Published in: Credit Cards | Jan. 4, 2020
How to Become a Digital Nomad
By: Lyle Daly
If you want to be a digital nomad, here's your road map.
A digital nomad is someone who earns money remotely and isn't tied to any single place. The typical digital nomad works from their laptop, lives in short-term rentals, and goes where their mood (and their budget) takes them.
For anyone who loves traveling and exploring new parts of the world, it's easy to understand the appeal of living and working wherever you want. This lifestyle has its ups and downs, but it certainly makes life an adventure. I'll never forget the day I officially became a digital nomad. I packed everything I needed to start my new life into a couple of suitcases and moved over 3,000 miles away. To say it was nerve-racking would be a massive understatement.
Many aspiring digital nomads may be wondering how they can make it happen. Find out in our step-by-step guide to on how to become a digital nomad.
1. Find a source of remote income
The key to being a digital nomad is being able to work from anywhere in the world. For that reason, your first step should be finding at least one source of remote income. There are several ways you can do this.
Transition to a remote role at your current job. If you already have a job and you could fulfill your role remotely, then it makes sense to ask about this option. You could also start with a gradual transition if your boss isn't completely sure about the idea. Request to work one or two days a week from home in the beginning, perform well, and then ask again about a completely remote role after a few months.
Apply for remote positions. Most of the major job listing sites, such as Indeed and Monster, now let you search for remote jobs. Another option is to use a job listing site that's specifically intended for remote work. Here are some of the most popular options:
Freelance. Remote full-time employment isn't the only way to earn a living. You can also freelance, assuming you have a service you can provide to clients remotely. The rise of the gig economy means freelancing is becoming increasingly popular, and there are also sites dedicated to connecting freelancers with clients. Two of the most popular are Upwork and Freelancer.
Freelancing can be a mixed bag, especially through sites like the two mentioned above. Although there are high-paying clients, there are many more who are looking for the cheapest workers they can find. To make a living and be able to save money as a freelancer, you'll need to spend quite a bit of your time searching for clients who prefer to pay more for quality work.
Start an online business. Many digital nomads run their own online businesses, which can be a good way to generate income from any location. Launching a profitable online business can be time-consuming, but the earning potential is high.
What are the most common digital nomad jobs?
If you're looking for a career that would work well remotely, here are some of the most common digital nomad jobs:
- Web developer
- App developer
- Graphic designer
- Online marketer
- Virtual assistant
- Customer service representative
- Technical support representative
- Affiliate marketer
- English tutor
2. Prepare yourself financially
Before you pack up and leave your life behind, you'll want to make sure that your financial situation is airtight. There are several things you'll need to set up, including your emergency fund, insurance, your bank accounts, and your credit cards.
Digital nomads need solid emergency funds
Emergency funds are a must for every adult. They're even more important when you're a digital nomad, because there will be greater potential for financial setbacks. You might have a rental fall through and need to pay extra for last-minute accommodations. You could get sick and incur expensive medical bills. If you're freelancing, you may experience slow months in which your earnings drop substantially. And if you're living abroad and your new lifestyle doesn't work out, the airfare home may be costly.
The rule of thumb is that you need three to six months' worth of expenses in your emergency fund. If you don't have that much yet, then now is the time to work on building your emergency fund.
How to pay for health insurance as a digital nomad
One of the bigger challenges of being a digital nomad is finding the right health insurance plan. Most plans provide coverage for a single country, which won't be enough if you're moving from country to country.
What about travel insurance? When it comes to healthcare, many travel insurance plans cover medical emergencies rather than routine care. And even with emergency coverage, you won't always be able to get treatment in your current location. If it's cheaper, many of these plans will only cover transportation back to your home country. To put it simply, they might just pay to send you home, at which point you need to have health insurance coverage in that country to pay for treatment.
The good news is that there are two ways to ensure you have sufficient healthcare coverage as you travel the world.
1. Get an international health insurance policy
International health insurance plans provide worldwide coverage, although the United States and Canada are typically excluded due to their higher healthcare costs. That said, you can get a plan that offers coverage for a limited amount of time each year, such as three months, in these countries.
Some of the most popular providers of international health insurance plans are:
Whichever plan you're considering, be sure to read the policy details carefully. You need to know what's included, what's not, and in which countries you'll have healthcare coverage.
2. Combine health insurance in one country with a travel insurance plan
A simple solution is to have a health insurance policy in one country, and then supplement that coverage with travel insurance. If you're from the United States, you could maintain the coverage you already have. Another option would be to purchase health insurance in the foreign country where you spend the most time, although you may need to be a legal resident there to do this.
Banking needs for digital nomads
You probably already have a bank account, but your needs will change if you'll be living in other countries. You'll need a debit card that you can use to withdraw cash and a bank account that won't charge you all kinds of fees in the process.
It's a good idea to set up a checking account well before you move, because it's more difficult to open an account and get your debit card once you leave the United States. The best checking accounts for international travelers allow no-fee foreign transactions and withdrawals.
