How to Calculate an Accurate Digital Nomad Budget
Math isn’t everyone’s favorite subject, but calculating a budget is essential for anyone serious about becoming a digital nomad. It’s the difference between success and coming home within a month. It’s not easy, but with a good plan, it can be done.
In this guide, we’ll discuss why money matters, how to create a digital nomad budget, and precisely what it costs to live a nomad life.
The Importance of Money Management for Digital Nomads
Cash is the number one concern for many potential digital nomads, and the prime reason many give up the dream before they’ve even started. Becoming a digital nomad is risky, but with proper money management, it can be extremely rewarding and successful. A watertight budget and sensible plan open up many doors:
- Living comfortably: Understanding how much cash you need to earn as a digital nomad and live life to a high standard in your chosen destination is essential. This is a balancing act of figuring out how much you’re able to earn each month, and selecting a destination that fits that budget. If you get it right, you don’t have to be a digital nomad on a budget, working all the time yet barely making ends meet.
- Ability to explore your new home: When choosing a place to start, you should factor in far more than just the essential earnings needed to cover the rent. Your income must allow you to enjoy life rather than just scrape by. There’s no point in becoming a digital nomad if your budget doesn’t allow you to experience where you’re based. With a plan, you can enjoy a variety of activities and excursions, as well as meeting new friends in town.
- Investing in your future: You should also be able to put some money into savings. This will give you flexibility and enable you to invest in yourself and your work. Travel is meant to be exciting and spontaneous, but proper money management as a digital nomad provides the financial backing you need to move forward.
Steps Towards Creating Your Budget
Every digital nomad budgets differently, and there’s no one-size-fits-all calculation. Many factors are at play, depending on your work and travel destination. That’s not to mention the kind of traveler you are. However, there are plenty of tips you can use to create a budget that works for you.
Determine Your Starting Budget
When figuring out how much to save, the best advice is to assume you won’t earn anything for the first six months on the road. While this rarely happens, it gives you a decent amount to live on while you find your feet. With that in mind, it’s essential to consider the following factors:
Your first significant expense is likely to be the cost of traveling to your chosen destination. Many nomads want to fly as it’s usually the quickest, cheapest, and most convenient method. The price of flight tickets will vary widely depending on your destination, travel date, airline, and the amount of luggage.
You can find incredibly affordable travel and health insurance that’ll keep you covered for a wide range of potential issues. Not all nomads bother with it, but it can save you thousands of dollars in medical fees in case of an emergency, and much more. SafetyWing offers excellent coverage for as little as $37 per month.
It’s worth booking a room somewhere for the first few days of your stay to use as a base while you search for a more long-term solution. CouchSurfing is free, hostel dorms are generally cheap, or you can spend a little more on a hotel room, guest house, or Airbnb.
Work Equipment and Luggage
Your work will become a lifeline, and you’ll likely need to invest in some hardware. A laptop is essential for the vast majority of digital nomads, and depending on the nature of your work, you might need additional gear. Also, if you don’t have luggage already, you’ll need at least a backpack. Check out our complete digital nomad packing list to get an idea of exactly what you’ll need.
Be sure to check the visa requirements of any place you plan to travel to. If you need to get one, the price isn’t usually too high and averages out at around $45.
Many digital nomads start by traveling to more exotic locations such as Southeast Asia. Check what vaccinations you’ll need for your chosen destination. A full set of the most common vaccinations (malaria, rabies, typhoid, hepatitis A, yellow fever, etc.) should typically cost around $250, though the cost of each shot varies.
A stash of cash that can be used when the unexpected happens is extremely useful to have. In fact, it’s just as essential as saving up for your airfare. Life is unpredictable when traveling, so having a safety net not only gives you peace of mind but can get you out of tricky situations. A good amount to hideaway would be around $1,500-$2,000.
Monthly Budget Overview
Besides knowing how much to save, you need to calculate the cost of living in your destination. Again, it’s important to consider several different elements to come up with an accurate figure. With this information, you can tell if your income will allow you to live comfortably.
The vast majority of your earnings will go towards paying for your accommodation. A general rule of thumb is that the longer you stay in one place, the less you’ll spend. Rents vary around the world, and a lot depends on the type of lodging you choose. Long-term Airbnb rentals are worth looking into and can be extremely convenient and affordable.
It’s also worth factoring in the cost of your monthly utilities if these aren’t included in your rent. Be sure to consider water, electricity, heating, cooling, garbage disposal, internet, and cell phone costs.
Whether you plan to buy or rent a bicycle or take public transportation, it’s good to know how much you can expect to pay. Bear in mind that if you use public transport a lot, monthly passes generally work out cheaper. If you’re planning on buying or renting a vehicle, consider petrol, insurance, and any taxes that might be required.
Groceries and Essentials
Everything from food to toiletries should be budgeted for as best you can before you set off. Of course, you don’t need to know the exact price of a razor or a bread roll, but a rough idea of the cost of a weekly shop is useful.
