Finances FYI Presented by JPMorgan Chase
Imagine waking up to a sunrise across the Grand Cayon one week, surfing in the Southern California Pacific waters after a few hours of work the next week, and ending the month sampling coffees in cafes throughout Seattle. A lifestyle like this is possible as a digital nomad. But how do you take your work on the road while keeping your finances well-managed and secure?
This guide provides a roadmap for financial security and wellness no matter where your travels take you.
What Is a Digital Nomad?
A digital nomad leverages technology to work remotely and live a location-independent lifestyle. Some digital nomads are constantly on the move, while others prefer to stay in one place for weeks or months before moving on. Many digital nomads embrace minimalism and pare down their belongings to just the essentials to make it easier to pack and unpack from place to place.
Steps to Financial Well-Being as a Digital Nomad
1. Understand Your Costs
Life on the road comes with new expenses that you need to figure into your budget. An important factor is whether you will travel abroad or stay in the U.S. Will you get from place to place by car, RV, or airplane? Finally, consider the cost of living in each area, as rents, groceries, gas, and other expenses can vary significantly.
When calculating your expenses, consider the following:
- Travel, including airfare, gas, car rentals, and travel to and from airports.
- Housing, including security deposits, cleaning fees, and utilities.
- Work-related expenses, including internet and software subscriptions.
- Health and travel insurance
- International travel expenses, including Visa applications, SIM cards, and an international wireless plan.
- Banking ATM and other fees
2. Select a Bank that Meets Your Needs
One of your first steps is choosing a bank that supports your nomadic lifestyle. Key considerations include:
- Fees for foreign exchanges, transactions, or ATM withdrawals
- Available currencies and global accessibility
- Mobile access
- Travel perks or rewards
Look for banks that are friendly to travelers who need to use multiple currencies and that will alert you when exchange rates change or allow you to withdraw cash with no or limited fees. Banks with good customer service, no transfer fees, or no international transaction fees are also excellent choices.
3. Maintain Investment Accounts
If you have been working diligently to save for retirement, you don’t want to lose momentum toward your long-term investment goals while you travel. One easy solution is to set up automatic deposits into your investment account. Make your financial advisor aware of your plans so they can monitor your investments, ensure you are taking required withdrawals, and know how to contact you.
4. Understand Tax Implications and Other Requirements
Some countries require you to pay taxes if you reside there for a certain time. Do your research and plan to move before you reach that residency time or understand the financial obligations. You may also need work visas depending on the country and your length of stay. Here are 20 countries with remote work visas.
FBAR and FATCA are forms you may be required to file if you have money in foreign banks or assets abroad. Requirements for these are based on the amount of money you have in bank accounts abroad, annual income, total assets, and assets abroad. If eligible and you follow the guidelines, you can lessen the tax burden by claiming the Foreign Earned Income Exclusion (FEIE) when you file your U.S. tax return.
You may want to work with a financial advisor and a Certified Public Accountant (CPA) to ensure you stay in compliance with U.S. tax laws.
5. Ensure Secure Access to Accounts
Protecting your financial information while traveling should be a top priority. The last thing you want is to lose access to your accounts or have them wiped out when you are far from home. To do this, avoid making financial transactions and logging into these accounts from public WIFI networks. Use your mobile data or a Virtual Private Network (VPN) for secure access.
Keep your account numbers and contact information in a safe place in case your wallet is lost or stolen. By regularly monitoring your accounts, you can be ready to address any issues immediately.
Living the digital nomad style takes some planning, especially when protecting your financial well-being. With these tips, you can enjoy the rewards of your new lifestyle and rest assured that your money is well-managed and safe.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