Once you've opened your checking account, don't forget to set up a travel notification with the bank. Otherwise, it may automatically decline your transactions as a fraud prevention measure.
Best credit cards for digital nomads
Here are several of the best credit cards for digital nomads:
- Chase Sapphire Reserve® -- A premium travel card with all the features you could need
- Capital One® Venture® Rewards -- Double rewards on every purchase
- Bank of America® Premium Rewards® Visa® credit card -- Bonus points for Bank of America Preferred Rewards clients
- Chase Sapphire Preferred® -- Affordable card with flexible travel redemption options
- Discover it® Miles -- A no-annual-fee travel card that's easy to use
What makes a credit card well-suited to the digital nomad lifestyle? There are several features to look for:
- No foreign transaction fees -- This is a must for any card you'll be using abroad. Fortunately, quite a few credit cards don't charge foreign transaction fees.
- Travel rewards -- Since you'll almost certainly be traveling more often than the average cardholder, it makes sense to earn travel rewards to help pay for your flights and accommodations.
- Bonus categories -- While this isn't a must, it's great if you earn more points in categories where you expect to spend heavily. For example, a card that earns bonus points on travel purchases could be ideal for your new lifestyle.
- Extra travel benefits -- Again, this isn't something you absolutely need, but complimentary travel perks can be nice to have. Common benefits include a credit for a Global Entry or TSA PreCheck membership fee, or airport lounge access.
This is also a good time to decide on what type of travel rewards you want to earn. The smartest choice for most consumers, at least as your first travel card, is one that earns transferable points you can use with any of the card issuer's travel partners.
The advantage of these cards is that your points aren't tied to any specific airline or hotel, so you have you more flexibility in how you redeem them. As an added bonus, some programs also let you redeem your points at a fixed rate for travel purchases, giving you more ways to travel for free using points.
3. Decide what to do with your possessions
You've likely accumulated plenty of possessions over the years, and moving it all would be not only extremely expensive, but also at odds with a nomadic lifestyle. Therefore you'll need to say goodbye to a large portion of your stuff.
There are two parts to this: figuring out what you'll take with you and deciding what to do with your leftover items.
Figuring out what to take with you
A travel-heavy lifestyle generally requires you to take as little stuff as possible from place to place. A lot of people take that to an extreme, living entirely out of a carry-on or even just a backpack.
You can do that if you want, but it's not necessary. I suggest that, at most, you take:
- One carry-on
- One personal item, such as a laptop bag
- One checked bag
This means you can roll both your carry-on and your checked bag, and you can put your personal item on top of either bag or sling it over your shoulder. It's easy enough to manage at the airport and any time you decide to move.
If you can get by with less, go for it. If you're planning on taking more, you should strongly consider making some cuts.
I started out with too many bags, and trust me, it's miserable when you're constantly traveling. Whenever you move to a new city or home, it takes you more time to pack, and the move itself is more cumbersome. It's frustrating to move several bags by yourself, and it can also be harder to find transportation, since you'll need a taxi or rideshare that has room for everything.
What to do with everything else
With everything that doesn't make the cut, you have a couple options:
- Get rid of it (by selling it, donating it, or throwing it out)
- Leave it with someone you know
- Put it in storage
I went with a combination of the first two options, and I'd argue that those tend to be the best ways to go.
Start getting rid of possessions well in advance of your move -- especially anything you're going to sell. It can often take weeks or months to sell your stuff, especially expensive items such as your car.
If you're lucky enough to have family or friends who are willing to keep some of your belongings, take them up on the offer. My father took quite a few of my things, and I was glad I didn't have to part with practically every possession.
A storage unit is another option, but I'd advise against it unless it's absolutely necessary. Even a small storage unit can cost $50 to $100 per month. You could spend over $1,000 per year on storage for things you aren't using. If you're planning to be a digital nomad for the long haul, storage is one expense you don't need.
4. Choose where you want to live
Now we get to the fun part. You get to decide where you're going to start your journey as a digital nomad, and you can choose almost anywhere in the world.
This decision will be different for everyone and will depend on what exactly you're looking for. If there's any area that you've always wanted to visit or that you've visited in the past and enjoyed, then you may want to make that your first destination. Otherwise, here are some tips on how to choose a place.
What to look for
To help you decide on a place to live, here are a few things digital nomads often consider:
- Cost -- One advantage of moving abroad is that you can save money by living in areas with lower costs of living. Depending on where you go, you could cut your monthly bills in half.
- Wi-Fi and internet speed -- Since you'll be using the internet for your work, good internet access is crucial. If you decide to live in furnished rentals where the Wi-Fi connection is already set up, I recommend asking about the internet speed before you book.
- Safety -- No one wants to live and work in an area where the threat of crime makes them uncomfortable. While crime can happen anywhere, it's much more common in some areas than others.
- Weather -- If you have your pick of places to live, why not choose one with a climate you like?
- Language -- It makes sense to live in a place where you speak the native language, or where a large portion of the population speaks English. Being unable to communicate will make life much more difficult in your new home.
