The first few steps into the world of remote work can be as intimidating as they are exciting, especially when it comes to the prospects of financial freedom. Just a few miscalculations, however, and you could be packing your bags sooner than you think. We’re here to arm all you first-time remote workers with some practical money management tips that will keep you crisis-free as you set out on your travels.
Let’s assume that you’re setting out on your remote working journey with a fair amount of financial runway ahead of you. We’re also going to assume that you’ve got more than just one source of income (that in itself is a money tip you shouldn’t ignore – diversify your client income). Having some semblance of financial stability is a key part of setting out on your journey to fully-fledged location independence. Before you’ve even booked your plane tickets, trawl the internet to get an idea of your living costs ahead of time, and budget down to the last dollar to ensure that your affairs are in order.
The general rule of thumb is that you should have at least three to six months’ worth of financial runway to cover you in the event that you’re without work. Now that you’ve got that sorted, let’s get down the money management advice.
- Cover your bills at home to avoid being blacklisted
Moving abroad does not mean forgetting about your obligations back in your country of domicile. As much as you might want to stick your head in the sand and carry on with life, as usual, leaving your bills unpaid can spell disaster – both for you and your credit score. Defaulting on your debts could lead to all sorts of trouble with your service providers, so you could a) either close your accounts before going remote or b) look into a remittance account. A remittance account is essentially a clearing account linked to your main account in the country where you’re based. You transfer money from your main account in, let’s say, South Korea, and it then ‘pushes’ this cash to the account in your home country. Some banks will allow you to set up automatic stop orders on your remittance account so that when your bills go off at home, you won’t have to worry about a thing.
- Save for retirement and manage your investments
Amidst the endless cocktails, demanding clients and days of exploring, it can be all too easy to lose sight of saving goals – especially when starting out. Plotting out a long-term diversified investment portfolio before you go remote can help you stick to your savings goals and keep it front of mind when the going gets tough. Some apps help you with saving by automatically ‘stashing’ any spare change from odd transactions, i.e. rounding up the nearest dollar and adding it to a savings account. Alternatively, a good old stop order works just as well.
- Will you be paying taxes?
Getting slapped with a hefty tax bill can be deflating, especially in the early stages of being a digital nomad. There is a wealth of information floating around about the tax implications of being a location-independent worker, so read up and make sure that your taxes are filed on time. If you’re still feeling uneasy about your taxes, get in touch with an advisor.
- Get a card with favorable rates
If you’ve read our article on The Best Banks For Remote Workers, then you’ll know that one of the biggest boons for nomads banking abroad are bank cards which don’t charge you an arm and a leg to transact. Specifically, cards which give you rebates on the ATM withdrawals you make. These savings add up in the long run.
- Get insured
Over and above your standard monthly expenses like food, rent, and entertainment, think about insurance costs – both for items and your health. When you consider that your computer, accessories, and equipment are your livelihood as a remote worker, it becomes essential that you take care of your items. Alternatively, set up an emergency fund to cover any rainy days.
Money is never an easy issue to tackle, and while the world of remote working can constantly seem in flux, following a solid set of money management tips can save you a world of trouble on your location-independent journey.