Earning & Saving Money As a Digital Nomad

Pristine beach in sight, bright cocktail in hand, sea breeze caressing your hair, you're typing away on the laptop against your perfectly bronzed legs. No more horrid rush-hour commute, no more concrete jungles, no more Excel spreadsheets at 2AM.

This wanderlust digital nomad lifestyle is indeed a dream for many.—myself included. But before you jump in and start drafting your resignation letter, you might want to go through the following money-related aspects to this lifestyle and ask yourself if you are really prepared.

Steady Stream of Income

You need money, and more often than not, you will need 10% more than what you have budgeted. You can choose to live on your savings, but it is likely to be limited, so it would mean your digital nomad days are also numbered. Off the top of my head, here are five ways to make money on the road:

1. Social media influencer: You can document your life on the road and transform that into a personal brand—think Youtubers and Instagram personalities. The barrier of entry is relatively low, but it also means you must find your own niche in this increasingly competitive scene to stand out.
2. Writing: If you are writing on Vocal Media, then congrats, you are already on the right track. Of course, there are also many other writing opportunities like magazines, scripts, copywriting, and blogs that can offer a considerably good pay.
3. Online business: If you have a marketable soft skill—say photography, coding or financial consultant—then the flexibility to take up independent projects is in your hands. If you don’t have a specific employable skill, you can still consider setting up an online business in the form of drop-shipping. It can be a viable option if well thought-through and executed.
4. Passive-financing: I coined this term for investment incomes that generally only entail a one-time decision or effort and do not require any subsequent work. If you have a property in your home country, you can consider renting it out for the period of your travel and just live off the rental income on a month-to-month basis. Alternatively, you can put your savings into an index fund and if all due diligence has been done properly, you can enjoy substantial capital gains without the volatility of trading. You can also create and sell e-books, courses, podcasts, videos, apps, and any other e-products. Since these products have no transactional constraints or inventory issues, the sales accumulated over time can be a very substantiated amount, provided that the content is good.

Potentially Huge Costs

After asking yourself how you will make money, you should also ask how you can save money. While learning to book cheap flights and accommodations is one thing, you have to look at the bigger picture and recognize the huge costs that can potentially throw your life off-course.

Traveling the world is exciting because of the unknown adventures that lie ahead. This, however, also exposes you to risks that you might otherwise not face in your usual life. All sorts of things might happen—car, bike, flight accidents and cancellations, fire, flood, earthquake, theft, loss, medical, etc. Both your life and savings will be at stake, so be sure to get insurance to cover yourself well.

Another point of concern is the taxes. Remember to settle your tax filings before leaving, as well as finding out how you will be taxed if you work overseas and/or online. Imagine returning home decades later, only to find a massive tax bill and a jail sentence waiting for you...

The above is just a quick check on your financial planning for the lifestyle switch. There are so many more to them, let alone the non-monetary factors on top of these. It is thus best if you can start with a few short “recce” trips first (ie. a few weeks or months-long), and find out more about the type of "digital nomad life" that is best-fitted for you.