Don't forget about visas
As you plan your new life, it's easy to get wrapped up in the exciting parts and forget about those boring yet necessary details, such as visas.
There are two questions you need to answer about a country before you move there:
- Do you need to apply for a visa, or can you visit as a tourist if you have a valid passport?
- What will you do when the time you're allowed to spend in the country as a tourist runs out?
The first question probably won't be too much of a problem, assuming you have a U.S. passport or any other passport that allows visa-free entry to many different countries. You'll be able to travel to quite a few destinations without worrying about visa applications. To see whether you need a visa to travel to a country, search for the visa requirements online or, if you're a U.S. passport holder, visit the U.S. Department of State's travel site.
The second question is where things get trickier. There aren't many countries that will let you live there indefinitely as a tourist. If you want to stay in a country for more than three to six months, you will usually need to apply for some kind of visa.
Visa options vary by country, and only you will know what types of visas you could potentially qualify for. You'll need to do an online search for the country's visa options and potentially consult with an immigration lawyer for help.
The alternative is to simply move before your visa expires. After all, you're a nomad. This is one way to go, although you may find that you want to explore one country or use it as your home base.
Can you work on a tourist visa?
While we're discussing visas, we should touch on a subject that leads to confusion among many digital nomads: working on a tourist visa.
Although the laws vary by country, many countries make it clear that you're not allowed to work on a tourist visa. But as a digital nomad, you're not taking a job away from a local, so it's understandable why this may seem like a gray area.
The reality is that many digital nomads work on tourist visas, and the odds of getting caught are low. This doesn't make it legal, though, and anything you do is at your own risk.
How often should you move?
For digital nomads, it's good to spend at least one to two months in an area before you move somewhere new. Longer stays tend to work well with this lifestyle for a few important reasons:
- Lower expenses -- The more you move, the more you spend. You'll need to pay for plane tickets and transportation to and from the airport. In addition, rentals are often cheaper if you book them for at least a month, so you could miss out on savings if you only stay a few weeks.
- More productivity -- The cost of moving isn't what bothers me the most; it's the time involved. When you add up the packing, the move itself, and the unpacking, even a move to a new place in the same city can take several hours. Moving to a new city usually takes at least half a day. Time is a valuable commodity, because you're not a tourist on vacation. You're a digital nomad, which means you still need to clock up work hours.
- Adjusting to your new home -- Part of the fun of being a digital nomad is living somewhere new, but it takes time to get acclimated to an area and feel like you truly live there. When you stay somewhere for just a few weeks, it's hard to get out of tourist mode.
6. Make your travel arrangements
Traveling as a digital nomad is a bit different from traveling as a tourist. To ensure everything goes well on your first move and every move thereafter, here are some things to keep in mind when booking flights and lodging.
Start your search as early as possible, especially when it's an international flight and/or you want to pay with travel points. However, don't panic if you're booking on short notice. As a digital nomad, you'll probably have some flexibility regarding your travel dates, and that can help you get the best flight deals.
Review the airline's luggage allowances, including the weight limits. On short domestic flights, economy tickets may not include a complimentary checked bag, so it can sometimes be more cost-effective to fly business or first class if you're checking luggage.
Airlines may require proof of onward travel when you're traveling to a country where you're not a resident. That means you can't just buy a one-way ticket to a place you'll technically be visiting as a tourist. Here's a simple solution: On the day of your flight, buy a return ticket home that you can cancel within 24 hours. Carriers must give you this option on flights to or from the United States. When you arrive at your destination, you can simply cancel this return ticket at no cost.
Renting a home
For digital nomads, furnished homes and vacation rentals tend to be the best choices. They provide all the comforts of a home without the need to buy furniture or sign any long-term rental contracts.
Finding a place to stay is undoubtedly one of the trickiest parts of this lifestyle. I've stayed in places I loved, as well as places that were so awful I left after a single night. Here are some tips on finding a home you'll enjoy:
- Read every review and gauge how enthusiastic previous guests were. Do they rave about the home, or are the reviews lukewarm?
- Use the photos to get an idea of what the home offers and its size. Although any listing should have quality pictures, don't get fooled into thinking a place is better than it is just because the photographer did a good job.
- Find out where a home is located and check out the neighborhood online. You may be able to use Google Street View to get an idea of what the area is like and see whether it's conveniently located or miles away from any grocery stores or coffee shops.
- Ask the owner any questions you have before you book. I'd recommend asking about the noise level and the speed of the internet, as both can be deal-breakers if you're working remotely.
7. Take the leap
You can never completely prepare for life as a digital nomad. And of course, part of the excitement is breaking out of your comfort zone and putting yourself in a situation that's completely different.
But you can ensure that you're in the best position to succeed in that new life of yours. If you follow the steps in this guide and prepare carefully before you take off, you should be able to handle anything that comes your way.
Don't pay credit card interest until 2021
The Ascent just released a free credit card guide that could help you pay off credit card debt once and for all. Inside, you'll uncover a simple debt-cutting strategy that could save you $1,863 in interest charges paying off $10,000 of debt. Best yet, you can get started in just three minutes!