Nomad budgeting

Today I want to cover one of the most important topics for nomads, and really for everyone.

Budgeting is not optional, and in fact is essential, to having a successful and long-term nomadic life.

Learn from pre-nomad spending

Before nomad life, maybe you followed a budget, or maybe it was controlled chaos. One thing is sure, it is easier to look back at spending than to predict spending.

Use your past spending to analyze honestly what you spend money on. Categorize it, break it down, and don't sugar-coat it. You need to know the truth.

Ideally, include 12 months of spending so you include all of those annual costs in your evaluation.

If you plan to sell everything

There are two budget categories that most directly impact your nomad budget when you plan to sell everything: housing and transportation.

For housing, leave nothing out. Include mortgage/rent property tax, utilities, termite inspection, AC/Heating maintenance/replacement, roof replacement at an annualized rate, appliance replacement, etc. The list should be long.

For each item, ask yourself, “Is this an expense that I would directly have to pay if I was in an AirBnB or Hotel?” If the answer is No, add it to your housing expense total.

For the starter-simple-math, this annualized cost divided by 12 is your monthly AirBnB/Hotel budget. The budget will likely change as you finish a complete nomad budget, but this is back-of-the-napkin visibility into what you may be looking at. It is enough to start checking AirBnB prices for 4 weeks at a time at different times of the year to see how many places fit your housing budget.

Same for the cars. Include car payments, tags, registration, regular maintenance, allowance for occasional maintenance, gas, and any other expenses that apply to your transportation. In a city, that might mean a monthly metro pass, or something similar.

Add it all up, and that is your starter budget for transportation, covering things like flights, trains, and local transport.

If you plan to rent out your house

I am not going to give advice or details on renting out your home/condo, but if you do, just consider that your net profit per month is all you can really budget for in your nomad budget.

Long-term rental? This is a pretty straight forward calculation for rough-math, with a buffer for vacancy rate. Remember that all of those expenses you added up earlier all apply, minus the few things the renter pays directly like utilities.

Renting as AirBnB? I would consider a large emergency fund buffer until you have a couple of years experience with actual profit rates.

Either way, your profit will not be as large as replacing your total expenses by selling, so you may need to find money from other expense categories, or target lower cost housing options based on projected profits.

The goal here is to be realistic. This is not a time for optimism.

Health care and insurance

Depending on your age, health, and activities, this can be a loaded topic.

I cannot address it all, but will throw out a good starting place.

If you have health insurance in your home country and plan to have your regular check-up visits in that country, you may just need travel insurance while abroad.

Safetywing is a good option for simple coverage if you fall ill or have an injury while traveling. It also includes things like emergency evacuation, lost luggage coverage, and travel interruption insurance.

If you don't have any health insurance and plan to spend most of your time abroad, a full health plan like Cigna Global might be what you need.

Consider both what you need when “home” and when abroad to find the right mix of coverage.

Other stuff

The rest of your budget should be suited to your life and preferences. Just like any normal non-nomad budget.

Remember that you are not on vacation, but are simply living in different countries and cities.

That said, if you normally have a vacation budget, continue to have one as a nomad.

We recently spent two day trips in Brussels and Ghent from our 4 week stay in Antwerp, Belgium. The month before, we spent two days and one night in Paris from our home base in Lille, France.

The secret is in the proximity. You spend far less on a Parisian vacation taking the train from Lille than flying in from the US. And day trips cost a train ride and maybe a little more in food and drink than a normal day, but not much.

Final thoughts

I know I did not answer every question, or address every budget concern, but I hope this gives you a way to start looking at your current spending, and take practical steps to see “what if?”

If you have questions about budgeting or other aspects of nomad life, please post a comment.

Remember that planning and dreaming are free.

Until next time, have a good one.