Every digital nomad should have a personal budget in place. In fact, everyone should have a personal budget in place.
The problem is that when you become a digital nomad, it can be difficult to budget because there is more to think about, and it’s such a different way to live. And if you do know how to budget well, creating the right tool or using an app is often a difficult, not to mention, boring experience.
I have found that trying to record every transaction I make while traveling really just sets me up for failure. I can usually do it for the first few days, but after that, I can’t be bothered anymore or start to forget.
The key to an effective digital nomad budget and plan is having the right tool in place.
You need something that gives you an overview of your monthly expenses and shows you exactly where you are spending your money. After that, you just need to follow it.
My goal in this guide is to show you how to plan and calculate your monthly budget as a digital nomad.
You can use the categories in this blog to formulate your own digital nomad budget and then either use a digital nomad travel expense app or create your own google sheet to plan it out properly.
5 Categories Of A Digital Nomad Budget
Everything that we include in our personal budget fits into 5 broad categories. These 5 categories are:
- Living essentials
- Travel essentials
- Remote Working
- Savings, Emergency & Investments
We want to break down each monthly expense into a broader category because we can then see where we end up spending the majority of our money.
For example, when I first did this, I realized that I was spending almost as much money on coffee each month as I was on coworking!
For some people that might be okay. For me, I realized I needed to cut back on my coffee and focus on saving a little bit more.
1. Living Essentials
Living essentials is exactly what the category name says, “living essentials”.
This category is the most important category to fill out in your budget and usually makes up the bulk of your monthly expenses. Living essentials include the cost of accommodation, food, transport, non-essential groceries, and any outstanding debts.
Your accommodation comes down to your income and the cost of living in your destination. These two factors will determine how much you should budget for your accommodation.
Because this is a fixed cost, I would do a bit of research on how much it costs for rent and then add this into your budget first.
The accommodation will help set a good basis for the rest of your expenses.
Digital Nomad Tip: When finding new accommodation at a new destination, book a few nights in an Airbnb or hotel first, then after arriving, spend some time over the next couple of days finding a long-term place to stay. In my experience, it’s always cheaper to go direct through the owner
Food for me is often more expensive than my accommodation.
In saying that I eat out almost every day, 1-2 times per day plus snacks.
My food budget basically consists of how much money I spend on everything I consume in a month, such as meals, snacks, coffee, etc.
The great thing about food is that you can always spend less. If you decide to buy groceries and cook at your accommodation, you will often save a significant amount of money.
So decide how much it will cost for you to eat, drink, and snack each month and add that into your budget.
Transport can be a little difficult to budget because of the variety of transport available at your destination.
I would recommend taking an average of how much you spend on transport each week, then multiplying it by 4.3 to give you a monthly budget.
If you rent a scooter or bicycle to get around, this will make it a bit easier to calculate your transport cost. Just make sure you add in a little bit extra for those few times you take a taxi!
Non-essential groceries include things like soaps, shampoos, shaving accessories, etc. Basically, anything that you buy from the supermarket or grocery store that isn’t food, drinks, or snacks.
For me, this isn’t a very expensive part of my budget but is still worth recording.
No everyone has outstanding debts, but there are a surprising number of digital nomads that are paying debt off in some form or another.
Outstanding debts include student loans, credit card payments, house repayments, and other loans that require a monthly payment.
If you do have outstanding debts, it’s very important to include them in your budget. If you don’t, just leave this expense blank.
2. Travel Essentials
After we have our living essentials sorted, we need to make sure that we budget our future and current travels so that we always have enough money put aside to continue traveling.
Travel essentials include travel insurance, visas, and future travel expenses.
Insurance while traveling is an absolute must. If you don’t have travel insurance, then you need to get it.
For digital nomad travel insurance, we use SafetyWing. They offer a monthly subscription coverage starting from just $40 USD per month. They cover pretty much everything that we need while we travel, so double-check that they work for you as well.
Most countries offer a 30-90 day visa on your arrival depending on your nationality and passport but charge roughly $40 USD to $60 USD if you want to extend for more days.
If you are planning to extend, make sure that you’ve accounted for it in your budget.
Because this highly depends on the country that you are visiting, my advice is just to take your estimated visa costs over the year and divide it by 12.
Future travel expenses
Future travel expenses include things like flights, taxies, and short-term accommodation. If you don’t watch this one, it can sneak up on you! It’s happened to us a couple of times.
I now always make sure that I have next month’s (sometimes 2 months) future travel expenses covered in this month’s budget. That way I know that I’m good for next month’s travel and don’t have to worry about it.
