The opportunity to explore new countries and cultures, and to grow personally and professionally, is encouraging more South Africans to consider the life of a digital nomad.
A digital nomad is someone who uses technology to work remotely and is free to travel and live in different places while maintaining their job or business online. The Covid-19 pandemic, and the adoption of new tech tools, have made working away from the traditional office far more common.
However, before you put your possessions in storage and head off to another country, it’s important to take note of personal finance considerations, advises JustMoney.co.za, a site that helps South Africans make good money choices.
“It’s tempting to throw up your current arrangements when you see clips of friends working beside a sunny beach or pool, and you’re shivering during load-shedding,” says Shafeeka Anthony, marketing manager of JustMoney.“This lifestyle is not without its challenges – and you don’t want to lose out on benefits you’ve worked hard to achieve. Diligent planning is essential.”
JustMoney offers 10 tips for would-be digital nomads:
- Destinations: The list of countries offering digital nomad visas is growing, but the fees, paperwork and duration of a stay differ widely. Do your research.
- Budget: Plan ahead and account for both fixed and variable expenses. This detailed budget should include accommodation, transport, food, insurance, connectivity, and leisure activities. Test out budgeting apps and tools to track expenses and ensure you stay within your limits.
- Emergency fund: A robust emergency fund is essential for coping with unpredictable situations. Aim to save at least three to six months' worth of overseas living expenses to provide a financial safety net when there are unexpected challenges.
- International banking: Research banks and select one with favourable international banking options. Look for low foreign transaction fees. Consider opening multi-currency accounts to reduce currency conversion fees.
- Tax planning: When you’re a South African taxpayer or tax resident, you’re taxed on your worldwide assets and income. Understand your tax obligations as a digital nomad; it’s advisable to consult a tax professional to ensure compliance and to optimise your tax situation.
- Insurance: Comprehensive insurance is non-negotiable. Invest in plans that cover medical emergencies, evacuation, and lost belongings. Check if your current insurance covers international travel or explore specialised options.
- Exchange rates: Monitor exchange rates and plan accordingly. Currency fluctuations can significantly impact your purchasing power. Use currency exchange platforms that offer competitive rates.
- Community support: Connect with other digital nomads to share financial insights and experiences. Online communities and forums can provide valuable tips for stretching your budget abroad.
- Retirement planning: Even as a digital nomad, it's crucial to plan for retirement. Establish a retirement account or investment portfolio to secure your financial future. Diversify your investments to mitigate risks associated with changing economies and currencies.
- Continuous learning: Stay informed about financial trends, investment opportunities, and changes in tax rules. Educate yourself to make informed decisions that align with your long-term financial goals.
“Incorporating these personal finance tips into your digital nomad planning increases the possibility of enjoying the freedom of remote work while maintaining financial stability and security,” says Anthony.
JustMoney.co.za is a trusted voice within the personal finance sector. The JustMoney website offers articles, money management tools, and a wide range of financial products and services. Over 250,000 South Africans subscribe to the newsletter to stay informed and become financially savvy.