Moving forward with location independence may seem daunting, but it's easier than you think.
There is a lot of info about the options that digital nomads and remote workers have once they are location-independent and seeking a country or a community to join. But what about if you have never been a remote worker or digital nomad and want to take the first step?
In this post, we will go over various strategic and administrative topics that you need to think about to become a digital nomad! It's not as complicated as you think.
What is a digital nomad and why do you want to be one?
A digital nomad is someone who can work online, and therefore does not need to be in a physical office. A digital nomad is similar to a remote worker, in the sense that remote work is work that can be done anywhere (not just at the physical office).
Not all remote workers are digital nomads. Remote workers may just be people who work in their bedroom in the same city as their company headquarters and don't move around or travel anywhere in particular.
Digital nomads, specifically, are people who use the flexibility of remote work to travel and explore lifestyles in other countries. Within this category of "nomad life", there is also an emerging category called "slo-mad life" with a focus on going slow and staying in one place at a time.
Pros and cons of being a digital nomad
There are pros and cons to the digital nomad lifestyle, without a doubt. Some of the pros might be obvious, but let's a few of the big ones anyway to see why someone might work and travel remotely:
Pros of being a digital nomad
- First, having the flexibility to live wherever you want, or wherever you can get a digital nomad visa.
- The ability to save money by reducing your commute costs in a world of rising gas prices and food prices
- The opportunity to experience new cultures, pursue certain hobbies, and make new friends
- Pursue the type of weather you want to live in
- Grow wealth faster, by reducing expenses in areas with low cost of living and/or low or zero income tax rates
- Set your own daily and weekly schedule to organize your time how you want
- Be closer to friends and family that are important to you
And some of the downsides:
Cons of being a digital nomad
- Moving constantly may disrupt a sense of being settled
- You may need to learn the customs, culture, taxation, and administration norms of new countries you are not familiar with
- You may need to work to find new friends, routines, and habits that make you happy after the novelty of travel wears off
- You may encounter stints where you lack either privacy, stability, or community
- There are only certain types of careers that are fully digital, and yours may not fit the perfect definition of a remote-friendly occupation
Preparing for location independence by reducing ties to your last location
Location-independence means that you may be away from the current state, province, or region where you have been a tax resident, member of a health care system, car driver, and much more for a long time. Some aspects of administering your life at home (like changing the jurisdiction of your driver's license) may be so second nature that you may never have had to think about changing them.
If you are planning to switch home base locations (like spending 6 months in Costa Rica or Croatia), there are certain things you may want to wind down in your home area.
- If you have physical items that need to be stored, you may want to put them in a self-storage unit
- If you have credit card debt, you may want to pay it down locally before you leave
- If you have longer-term debt, like a student loan, you may want to find a way to set up 6-12 months of auto-payments so you are not worrying about hitting the pay button while you are traveling
- You may want to reduce your TV, gym, and local community memberships to cut down on things you may not use while traveling
Identify your skills and possible sources of income
This is where there is not a one-size-fits-all solution and it is important to call out a variety of different tactics here. Several distinct situations could support your digital nomad lifestyle, and not everyone will be in the same situation.
Here are a few common situations:
- You have an employment job that allows for remote work as an official policy, like thousands of employers who are going fully remote or to a hybrid model
- You have an employment job that is not remote, and you are working at the office, but you think you can negotiate a remote work situation with your boss.
- You are an established freelancer or business owner with a digital business that you believe you can continue to run outside of your home country
- You are an aspiring freelancer or business owner, with aspirations to leave your current situation and break free of your job — but you don't have the income yet
For situation #4, you will have the most legwork to do — but that doesn't mean it needs to be scary or difficult. There are a variety of jobs you could transition to that don't take years of education or retraining.
If you aspire to be a "solopreneur", and have any of the following skills, you can start by reaching out to find potential clients, or create a short product you think you can sell. This type of entrepreneurship, and how to get it off the ground, is a topic for another article, but suffice to say you can look at the following jobs as ones that be done fully remotely
- SEO and Content Marketing
- Virtual Assistant
- Software Developer
- Customer Service
- Language Tutoring
- Tutoring in other skills
- Social Media Management
- Quality Assurance
And much, much more...
Whatever your situation is, if you are employed, it is best not to hide where you are working from when you switch to location-independence. If your employer has a remote work policy that is global, you should inform HR which country you plan to go to on a remote work visa so they can plan their tax liabilities as an employer.
