Chasing the sun and waking up in a different place every month, making friends all around the world, experiencing different cuisines, cultures, and natural habits. And all that while earning an income along the way? Living life as a digital nomad sounds like a dream and thanks to websites such as Pieter Level’s Nomadlist it has never been easier than today.
One thing to remember is that living ‘the dream’ cost money. Sure, popular nomad places like Canggu in Bali or Chiang Mai in Thailand are significantly cheaper than most larger cities in the Western World. However, you still need to account for air travel, visas, hotels, and general expenses. Here are three tips that will help you plan your digital nomad life and avoid ending up in financial trouble.
Money in the bank
It doesn’t sound fun, exciting or rebellious – in short, it doesn’t look at all like a digital nomad life – but having money in the bank is key to kick off your life on the road.
Starting a new life is expensive, no matter where you are going to live. Once you arrive at your chosen destination, you will have to sort out where to live, obtain necessary documents, integrate into the culture, and connect with people. It takes time to settle – even if it’s just for a short while – and during this time, your expenses will be higher than usual. What’s more; the effort required to sort out stuff eats up time that you could spend on a client’s (or your own) project hence lowering your income.
Having some money in the bank allows you to cover expenses and help you get started. What’s more – most international travel insurances do not provide cover for extended periods, and you should have a financial back-up for when you get sick and require to visit a hospital. Savings give you peace of mind. Period.
Monthly Recurring Revenue (MMR)
If you’re running a SaaS company – and as a digital nomad you most like do – Monthly Recurring Revenue (MMR) becomes one of the most important metrics to keep an eye on. It’s what makes building a Saas so appealing.
In short, MRR is your recurring revenue normalised for each month. Think about running a subscription service for travel alerts for female travellers. You’ve built the tech and start signing up new users every day by offering an initial 30-day trial period. After the first month, the service will cost users $4.99.
It’s great to sign up hundreds or even thousands of users every month, but if they don’t stick around for longer, it won’t make you any money. The Monthly Recurring Revenue will tell you how many users convert into paying customers. If you have built a great product that people love, MRR should grow over time, making you more money with less effort.
One thing to mention: I have recently spoken to a fellow traveller who managed to win a good chunk of money playing online slots at Casumo two months in a row. It was enough money to live comfortably for a few months. However, it is *not* the same as monthly recurring revenue. Winnings from casinos, the lottery or sports betting are great but not guaranteed. Don’t build your life on highly volatile income as it has the potential to screw up your plans badly.
You’re not on an extended holiday
Last but not least, and one of the most important things to remember while being a digital nomad is to realise that you’re not on holiday!
What happens to most of us while on vacation? We spent too much money! A couple drinks here and there, going out for lunch AND dinner, spending all day at the beach while sipping Margaritas in the sun. Holidays are the real deal! But if you live that life while trying to build a business abroad, you will most certainly fail.
Make sure that you put your new life into perspective. Is the sun out? Great! That doesn’t mean to ditch your laptop and spend all day at the beach. Get up early, watch the sunrise, be productive for a few hours and jump in the ocean at sunset. Equally, when living in places like Thailand and Bali, you will meet a lot of travellers, and it’s easy to get sucked into the trave lifestyle. Always remember that you’re not having time off though, as they do, but you’re in the country to build a new life. Don’t waste your opportunity as you don’t know how many you will get during your lifetime.