Whether you wish to hire a spot in a coworking space or work from a different cafe each day, it’s important to consider the costs. If you’re working from cafes, budget for a coffee, and a light meal per working day. Otherwise, research coworking space costs, which are often discounted for long-term use. Even if you are working from your apartment, think about the potential increased cost of utilities.
Life is to be enjoyed, so be sure you have enough spare cash to cover entertainment. This will include everything from excursions and activities, to eating out at a restaurant or having a drink with new friends.
Investing in Your Future
It’s also essential to be able to put a little cash aside when you can. This can go toward buying a ticket to your next destination, upgrading your equipment, or investing in your business.
Sample Monthly Budget
Theory is great, but let’s take a look at a real-life example. For this, I chose Cluj Napoca, which is a city in Romania (Eastern Europe). Your budget might look similar if you wanted to live here, assuming you’re coming from the US.
|Work Equipment & Luggage||$1,000 – $2,000|
|Airfare||$300 – $900|
|Travel Insurance (per month)||$37|
|Visa||90-day visa free|
|Emergency Money||$1,500 – $2,000|
|Starting Accommodation (1 week Airbnb)||$120 – $240|
|TOTAL||$2,687 – $5,177|
|Accommodation||$300 – $500|
|Utilities||$70 – $150|
|Groceries & Essentials||$50 – $200|
|Transport (monthly pass)||$20|
|Working Space||$50 – $160|
|Entertainment||$50 – $200|
|Investing in Your Future||$250 – $500|
|TOTAL||$790 – $1,730|
If you imagine you’ll spend three months in Cluj Napoca before moving on, you’ll need between around $5,000 and $10,400.
Bear in mind this is just a rough guide and that the budget also includes the expenses to get started.
Places like Southeast Asia will probably be cheaper, while others may be a little more expensive. You may find that you can spend far less, or even far more!
How to Add up a Digital Nomad Budget
Things like your airfare are quite easy to work out as long as you know when and where you’re going. But other factors, like the day-to-day cost of living, are a little trickier to arrive at. Fortunately, the internet provides.
Reach Out to the Digital Community
From Eastern Europe to Asia to South America, digital nomads live and work all around the world. One of the best ways to get accurate, up to date information is to reach out to the local community in your chosen city. Not only will you discover the cost of living from the horse’s mouth, but it’s a great way to meet like-minded people. If you’re lucky, you might even find apartments for rent.
Use Online Calculators
Nowadays, it’s easy to find out the average cost of living in cities around the world. Several websites have user-contributed data to provide accurate figures.
- Numbeo: is a great tool that relies on users to input the cost of living data for cities around the world. The average price of everything from rent and utilities to eating out to public transport is calculated. Plus, you can quickly and easily compare different cities.
- The Earth Awaits: this is a useful site for finding the ideal location for you. Just type in your monthly income and a few other factors, and it’ll show you a range of cities that could work for you. Each destination has a thorough guide, covering everything from the weather to the cost of living.
- Nomad List: a handy tool for those who have an idea of where they want to visit, Nomad List provides detailed information on cities around the world. With user reviews and rankings, you can soon get a feel for anywhere that interests you.
Tips for Keeping Your Costs Down
Don’t worry if you’ve calculated your budget and are thinking that your costs are a little high. It’s always best to overestimate your expenses. Plus, there are many ways to reduce your cost of living and shrink your overall spendings. Here are a few tips for living on a tighter budget:
Choose the Right Location
You might have your heart set on a particular city that you’ve always dreamed of living in. However, if you can’t afford it right now, don’t be put off. Broaden your horizons and check out places that are a little more affordable and a better match for your budget. You never know, you might find somewhere that is even better than your original choice. Plus, all the time that you’re working, you can be improving your skills and earning more. In time, you’ll almost certainly be able to afford your original choice and be better traveled.
Choose the Right Accommodation
Where you stay as a digital nomad will almost always be your highest expense. The good news is that you can drastically reduce how much you spend on it if you’re willing to make some compromises.
Living on your own gives you privacy, but costs a lot more than shared accommodation. Seek out house shares or private Airbnb rooms to keep costs low. If you’re able to rough it, a bed in a shared hostel dormitory is one of the cheapest options you can find.
Location Location Location
Apartments in the city center will always be more expensive than those in the suburbs or neighborhoods that aren’t right in the middle of town. You can typically reduce your rent considerably by opting for accommodation that isn’t downtown.
House Sitting and Volunteering
You can even find free accommodation if you know where to look. Websites like Workaway offer a vast range of volunteer projects around the world. Many projects provide free food and lodging for a few hours of work each day, leaving you plenty of time to do your own job. Alternatively, check out websites like House Carers, where you look after someone’s house for free. Time periods typically range from a few days to a few months.
Calculating your budget might not sound like a lot of fun, but doing it right means you can enjoy your new life rather than struggle. It’s essential to be realistic about how much you can earn and choose a destination that you can actually afford to live in. There’s always time to save up and start earning more, so don’t get fixated on one place in particular if you can’t afford it.