, a digital nomad budget focuses on long-term financial sustainability and encompasses all aspects of living and working abroad.

Vacations are temporary, but digital nomadding is your life. Digital nomad budgets are quite distinct from vacation budgets for several reasons. When you travel full-time as a remote worker, you should set aside money to sustain your lifestyle abroad. This means factoring in costs like accommodation, utilities, coworking spaces, health insurance, and travel expenses from one place to another. 

Why You Need a Digital Nomad Budget

Having a digital nomad budget is essential for a variety of reasons. For one, it helps you manage your finances and ensure you can meet your basic needs while still enjoying your nomadic lifestyle. It also enables you to avoid debt and ensure financial freedom. For example, you might move from a city with a low cost of living, like Madrid, to a pricier one, like Paris. A well-planned budget will help you adjust your spending to accommodate the change and keep your finances in check.

Financial health is a priority for digital nomads. While this lifestyle comes with numerous benefits, it also poses unique challenges, such as varying costs in different countries or cities and the need to plan for unexpected expenses. Thus, having a clear, well-structured digital nomad budget is not just beneficial—it’s crucial to your long-term success and financial health as a digital nomad.

Breakdown of a Digital Nomad’s Costs

Navigating the financial waters of the digital nomad lifestyle is easier when you understand the costs involved. Here’s a breakdown of the common expenses you’ll encounter:

Accommodation Costs

Accommodation will likely make up a significant portion of your budget. These costs vary widely depending on your chosen location and type of accommodation. From budget hostels to luxurious apartments, you’ll need to find a balance between comfort, convenience, and cost. You can easily get discounts when you rent a single room or you stay at a hostel, so if you’re looking for low-budget options, you’ll usually need to subtract on accommodation.

Food and Beverage Expenses

Living abroad also means factoring in food and beverage costs. This includes groceries for cooking at home, dining out, and social drinks. Again, these costs will depend on your lifestyle and location—some countries, like Turkey, are significantly cheaper for eating out than others because they have a street food culture.

Activities and Hobbies Expenditures

A big part of the digital nomad lifestyle is exploring your temporary home. Budgeting for activities like tours, classes, or events is a must. Your hobbies also come into play—whether it’s yoga classes, surfing lessons, or photography, ensure to allocate funds for these.

Travel, Visas, and Insurance Costs

Travel costs can quickly add up, especially for intercontinental flights. You should try to concentrate on a single region at a time. You can even take a bus between countries in some regions, like Europe or Southeast Asia.

Visas and travel insurance are other necessary expenses. Different countries have varied visa requirements and fees, and travel insurance is essential for covering any health issues or travel disruptions.

Unexpected Costs

From medical emergencies to unexpected travel changes, it’s prudent to have an emergency fund for unforeseen costs. I would recommend having this fund already saved up ahead of time rather than trying to contribute to it every month while you’re on the road.

Business Costs

Finally, don’t forget your business costs. This could include anything from new equipment and software subscriptions to Wi-Fi charges and coworking space fees.

6 Saving and Spending Tips for Digital Nomads

Effectively managing your budget as a digital nomad involves not just understanding your expenses but also knowing how to save and spend wisely. Here are some tips:

Utilizing Technology for Budget Management

Budgeting tools and apps can help track your spending and savings. This not only allows you to monitor your financial health but also alerts you when you’re spending too much in certain areas. We’ll discuss some of these tools in a bit.

Understanding Small Daily Expenses

When making such purchases, ask yourself the following question: Could I afford to spend this much every day? That way, a $3 beer becomes a $90 monthly alcohol budget. 

The small daily expenses, like that cup of coffee or snack, can add up without you realizing it. Understanding these expenses can help you adjust your spending habits. For instance, you could decide to drink once per week instead of every day.

Choosing Living Locations Wisely

Living costs dramatically from country to country. Do your research and choose locations that align with your budget and lifestyle needs. Some countries that are known for being cheap, like Turkey, aren’t actually that cheap anymore. The first thing you should do when researching which country to live in is to investigate accommodation costs since that’s going to eat up a major chunk of your budget.

Costs can even vary from region to region. Take Greece for instance, the cost of living in Athens is going to be more expensive than in some mountain towns in the North of Greece.

The Benefits of Coliving and Coworking Spaces

Coliving and coworking spaces can be a cost-effective option that also provides a sense of community and networking opportunities. They often include utilities, internet, and sometimes even meals in their fees. If you don’t mind company, this can save you a ton of money.

Utilizing Public Transport

Taking advantage of public transport over taxis or rental cars can result in substantial savings. Some cities also offer bike-sharing programs, which can be both a cost-effective and enjoyable way to get around.

Managing Business-related Expenses

Keep a close eye on your business-related expenses. Identify areas where you could potentially cut costs, such as swapping paid software for free versions or working from free Wi-Fi spots instead of paid coworking spaces. Remember that some business costs may be tax-deductible, so keep good records.

