Lies You've Been Told About Maintaining Your Finances as a Digital Nomad

Once a niche pursuit, the digital nomad lifestyle has exploded in popularity. In 2023, there were 17.3 million Americans who described themselves as digital nomads, according to MBO Partners. That’s up from 7.3 million in 2019.

The most exciting part of being a digital nomad is getting to see more of the world. People also often talk about the financial benefits. But there are a lot of misconceptions about the financial side of this lifestyle.

I have firsthand experience here, as I’ve been a digital nomad for several years. If you’re thinking about trying it yourself, it’s important to know about the common financial lies and half-truths so you don’t go in with false expectations.

It’s easy to mix work and travel

You’ve probably already seen the cliche digital nomad pictures. Working on the beach. Working by the pool. Working at the bar in your hostel, with a fruity cocktail right next to your laptop.

It paints the picture of a dream life, where you’re always making money while simultaneously having a blast. Sorry to be the bearer of bad news, but it’s nothing like that.

Successful digital nomads don’t mix work and play. When you try to do both, you don’t get the best of both worlds — you get the worst of both worlds. It ruins your productivity, because you’re constantly getting distracted. You can’t let loose and enjoy yourself, either, because you’re still ostensibly trying to get work done.

Finding a work-life balance is actually one of the hardest parts about being a digital nomad. You need to work, but you may end up feeling guilty about it. You’re in this amazing new place, and instead of exploring, you’re stuck on your computer.

Life will be less expensive

Lots of people get excited when they check out the cost of living in the places they plan to visit. Say goodbye to those high U.S. prices that drain your savings account; say hello to a more affordable lifestyle, where you’re able to save much more on all your bills.

This one can be true, but it’s easy to underestimate how much your new lifestyle will cost. Those cost of living estimates you see online could be quite a bit less than what you end up spending, for a few reasons.

First, you’ll probably live in short-term, furnished rentals. This tends to be the most expensive type of housing. Housing in general might be much cheaper in your new city compared to your old one. But if you rented an unfurnished apartment with a long-term lease in your old city, and you’re moving to a furnished monthly rental in your new one, you could spend a similar amount.

You may also have extra costs as a digital nomad that you didn’t have before. Since you’ll be traveling more often, you’ll likely spend more on travel. You may want to go out more and do more activities. And if you want to stay longer in a country than a tourist visa allows, you’ll need to apply for a visa. That means paying visa fees and maybe even hiring a lawyer.

Managing money will be just like it was back at home

You might think that personal finance doesn’t change much as a digital nomad. In all likelihood, it’s going to get much more complicated.

There are financial issues you’ll deal with as a digital nomad that you didn’t have before. Here are a few examples:

  • Your budget quickly becomes obsolete. Your bills will change every time you move. Rent, food, and other expenses can be much different from one country to another. That means a spending plan that worked for you in one place may not work in the next one.
  • You’ll have a more complicated tax situation. If you’re an American, you still need to file tax returns in the United States. You may also need to file a tax return with any other country where you work or live long-term. And you’ll need to report to the IRS if you have over $10,000 in foreign accounts at any time during the calendar year.
  • You may need to open new financial accounts. If your favorite credit card charges a 3% foreign transaction fee, you’ll need to open a new one without this type of fee. While you can continue using your U.S. bank accounts, you might also eventually need to open one in another country if you decide to settle down there.

You’ll make as much money as before

This is another common assumption that isn’t true for everyone. You certainly can make as much money, or even more than you did before. But there are also ways that being a digital nomad can negatively affect your income.

Many businesses aren’t open to employing digital nomads in the first place. If you want to travel the world, that will limit your job opportunities. And if you’re already employed, it’s a good idea to check your employer’s remote work policies. Even companies that allow remote work often put limitations on this, requiring that remote employees live in the same country or state.

The lifestyle can also hurt your productivity. You lose a lot of time when you’re frequently traveling, looking for new homes, and moving. You’ll run into your fair share of frustrating issues that get in the way of working, too. A lousy internet connection. Noisy neighbors. Nightmare rentals — I’ve booked a few places that were so bad, I had to immediately find a new one, so I ended up moving twice in two days.

Spending time as a digital nomad can be an incredible experience. Even with the drawbacks and inconveniences, I’m happy to have done it. By knowing what to expect financially, you can be better prepared before you jump in.

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