4th November, 2019

How the Digital Nomad lifestyle saves you money

Normally when you merely travel, you save up a certain amount of money and budget for your trip. This trip needs to fit into a certain time frame and yo have X amount of dollars to spend.

For digital nomads who are seeking a location independent lifestyle, it is quite a differentsetup. You don’t need to save up much money at all. In fact, after taking out the major expenses before leaving, it is very, very cheap.

Surely not right?

Today we look at how digital nomads save money by comparing their lifestyle costs with the same costs from their homeland.

On a side note, for the purpose of simplicity, we are drawing these figures from a 4 week per month year, totalling 48 weeks. However in reality of course their are 52 weeks.

Accommodation is always first port of call. If you haven’t got somewhere to sleep the night, your going to have a rough night. Plus, as a digital nomad, you will need an environment that can best suit working efficiently.

For this theoretical analysis, we will be looking a the profile of a person who is living solo in a rented inner city apartment, is responsible for all bills, and who works Monday to Friday in a desk job with a decent annual salary. They are in a highly developed westernised capitalist culture with a high cost of living and strong currency.

Give me shelter

Back home, your rent can hypothetically cost between $200-$300 per week, so on average we will go with $250 per week. This translates to roughly $1k per month, and $12k per year. These are simplified estimates.

On top of that are utility costs consisting of water, electricity and gas, which every quarter cost around $160 combined. For the year, this $640.

Then there is the communication bills, with ADSL internet and smartphone bill up around $50 per month each, around $1200 per year.

Impulse stuffs

We are adding in an additional cost for furnishings, as when you are settled, you tend to be more inclined to buy things such as white goods, furniture, electronics, ebay items and other general things for your home. We will put this down at about $200 per month, or $2,400 per year, and call it “stuff for the apartment”.

Next we delve into the food expenditure, and this will again vary depending on things like appetite, average required calorie intake, vegetarian needs and things like that. For the sake of this hypothetical, this person has a normal diet and daily intake.

As this person rents their own apartment, a basic pantry of condiments are also required, and although these are mostly cheap, they can add up. The other weekly items included for eating properly (not starving) include meats, vegetable, cereals, dairy products, fruit and alcohol. Cleaning products are required as well. Let’s keep it simple and go with $125 per week at the supermarket which covers most meals and drinks. $500 per month, and $6k a year.

Eating out

The other expenses for food and drink come from eating out at restaurants and cafes, and drinking at bars. Let’s say you eat out at restaurants once a week ($30), lunch at cafes twice ($25), drink coffee at cafes daily ($30) and hit the bar once per week ($40). This works out to be $125 per week which is $500 per month, and again $6k a year.

Included next are lifestyle interests such as monthly gym membership ($50), going to the movies monthly ($15), music concerts every few months ($300 per year), skiing / surfing / team sport match (depends highly on activity, will use $30 per month), going to your favourite sporting teams match ($20 per month), nightclubs ($20 per month), hairdresser ($300 per year), dentist ($500 per year) and other memberships ($10).

Again, many assumptions are being made here, but for this case study these lifestyle elements add up to around $3k, and that’s being on the extremely cautious side.

Walk around naked?

Clothes are an expensive item in western cultures, and including a range of clothing for all different occasions, and shoes, gear for snow and swimming, we say this person spends about $6k per year on clothes.

Throw in Christmas gifts for family ($500), holidays you take in your time off ($3k per year) and car related expenses like registration ($600), servicing ($800) and fuel costs weekly of ($40). On top of this are public transport and taxi costs when needed, say ($25 per week) and the additional costs annually for this is totalled at $8.5k.

That’s an expensive living

So even just taking these expenses into account, the expenditure for this person annually are estimated at $45,000 per year. So for a person working a normal job on say $75k per year, minus income tax in a fairly low bracket of $20k, this person has $55k yearly in disposable income. Take out the $45k in lifestyle costs, and this person can potentially save $10k per year.

This estimate doesn’t cover other costs that pop up like dating, online services costs and extended holidays, but who has time for most of this stuff anyway – after all, this person is at their companies office desk for 40 hours a week minimal, 5 days a week.

A better offer

So when looking at the expenses for digital nomads who work and travel simultaneously, are they much worse off in what they can save? There are different types of levels of digital nomads with differing salaries, but even the average, disciplined digital nomad can produce some fairly impressive results.

For starters, fully furnished accommodation in areas like Chiang Mai South East Asia can be $300 per month ,($3.6k per year). This includes all utility and internet services, a gym and cleaning needs. Splurging on food for $40 per week ($160 per month, $2k a year), travel and commute expenses like flights, bikes, taxis and trains are about $3k per year.

Alcohol about $20 per week, ($1k a year), clothing about $400 per year and touristy type things around $1k per year. Haircuts, dentists and other similar things around $200 a year.

The total numbers

Already, the huge difference in cost of living can be seen, as these costs total annually at $10,800 per year. And this is living very comfortably and is likely to be a lot less.

Then there is your work as a digital nomad. Ideally you have set up your business and are fair dinkum about doing the work and earning a salary. You are working hard enough to earn $3,000 a month in your home currency through a range of online jobs, and about $36k per year. Put $6k aside for tax, minus expenses of $10.8k, and you have saved about $19k.

Wowser!

This is LESS THAN HALF the earnings of what the company desk job was providing you with yet ALMOST DOUBLE THE SAVINGS. Plus you are reaping all the lifestyle benefits of travelling in foreign places, not committing all your time to a company office space and increasing the value their corporate empire!

Instead you are investing in yourself, living the way you want to live, being in full controlof your time, working for yourself and living in a far more interesting world.

Of course, this is just an example of a hypothetical profile of a digital nomad convert. Actual costs will vary based on millions of things. This article is designed to help you see the potential of choosing the digital nomad lifestyle, and how it can actually be more advantageous to not only your lifestyle, but also your savings.


Prepared by Work Play Nomad


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