The digital nomad lifestyle is one that has been growing in popularity from the rise of the internet and favorite books like “The 4-Hour Workweek” by Tim Ferris. Both young people and middle-aged now, more than ever before are feeling that making a living while seeing the world is an attainable goal. It is an achievable lifestyle, but how much do you need to maintain it? How hard will you have to work to sustain the life of a world traveler?
The short answer is, if you are a single person, you can make the digital lifestyle work for $1500 a month or less, depending on the country you choose. Now, you might not be able to live in the most select areas or eat in the most expensive restaurants. But at this price, you will be able to live comfortably and reach your goal of balancing work and travel.
Of course, there many other things that need to be considered to make decisions to maintain the lifestyle that you want to live. Most of what determines your success of staying on budget is the activities you do while living the digital nomad lifestyle.
One of the main cost factors, when you are an entrepreneur living the digital nomad life, is how frequently you travel and the way you go. If you are independent and only travel a few days at a time, it will cost much less than visiting neighboring cities or villages for one to two weeks at a time.
Most things that you have to pay for are cheaper when bought in bulk, and with rentals, this is no different. So if you are renting an apartment, you will find that many times the lease will be cheaper if you have a 3, 6, or 12-month contract. If you go month to month, the prices get much steeper.
Living in a hostel is not typically recommended for anyone who wants to make a living out of being a digital nomad. They are just too hectic to live in the long-term.
You also have to consider that if you are traveling every month or two, you have to add those travel costs to your monthly cost of living. Depending on how far you want to go each time you are on the move, you may find that transportation and moving costs from one place to another is equal to your entire monthly budget.
So when you balance work and adventure, consider immersing yourself in a specific area for a substantial amount of time before you move on. Or find a central city in between several points that you would like to see so you can take day trips from time to time to other areas.
Cost Of Living By City
Of course, $1500 in specific locations won’t take you very far. In other places, you may find you have a surplus of funds with this amount. You have to be conscious of where you are going and what the costs are going to be before you move there. There are a lot of great resources online for looking up the cost of living, but one of my favorites is this site. I included some of the costs of living for selected cities. These costs reflect someone who’s digital nomad lifestyle budget is at the bare minimum and they are living in a budget-friendly way.
Many times people assume that Europe is typically more expensive than other parts of the world, and a majority of the time this may be the case. However, if you search hard, you can find some budget-friendly areas. Here is a list of some new cost-effective regions.
- Manchester, UK: $1277
- Paris, France: $1368
- Berlin, Germany: $1124
Countries in this area of the world can be much cheaper to live in than other areas. You can live reasonably well for $1500 a month here.
- Kiev, Ukraine: $605
- Sofia, Bulgaria: $493
- St. Petersburg, Russia: $604
As with other areas, you do need to be selective when choosing an Asian city to live. There are multiple options that you can choose to trade-off in addition to the standard cost of living.
- Beijing, China: $1059
- Bangkok, Thailand: $842
- Kyoto, Japan: $936
There are a lot of options in the Americas for cost-efficient places to stay. You may end up never leaving!
- Cancun, Mexico: $342
- Sao Paulo, Brazil: $707
- Lima, Peru: $455
All the above cities’ cost of living is based on a budget for someone who is living as a local would, preparing home-cooked meals and having a longer than three-month lease.
Additional Budget Breakers
When you are living abroad, it can be challenging to stick to a budget. Every experience you have feels like it could be a once in a lifetime opportunity. It can be hard to say “no” to anything. However, hopefully, as you live as a digital nomad for longer, you will be able to discern which things are worth the money and which items you can pass on.
Here are a few things that can break your budget if you don’t successfully manage your money.
Eating out is always more expensive than making a meal from home, and with good reason. It takes a lot of effort to plan, purchase ingredients, and cook a meal. However, eating from home is one of the best ways to be more budget friendly.
Compromise – Mix it Up
It would be almost cruel to deny yourself of all restaurant eating, so you can find ways to budget weekly meals out if you are trying to manage your money responsibly. The other option is that you could work longer hours or take on more work through a second job.
You can also find a local cooking class that isn’t too expensive to get a taste of the local cuisine that you will be able to experience over and over again. Or you could buy a local cookbook and try your hand at some of the recipes at home.
One of the hardest parts about denying yourself meals out is that you miss out on many social events. If you invite your friends to your apartment to cook dinner together, you can have a similar experience without going out and without tanking your budget. You could even take turns teaching each other how to cook meals from your native country.
While you are trying to balance work and adventure, you are sure to stumble upon some tourist traps here and there. Though some of these tourist sites are worth the money to experience there are many that you may feel are a waste of time.
The best way to figure out which tourist sites to visit is to ask a local. People who have lived in the area for years have likely seen most of the sites or at least have heard from trustworthy sources about many of them. A big part of money management is making choices, and sometimes you have to choose not to see every site.
Creating A Budget
Making a budget to balance work and adventure is not as difficult as it sounds. However, if this is the first time you have lived on a budget, it may take a bit of practice and self-discipline to keep to your budget decisions instead of buying that hand-made leather item found in a nearby village.
Here are some tips for making and sticking to a budget.
SAVE A LITTLE AT A TIME
It can be stressful to live paycheck to paycheck, so on payday, make sure that you put away a small amount into a savings account that you do not plan on touching. Having a cushion will make you feel more at ease, and you can feel confident when planning an excursion that you have the money to do it.
HAVE AN EMERGENCY FUND
Everyone should have an emergency fund, but it is especially important to have one when you are in a foreign country. You never want to be stranded because you run out of funds with no family nearby to help you out if you’re desperate. A good emergency fund would be about $1000 or more. Having this fund is critical to have before you start your digital nomad lifestyle because it can help you in a sticky situation or an emergency which suddenly appears from nowhere when you are traveling.
BUDGET FOOD, SHOPPING AND TRANSPORTATION
Most of your bills are fixed expenses – generally, in the form of rent, phone bills, utilities and are pretty standard each month. The most variable parts of many people’s budgets are food, shopping, and transportation. You can make the most significant impact on your budget by making decisions on these areas and by exercising some discipline to keep the purchases low.
Look over your bank statements and try to set a reasonable amount for each of these categories and stick to it. Whatever you don’t spend, force yourself to put the whole amount or at least a percentage of it in your savings account or into an investment fund. By doing this, you will have extra funds after some time to do something fun or to purchase something you want to have.
MANAGE YOUR MONEY IF YOU ARE AN ENTREPRENEUR
If you own your own business, it can be challenging to know how much to pay yourself each month. You assume that you can take whatever you earn, however, you have to keep a close eye on what you are spending that is reinvested into the business and also making sure that you set enough money aside for taxes. The best way to manage your money from your business is to have a separate business account.
MINIMALIST OR EXTRAVAGANT LIFESTYLE?
Whether to choose a minimalist or extravagant lifestyle all depends on how well you want to live. If you want to live cheaply, consider traveling to a less expensive area until your business picks up or until you’ve saved enough to go to some of the other more costly places. If your business is already doing well, then the sky is the limit.