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Imagine opening your laptop and checking work email—all while soaking in an ocean view from your balcony in a faraway country. The idea of working from anywhere might have once been a pipe dream, but it's more possible than ever given improved technology and the pandemic-fueled shift toward teleworking.
Working as you travel or live temporarily in different places does come with some challenges that require planning, especially when it comes to handling money. Once you've ensured you have a solid and realistic travel budget, these six tips will help make your financial life as a digital nomad even more stable, regardless of where you lay your head at night.
1. Set up a Permanent Address
One of the biggest challenges of life as a digital nomad is not having a consistent address. Even though you don't often need a physical mailbox for much, you must give an address on payment accounts, and there are times when you do need to receive snail mail. Here are a few options:
- Use a family member's address. Ask a relative or even a close friend if you can use their address as your permanent address on your accounts while you travel. You can ask them to send photos of important mail or hold onto everything until you're back.
- Get a P.O. box. If you won't be gone too long, consider having mail collected in a P.O. box. This may not be a solution for extended travel if nobody is able to check it for you, since mail can only accumulate in a P.O. box for 30 days.
- Use a service. With the boom of the digital nomad, an increasing number of companies offer services to make this lifestyle easier. There are forwarding services, which can receive mail on your behalf and forward it to wherever you are. There are also virtual mailbox services, which provide a permanent address for you, collect your mail, send you photos and even forward select items to you.
2. Cover Your Health Insurance
There's nothing like an illness or injury to ruin a trip, and it can easily turn into a nightmare if you have to pay out of pocket for an emergency room trip. Not all U.S. health insurance policies offer overseas coverage or claims reimbursement. Some countries with generous social services will take care of you free of charge thanks to their tax-paying citizens, while others require visitors to foot the bill for their care.
Here are a few important points to research to ensure access to care and avoid a financial emergency:
- If you have U.S.-based health insurance, read your policy or contact the company to find out if they offer any coverage or reimbursement for expenses while traveling abroad.
- Either way, research the policies of the countries you'll be visiting to find out if tourists can access medical care, and whether it's no-cost or requires payment. Try the State Department's website; search by country and click on the "Health" tab for insight on the health care system in each destination.
- Consider purchasing travel medical insurance, which doesn't support routine care but covers costs of emergency medical treatment and/or evacuation when you're overseas.
- Purchase a travel health insurance plan specifically for digital nomads. Some are geared toward coverage only for accidents or emergencies, such as Safety Wing or World Nomads. Others function like international health insurance plans that cover more routine medical needs, such as GeoBlue.
3. Consider Traveler Insurance
While some travel insurance covers health crises like emergency medical treatment and medical evacuation, general travel insurance often includes that plus other money-saving benefits.You may actually have some travel-insurance-like benefits with your credit card, but traditional travel insurance can offer protection and help cover costs in unexpected situations like:
- Lost or delayed luggage
- Missed travel connections
- Delayed or interrupted travel
- Accidental death or dismemberment
- Rental car insurance
Travel insurance policies vary significantly. When reviewing plans, the U.S. State Department recommends looking for ones that cover pre-existing conditions, offer sufficient financial coverage and are eligible in the places you'll be traveling and for activities you're doing. Read the fine print carefully since not all policies offer protection for pandemic-related cancellations, among other exclusions.
4. Know How to Pay
While foreign transaction fees aren't as common on credit cards as they once were, they're still on some credit and debit cards—and for as much as 3% of any transaction. Check the terms on your current credit and debit cards to see if your issuers levy foreign transaction fees, and avoid using those. If you don't have one without the fees, consider applying for a new travel credit card that waives these fees.
Credit cards offer greater fraud protection than debit cards, so it's best to do your shopping abroad with your credit card. Some cards do allow for debit accounts in multiple currencies tied to one card, if you'd prefer that option.
Also, in some parts of the world, cash is still king. Before heading to any new area, learn about the currency, find out which ATMs are in your bank's network and look at fee schedules to avoid huge fees for foreign ATM withdrawals.
5. Plan for Taxes
Taxes can be tricky even if you're living in the U.S., but living and working abroad introduces a different level of complexity. The U.S. requires citizens to pay taxes and submit tax returns even if they live abroad (digital nomads may or may not be subject to state taxes depending on the situation).
Unfortunately, some countries require you to also pay them taxes if you earn income while you're within their borders, even if you're not a citizen and not working for a local business.
The good news: the IRS has a benefit that reduces the U.S. tax burden on citizens who are abroad and earn most of their income in foreign countries. Either way, it's wise to hire a tax expert who can help you ensure you're covering your bases and not at risk of penalties.
6. Protect Your Information
When you're globetrotting, you'll be relying on free Wi-Fi networks at hotels and hostels, airports and coffee shops. While convenient, these unsecured networks expose users to hacking and identity theft, especially if used to access banking information or make purchases with a card.
For safer browsing, use a VPN service on your computer and mobile devices, which encrypts the connection and makes you less vulnerable to fraudsters. A side benefit is that a VPN can allow you to access U.S.-based websites and digital services that would not otherwise be available in whatever country you're in.
Keep Tabs on Your Credit
When you're exploring the world, you're probably using your credit or debit cards at a vast number of merchants and ATMs with varying levels of security. Add on unsecured Wi-Fi networks, and perhaps difficulty receiving phone calls or mail, and it's easy to see how fraud can occur or go unnoticed for a while.
To help protect your money and identity while living the nomad life, sign up for free credit monitoring with Experian, which gives you an opportunity to ensure there's no unauthorized activity on your accounts.