The dream of working from anywhere — waking up in Bali, working from a café in Lisbon, and planning your next day while watching the sunset in Mexico can quickly be tarnished when the realities of being financially independent cause additional burdens.
Switching between currencies, making an international transfer, and trying to do something for yourself with your money, can all take a toll on you if you do not have proper knowledge. Here are a few tips to help you stay financially stable on the move and potentially create wealth while leading the digital nomad lifestyle.
- Learn How Currency Risk Will Affect Your Lifestyle
Will you be paid in a currency other than the one that you are spending? Anytime you are paid in one currency and spend another, you are exposed to some risk. For example, if you earn in US dollars but live where euros are being used, and then all of a sudden the US dollar drops in value, then you just lost your purchasing power.
It is wise for nomads to regularly examine exchange rate trends in the currency or currencies that they use most frequently. Often times, even small changes in exchange rates can create a variance in your monthly budget, especially if you are on the move for a long period in the same geographic area. Currency risk is more than just having to pay an exchange fee on your money. It can decide whether your savings will grow or decline while traveling
- Opening Multi Currency Accounts
Multi-currency accounts are a crucial tool for any digital nomad. They provide you with a place to hold money or convert to other currencies without inflated fees or bad rates.
Services like Wise, Revolut, and Payoneer allow you to receive money in other currencies, virtually spend the currency locally with little conversion cost, and access it through the same app.
This helps you avoid dependency on banks as the only option for cross-border finances. If you do freelance or run a remote business, getting paid directly into a multi-currency account should save you money and time.
- Hedge Against Currency Volatility
While most individuals just accept fluctuations in the value of their currency, sophisticated travelers employ hedging tactics that can help protect their income from exchange rate changes. One uncomplicated way to hedge is to simply keep some money in the currencies in which you spend often.
If, for example, you know you will be spending months in Europe, you might consider keeping some euros along with your dollars in a bank account. That way, if the dollar falls, your day-to-day budget doesn’t take as much of a hit.
More sophisticated travelers use investment platforms to take part in forex trading or invest in foreign assets that can appreciate from changing exchange rates. When using a trustworthy platform like Axi, you can access global markets and foreign currency exposure with near professional grade tools while traveling.
- Use Global Investing Opportunities
Traveling allows you to witness global market activity firsthand. Whether it is real estate growth in developing areas, or new opportunities for emerging startups, a digital nomad will spot that new opportunity before others.
Today’s world of online trading platforms makes it easy to get into the market internationally and invest with just a small amount. From stocks, ETFs and commodities, to cryptocurrencies, global investments help to further diversify risk and resiliency.
Consider researching the local tax rules or laws on investing as a foreigner before investing. There are often local tax rules for foreigners. Using an investment broker from an international firm, or a financial advisor who specializes in expatriate or nomad finance can help you invest while being compliant with local regulations.
Endnote
Being a digital nomad is about freedom not financial chaos. With the above tips, you can combine adventure and financial stability. With some planning, your passport can serve as your adventure map as well as a map to financial freedom.
By Gregory O'NeillGreg is a modern-day explorer with an insatiable love for travel. His passion for adventure has led him to far-flung corners of the world, where he immerses himself in diverse cultures and experiences. Greg's zest for life is epitomized by a continuous pursuit of new horizons and captivating journeys.
