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20 Essential Budgeting Tips: How To Save Money for Travel

You might be shocked to hear this, but it’s actually cheaper to travel than to stay at home…

Financial stability is a cornerstone for everybody, especially for digital nomads who often juggle irregular income, varying living costs, and the unexpected expenses of a mobile lifestyle. This unique set of challenges makes budgeting crucial, including strategies on how to save money for travel. Budgeting involves understanding and planning for your earnings and spending and actively managing your finances to ensure sustainability and growth. 

For digital nomads, this often means managing money and expenses across multiple currencies and countries and navigating international tax laws, which can be overwhelming. However, with a well-thought-out and comprehensive budget, digital nomads can manage their finances effectively while enjoying the freedom of their nomadic lifestyle.

Start With Your Income

Understand Your Income Patterns

Income inconsistency is a common challenge for digital nomads. Therefore, analyze your earnings for the past year and identify your lowest earning month. Use this as your baseline for planning your budget to ensure you won’t run out of funds even in a ‘lean month’. If you work on a project basis, understand the payment cycles and consider any delays that might occur. Also, make note of any clients who tend to delay payments and plan accordingly.

Set Aside Windfall Gains

In months when your earnings are significantly higher, allocate some of these extra earnings to your savings or debt repayment. Not only does this help to build a financial cushion, but it can also prevent unnecessary splurging. For instance, you may wish to allocate 50% of any extra income to your savings, 30% to debt repayment, and 20% to discretionary spending.

Plan for Taxes

As a digital nomad, you may be subject to taxes in multiple countries. Plan for these taxes in your budget to avoid unexpected expenses later on. Also, think about consulting a tax professional familiar with digital nomads’ tax obligations to ensure that you comply with all tax laws and take advantage of any available deductions.

Factor in Your Essential Expenses

Identify and List All Essentials

These are the expenses you cannot avoid — housing, food, travel, insurance, internet access, phone bills, and any work-related expenses. Include any debts like credit card payments or student loans. Make a list of all these expenses and allocate a portion of your income to cover them. Also, look for areas where you can cut costs, for example, by opting for a cheaper phone plan or negotiating a lower rate on your insurance.

Consider Location-Based Expenses

Your location can significantly impact your expenses. Research your next destination thoroughly before you arrive so you can plan your budget accordingly. Consider the cost of living, exchange rates, and any applicable local taxes or fees.

Plan for Health Care

Health care can be a significant expense for digital nomads. Research the cost of health care in your next destination and include it in your budget. Consider purchasing international health insurance to cover unexpected medical expenses. Also, consider the cost of any regular medications or treatments you may need.

Don't Forget Non-Essential Spending

Prioritize Your Spending

Allocate a portion of your income to non-essentials like entertainment, dining out, or shopping only after covering your essential expenses, savings, and debt repayment. For example, allocate 10% of your income to non-essential spending only after you have allocated sufficient funds to cover your essential expenses, savings, and debt repayment.

Utilize Discounts and Loyalty Programs

Leverage discounts, loyalty programs, cashback credit cards, or apps that offer purchase rewards to minimize your non-essential spending. For instance, you could use a cashback credit card for all your purchases and use the cashback earned to offset your future expenditure.

Use Technology to Track Spending

Leverage Budgeting Apps

Use budgeting apps like MintYNAB, or TravelSpend to track your spending, set spending limits, and receive alerts when you are close to exceeding your budget. These apps can also help you identify spending patterns and areas where you can cut costs.

Monitor Regularly

Weekly check-ins can help you adjust your spending before it becomes a problem at the end of the month. Set a specific time each week to review your spending, compare it to your budget, and make any necessary adjustments.

Plan for Emergencies

Create an Emergency Fund

Aim to save at least three to six months’ worth of living expenses. This fund is your safety net for unexpected expenses like medical emergencies, urgent travel, or equipment repair/replacement. It’s also wise to keep a portion of your emergency fund in a stable currency to protect against currency fluctuations.

Consider Travel Insurance

Travel insurance can cover unexpected costs like medical expenses, trip cancellations, or lost baggage. Take the time to read any fine print and fully understand the extent of the coverage before purchasing a policy. Compare different policies to find the one that offers the best coverage at the most affordable price. These are our favorite travel insurance companies. 

Review Your Expenses

Regularly Update Your Budget

Your expenses and income might change over time, so it’s crucial to revisit and adjust your budget regularly. For example, you could review your budget at the beginning of each month and make any necessary adjustments based on your actual income and expenses from the previous month. Our favorite budgeting app is TravelSpend.

Seek Opportunities to Reduce Expenses

Actively seek ways to minimize your expenses without compromising your needs or quality of life. There may be opportunities to save money across multiple aspects of your life, such as house-sitting or pet-sitting to save on accommodation costs or using public transportation instead of taxis or rideshare services.

Other Budget-Specific Tips for Digital Nomads

Consider Currency Fluctuations

As you move between countries, the value of your money can change significantly due to currency fluctuations. We mentioned this earlier, but it’s important to accommodate this within your budget planning by keeping at least some of your savings in a stable currency.

Leverage Co-working Spaces

Instead of working from cafes or hotels, which can be expensive, consider using co-working spaces. They often offer better internet speed, a quiet environment, and sometimes free coffee and snacks.

Cook At Home

Eating out frequently can significantly impact your budget, so try to cook at home or choose cheaper dining options. Meal prepping and bringing your own food when you are out and about can make a big dent in your expenses.

Use Public Transportation

We suggested using public transportation instead of taxis or rideshare services to save money, but remember healthier options like walking or cycling for shorter distances, too.

Avoid ATM Fees

Use a debit card that reimburses ATM fees or open a local bank account to avoid paying ATM fees. Currency exchange apps like Wise give the best exchange rates and minimize currency conversion fees.

Leverage Free Activities

Enjoy free activities like hiking, going to the beach, or exploring the city to save on entertainment costs. Join local meetups or online groups for digital nomads to meet new people and participate in activities without spending much money.

How To Save Money For Travel - A Budgeting Recap

Creating a comprehensive budget that accounts for both regular and irregular income, essential and non-essential expenses, as well as savings and debt repayment, is crucial for digital nomads. Regularly reviewing and updating your budget, leveraging technology, planning for emergencies, understanding tax obligations, and considering currency fluctuations are all essential aspects of managing finances effectively as a digital nomad. By being proactive and diligent in managing your finances, you can enjoy the freedom and adventure of the nomadic lifestyle without the financial stress.

Ready to save? Check out the “Finance” section of our digital nomad travel planning guide for tips of how to save money and our top recommendations related to credit cards, ATM cards, budgeting apps and more.

Often behind the scenes, you’ll find Jonny strategizing business plans for fellow digital nomads as well as for the DNG team. Armed with a laptop and an iced Americano, Jonny is our go-to strategy source for all things DNG. As a former UK-based digital marketing agency owner and current global marketing exec, Jonny's industry knowledge and SEO expertise make him a vital tool for building online brands and successful businesses.
Jonny Birch
Jonny Birch
Often behind the scenes, you’ll find Jonny strategizing business plans for fellow digital nomads as well as for the DNG team. Armed with a laptop and an iced Americano, Jonny is our go-to strategy source for all things DNG. As a former UK-based digital marketing agency owner and current global marketing exec, Jonny's industry knowledge and SEO expertise make him a vital tool for building online brands and successful businesses.

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