If you are working for a company, you may find out that your company's remote work policy isn't as expansive as you thought (maybe a US employee can only work within the US, remotely, and not actually in a different country).
If you are a freelancer or solopreneur, you will have more flexibility to just "up and go" but you will still want to think about income tax and banking needs while abroad.
If you are looking for a new remote job, try some of these job boards:
Income Tax and Digital Nomads
Please note that Wayviator is not an accounting firm and we are not providing financial or legal advice.
Income tax is a complicated subject and your particular strategy will differ depending on your citizenship or residence.
US citizens in particular should be aware that moving abroad does not allow you to magically be outside of the IRS' claim to your tax on worldwide income. Below a certain income threshold, you will likely have some lessening of your tax responsibility because of the Foreign Earned Income Exclusion tax credit. Consult a bookkeeper, accountant, or consultant like Heavnn before you plan your trip.
Each country will have different requirements for banking. The main point regarding banking is that if you don't want to be hit with foreign exchange fees, and if you are planning to be away from your home country for a significant amount of time, you will want to think about short-term and medium-term solutions to cash, investing and banking needs.
Things to think about include:
- Opening up a basic chequing account in your destination country
- Which investments accounts can stay as they are in your home country and which ones should be moved or changed if you are leaving the country
- How to move funds between currencies and between countries. We strongly recommend checking out wise.com for a global debit Mastercard product, the ability to hold funds in multiple currencies, and virtual banking details in a variety of countries and currencies.
- If you do have domestic credit cards you are going to keep, check on their foreign exchange fees and foreign purchase fees. Consider modifying your credit card to a product that is better for travelers, or calling to negotiate your rates once you explain you will be using it abroad
Health and travel insurance
This has got to be one of the biggest questions that comes up for people considering the digital nomad lifestyle — how will I be covered for health insurance?
We have some opinions on this, the first of which is a huge no-no: If you are leaving for months at a time, don't assume that the typical emergency vacation/travel insurance from your local private insurer in the USA/Canada (or public government health plan, in many other countries) will simply give you regular health coverage abroad.
We recommend that you check out health insurance specifically tailored for traveling abroad, like Insured Nomads, for example. There are new companies like Insured Nomads who are specifically offering global plans that can provide actual, local health care coverage abroad — with options that expand the scope to lost items, political unrest, cancellations, and other forms of trip insurance.
Choosing a work location
There are a couple of ways you can approach choosing the location you would like to go to. You may have created a mental shortlist in your head over the years of dream countries that you would like to go to. Maybe it's Thailand, Costa Rica, Italy, or Croatia!
You should let your passion and sense of what will make you happy drive your decision, but there are a few other factors to consider:
Here's the first question you need to ask yourself: how am I going to do this legally? There are lots of ways to be a legal digital nomad.
Before the pandemic, there were a lot of people traveling and working as digital nomads in a grey zone. They would enter countries on tourist visas that technically forbid work, and then quietly work while "on vacation" because the authorities weren't paying too close attention, and most people were still paying taxes back home.
Given the availability of legal remote work visas, we strongly do not suggest that you try to wing it.
Take the time to learn which locations offer remote work visas and go through the process of securing a digital nomad or remote work visa yourself (or get someone to help you).
Once you've seen the landscape of which countries offer legal remote work visas, you can start to narrow down your search by weather, community, geography, language, and opportunities for amenities, cultural opportunities, and adventures that are important to you.
Confirm your time zone and set expectations with colleagues
Once you know where you will be going, you will want to make a list of people you need to communicate with about your possible new time zone. If you are heading to South America from North America, or to Europe from Africa — for instance — you may not have much to say as you will be in a similar time zone as you were before.
But if you are offset considerably, you will want to adjust expectations and communicate proactively with anyone you work with (teammate, customer, client) so they understand how they can communicate with you.
As you begin your digital nomad lifestyle, you may not want to set a precedent where you tell every person you work with exactly where you are. You are virtual and free! Nevertheless, at least communicating which window of time you are available for is good proactive communication.
There is also an emerging team communication philosophy called "async" — where the fundamental assumption is that no one actually needs to have set meetings at scheduled times— where instant messaging and collaboration software can allow work to get done without synchronous communication. This philosophy may take off or it may remain a niche — in any event, you should probably still communicate your expectations.
Prepare for departure
You probably can't or don't want to completely leave your old life behind, so if you have important mail and belongings you still want to take care of, look into getting a storage locker and mail forwarding service. Virtual mail forwarding services like Earth Class Mail can scan your mail for you, so you can read it online from anywhere in the world.