Common Mistakes Digital Nomads Make When Managing Their Budgets

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Being a digital nomad sounds romantic, but it can quickly turn to horror if your budget is blown. Here are a few mistakes to avoid. [[{“value”:”

One of the most remarkable perks of remote work — whether for yourself or an understanding employer — is the ability to do it from anywhere. And some so-called digital nomads really stretch the idea of working from anywhere by traveling full-time.

While the idea of being on a year-round adventure sounds romantic, the reality for a lot of digital nomads ends up being a lot less Eat, Pray, Love — and a lot more 2 Broke Girls. As all nomads soon figure out, travel is expensive. And constant travel? You guessed it, constantly expensive.

That’s not to say you can’t make it work. Plenty of people do it every day. However, you really need to budget. More importantly, you need to budget wisely. That involves avoiding many of the common mistakes inexperienced nomads make. Here are just a few.

1. Not researching their destinations well

You can’t possibly plan a reasonable budget for your trip (or anything else) without first knowing what sorts of costs to expect. There is a massive difference in the cost of living for folks trying to “slowmad” around Western Europe versus those who are backpacking between hostels in Southeast Asia.

It’s imperative that you thoroughly research your destinations. Sure, this can include anecdotes from social media. But you should also use more data-driven resources to see actual prices of things. This could include third-party sources, like the various online cost-of-living calculators that have cropped up, as well as local sources.

For example, find the local food delivery app and check out restaurant prices. Peek at a local grocer’s website to see if they publish weekly ads. Find prices of the things you’re most likely to do for fun. And make sure you know what transportation will cost.

2. Forgetting to include everyday necessities

I’ve seen a lot of folks approach digital nomading like going on an extended vacation. This mindset leads to trouble in a lot of ways, but one of the more interesting ones — from a financial perspective — is that they often forget to budget for the costs of regular life.

Even though your daily life will be a bit different, it’s still life. You need to budget for the stuff you use every day. Those travel-sized toiletries won’t last too long into a typical nomad tour. And depending on your rental, you’ll probably need to restock your own toilet paper. Let’s not forget laundry soap, hair brushes, menstrual products, and other necessities.

Similarly, you’re still going to need to buy new clothes and shoes when your stuff wears out. (Merino isn’t cheap, friends.) And you’re still going to need to pay for that allergy medication, heart medication, and, yes, health insurance. (Free healthcare is generally for citizens of countries, not nomads.)

Oh, and don’t forget your cellphone bills. You’ll probably be paying way more for a plan that offers your international calling and/or data. (International roaming can be prohibitively expensive.) Plus, you’ll likely want to get a local SIM card for any country where you intend to stay for an extended period.

3. Discounting the cost of bureaucracy

One expense that can really sneak up on people who travel frequently is the cost of basic bureaucracy.

For instance, many countries require you to apply for a visa before you can visit, and visas typically come with application fees. If you’re going to multiple countries in one trip, even small fees can really add up.

You also need to consider logistics-related costs, like mail. Unless you’re straight up moving to another country, you’ll need to maintain some sort of mailing address in the U.S. This likely means having to pay for a mailbox somewhere. (And no, a P.O. box typically won’t cut it, you’ll want to rent a box with an actual street address. Yes, this often costs more.)

Moreover, you can’t simply ignore your mail for months on end. This means paying extra for a service that will forward important correspondence, such as business documents or government letters. (If you get summoned for jury duty, you’ll need to reply!)

4. Ignoring currency conversion costs

Every time you change money from one currency to another, you’re probably going to pay a fee. In many cases, you’re going to pay multiple fees.

If you withdraw money from your U.S. bank account at a foreign ATM, you will probably be charged a fee for converting your U.S. dollars into the local currency. Then, you’ll probably be charged an ATM transaction fee — or even two: one from the ATM itself, and one from your bank for an out-of-network ATM. In some cases, you may even get hit with a foreign transaction fee for using a non-U.S. ATM.

Some credit cards will get you with the foreign transaction fees, too. Choose a travel rewards card with no foreign transaction fee to avoid this. Also, if a foreign merchant gives you the option to pay in U.S. dollars instead of the local currency, decline; you’ll likely pay less favorable exchange rate than if you let your card issuer handle the exchange.

Many of the costs of life are the same whether you live a stationary life or a nomadic one. Then there are the things unique to a digital nomad’s path. All of it needs to be included in your budget to make your nomading adventure a successful one.

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