3 Ways To Save For Retirement as a Digital Nomad
If you’re a digital nomad, you know that life on the road isn’t always as glamorous as your Instagram account makes it out to be. While the lifestyle certainly gives you more freedom than a traditional 9-5 job, it can also be worrisome. Most digital nomads are contract workers or freelancers. They may not have a steady source of income, and they most likely don’t have company-sponsored benefits like health insurance and a 401(k).
For most digital nomads, life is lived more in the moment, dreaming about the next destination, than it is planning for retirement. But truth be told? It shouldn’t be. If you enjoy traveling, why not start saving for retirement so you can retire young and keep living the nomadic lifestyle?
Here are three ways you can start saving today (regardless of how much you’re making):
1. Become Debt Free
If you don’t have credit card debt or student loans, we applaud you. Go ahead and skip to number two.
Unfortunately, the average American has $38,000 of personal debt (excluding mortgages). Millennials and Gen Z have $42,000 and $22,000 respectively, most of which is from student loans and credit cards. While we wish we could go back and tell our younger selves “don’t get into debt!” if you’re in it, it’s too late. But it’s not too late to get out of it.
Our biggest piece of advice for you is to get out of debt ASAP. With interest rates upwards of 22%, your debt is increasing by the day and the longer it takes the pay it off the more you’ll owe and the less you’ll be able to save.
Start by calling your credit card company and ask if they’ll lower your interest rate. Even lowering it just a few points can help you save. It’s a competitive market and the worst they can say is no.
You can also look at transferring your debt to another credit card that will give you up to 18 months interest free, refinancing your student loans, or getting a personal loan from companies such as SoFi, Earnest, or Lightstream.
2. Set a Budget (And Stick To It)
If you’re truly serious about saving for retirement, you’ll need to understand your spending habits.
Sit down and review your expenses from last year (thankfully, online banking makes this relatively easy). Sort your expenses into various categories such as lodging, transportation, dining out, grocery shopping, entertainment, insurance, and “other”. How much did you spend in each category per month? It may be more than you think. If it’s too daunting to do this for the whole year, try looking at the past month. There are apps for budgeting you can look into for this!
Once you have an idea of how much you spent per category, start looking for areas you can cut back. There will be fixed costs such as cell phone bills and insurance, but for the more frivolous categories try and find areas to save. Are your restaurant bills averaging $400 a month? Start cooking more! Spending a lot on taxis when you could be taking the metro? Learn to love public transportation.
With your expenses laid out in front of you, set a budget for each category. It’s imperative that the budget be realistic otherwise you won’t stick to it. Your budget shouldn’t blow through your entire paycheck, either. In fact, you should have some money leftover.
With your categories and budget in front of you, add two more categories: savings and retirement. This is where that leftover money will go. Savings is what you can dip into should you be presented with any unforeseen expenses or emergencies, and retirement is the category that should remain untouched outside of investments.
Allot a specific amount of money that you can realistically afford to put into savings and retirement each month. If it’s only $50, that’s okay. Just make a plan and stick to it.
Just make sure you stick to your budget and add to your savings and retirement accounts what you promised yourself you would.
3. Pay Yourself First
Remember those two categories we just told you to add to your budget? Savings and retirement? When you get your paycheck, make sure you put the allotted amount into these accounts first. If not, you may be tempted to spend that money on other things.
We keep stressing the word “realistic” for a reason: if you set goals for yourself that are too egregious, you likely won’t stick to them. Thus, if $50 is all you can afford to put into your retirement account right now, that’s fine. Just make sure you keep yourself accountable and actually put that $50 into the account each month.
If you end up getting an extra gig or finding additional ways to save and bring in a bonus $500 one month, that’s great! But try and stick to your original budget and put as much of that into your savings or retirement accounts as well.
When it comes time to retire, you’ll be glad you put as much as possible aside each month rather than spend it on frozen cocktails in a new city.
About the Author
Leigh Kunis is a Top 5 blogger who left NYC two years ago to embrace the digital nomad lifestyle. You can typically find her “somewhere in Europe” writing about travel, digital marketing, and more.