6 Of The Best Budgeting Tools for Digital Nomads

A budget isn’t just about tracking expenses but also about planning where your money goes. So tools that help you find cheap flights, affordable accommodations, or free workspaces can all contribute to effective budgeting.

Several of the tools you’ve listed are helpful for digital nomads when it comes to budgeting. Here are the most relevant ones:

Nomad Wallet App

Nomad Wallet is a personal finance app specifically designed for travellers. It helps you keep track of your spending, automatically converts foreign expenses into your home currency, and provides visual aids to help you understand where your money is going. With its budgeting feature, you can set spending targets to ensure you don’t exceed your budget.

Sky Scanner 

Skyscanner can save you money by helping you find the cheapest flights. The ability to compare multiple airlines and options enables you to stay within your budget when planning your travels.

Work From

Work From can help you save money on coworking space fees by helping you find coffee shops and bars with good Wi-Fi and power outlets. These places can serve as cost-effective temporary workspaces, especially in cities where coworking spaces are pricey.

Trip Advisor

While mostly known for its reviews, Trip Advisor can also be a budgeting tool. By researching activities, food, and lodging in your next destination, you can plan and budget your trip more effectively.

Trello and Slack

While not explicitly budgeting tools, these platforms can help you manage your work tasks and improve productivity. If you’re a freelancer or run your own business, time is money, and staying organized could indirectly help with your budgeting.

Hip Camp

For digital nomads in the US, this tool can be invaluable.

While it’s not a budgeting tool per se, Hip Camp could save you a lot of money on accommodation costs if you enjoy camping. It can be an affordable alternative to hotels or short-term rentals, particularly in high-demand areas. 

How to Budget As A Digital Nomad

Creating a detailed budget is vital for managing your expenses effectively as a digital nomad. Here are a few budgeting methods and tools that can help you structure your budget:

Zero-Sum Budgeting

The zero-sum budgeting method involves assigning every dollar of your income a specific role. At the end of the month, your income minus your expenses should equal zero. This approach is ideal for those who wish to plan their budget a month ahead and make adjustments as their travel plans change. It also ensures that all your needs, including accommodation, food, and savings, are catered for.

Understanding the 50/30/20 Budgeting Method

The 50/30/20 method is another efficient approach to budgeting. This technique involves dividing your income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayments. The simplicity and adaptability of this method make it ideal for digital nomads navigating fluctuating expenses and income.

Utilizing Budget Templates

Utilizing budget templates can help you effectively manage your income and expenditures. These templates often come with pre-defined categories that you can customize to fit your lifestyle. They also provide a visual representation of your financial status, aiding in better decision-making.

Case Study: A Digital Nomad’s Monthly Budget

Let’s consider a real-world example to understand how a digital nomad budget could look for someone living on $1500 per month in a country like Thailand, where the cost of living is relatively low.

Detailed Breakdown:

Accommodation: $500 – Thailand offers a range of affordable accommodation options, including apartments, shared housing, and even attractive co-living spaces.

Food and beverages: $250 – Eating out in Thailand is cheap, but if you prefer to cook, groceries are even cheaper. I can’t see how you spend more than $300 unless you eat expensive burgers. Navigating the street food scene might be rough at first, but you’ll make it.

Activities and hobbies: $100 – Whether it’s visiting temples, taking cooking classes, or going for a Muay Thai lesson, you can find affordable entertainment options.

Travel, visas, and insurance: $100 – This covers local transport, visa extension fees, and travel insurance.

Business costs: $100 – Covers expenses such as coworking spaces, software subscriptions, or any new equipment you may need.

Savings: $300 – Following the pay-yourself-first method, 20% of the income ($300) is set aside as savings. Roughly 50% is spent on needs like accommodation and food and visas, 30% on Wants like activities or coworking spaces to help you work more comfortably.

In this case, every dollar of the $1500 budget has a job. It’s a zero-sum budget that balances out to zero at the end of the month. And while this is just an example, it’s a clear illustration of how a digital nomad budget can work effectively in practice, ensuring financial stability while enjoying the nomadic lifestyle.

Digital Nomad Budget
Digital Nomad Budget

The Bottom Line

Maintaining a robust digital nomad budget is essential for anyone looking to lead a sustainable and successful nomadic lifestyle. As we’ve seen throughout this guide, a digital nomad budget extends far beyond a typical vacation budget, requiring thorough financial planning and strategy. From establishing a zero-sum budget, which accounts for every dollar earned, to embracing the flexible 50/30/20 method, creating a comprehensive budget is key to achieving financial health on the road.

By being honest with your spending habits and staying one step ahead of your expenses, you can thrive as a digital nomad, regardless of your chosen destination. Whether you choose the bustling cityscape of Bangkok or the serene mountains of Greece, your budget should enable you to live comfortably, save effectively, and enjoy the digital nomad lifestyle to its fullest.

In the end, being a digital nomad is about freedom, exploration, and financial independence. With the right budget in place, you can live out your dream without the burden of financial stress, making the most of your adventures across the globe.

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