Digital Nomad Tip: Get cheap flights using Skyscanner. It’s a search engine dedicated to finding you the cheapest flights to your destination.
3. Remote Working
Every digital nomad needs a place to work and tools to do it. Some digital nomads work from their accommodation, others from cafes and me personally, a coworking space.
The working category really only requires 2 things, phone and internet, and coworking/workspace.
Phone And Internet
As with most digital nomads, one of the first things I do when I get to a new destination is to get a local sim card.
Even before I get into a taxi at the airport, If I can get a sim card I will. Having that all important data, the ability to make local phone calls, and just being connected is important. This is a cost that goes under phone and internet.
Other communication may include skype numbers, international portable wifi, zoom subscriptions, etc.
Coworking / Workspace
Some digital nomads work from their accommodation, others from coffee shops, but I am definitely an advocate for a comfortable coworking space.
I just find that I am much more productive when I have a dedicated place to work from.
Most coworking spaces that I have used range from $100 USD to $200+ USD per month, so it’s definitely an expense that needs to be added to the budget.
If you don’t use a coworking space, you can put a zero under this expense.
Digital Nomad Tip: Most of these remote working expenses can often be claimed as business expenses. In many cases, you might be able to claim them when you submit your tax return.
I like to have a healthy amount of money dedicated to entertainment because I like to enjoy the destination that I’m in.
I’m also a sucker for a few beers and a nice meal out at least twice per week.
This could be put under the “Food” expense, however, because it’s a regular enough activity and considerably more than my other food expenses, I add it to entertainment. It’s really up to you.
Activities & Entertainment
When you are in a new destination you are going to have a few tourist days throughout the month. Otherwise, what’s the point of being a digital nomad, right?
You want to experience the sites and activities that make that destination unique, and you can’t do anywhere else in the world.
I also include things going to the movies, out for a nice dinner (as mentioned above), massages, hiking, exploring, etc, under this expense category.
Personally, I find it difficult to budget these expenses because they differ month-to-month, destination-to-destination. My advice then is to do a bit of planning in advance and try and come up with an estimated number to put under this category.
I’m not a big shopper, in fact, I really don’t enjoy it, but everyone needs a new shirt, some jocks or a new pair of shoes every now and then.
I really struggle to budget this category, so I just put a blanket $50 here each month.
You have to decide based on your spending habits, what you need, and what you can fit in your suitcase! Want to see what we have in our sutcase? Check out our digital nomad packing list.
5. Savings, Emergency & Investments
Now, when I say emergency, I really mean unexpected expenses.
This category is there as a backup for expenses that come out of nowhere.
It’s basically a buffer between your monthly spendings and your monthly savings. If you don’t spend it, that’s great, just put it away for a rainy day.
Savings and investments are also really important! I have met a lot of digital nomads that are really just caught up in the moment and not thinking about the future. I guess it probably just comes with the lifestyle a bit)!
Nevertheless, being a digital nomad is a career choice. Just make sure you are looking after your future as well.
I put a blanket 5% of my net income away for unexpected expenses.
And most of the time, eventually, there is some small expense that comes out of nowhere that I didn’t budget for.
Usually, I don’t end up using the whole unexpected expenses budget, instead just use a bit. The leftovers I keep in a separate account for larger unexpected expenses in the future, just in case.
For my savings, I also have a blanket 10% of my net income that I put away each month.
My savings is really dedicated to bigger expenses for later in life, such as a house deposit.
My advice is for you to do the same, although I understand that if your budget is already a bit tight, you may not be able to save as much.
That’s ok for now, but I would always try and at least have 3 months of living expenses in a savings account that you can access if needed.
I love investing! The idea of being able to put money in something and coming back later to find it worth more just gets the adrenaline pumping in my veins.
Now obviously it’s more complicated than that, but still, I love it! I commit about 5% of my monthly income into my own investment portfolio.
If this isn’t your forte either, that’s fine. But it is important that you have something for longer-term investments.
Digital Nomad Tip: For bank accounts and bank cards while traveling, I use Transferwise. You can exchange money instantly into almost any currency in the world. You can also send money to a bank account and receive money into your Transferwise account. They charge a very small fee for transfers and give you the market rate of whatever currency you are transferring in. Crazy!
Get Your Digital Nomad Budget Under Control
That’s it! Those are the 14 categories that I use for our digital nomad budget. It’s not that complicated, is it?
Most people make the mistake of making their personal budgets complicated and then they never use them. With this, it’s simple and still effective!