Simple Budgeting for Digital Nomads
In Bangladesh, where a job paying a salary of more than USD $200 per month is hard to come by, nothing rings more true than the importance of budgeting and living very minimal. In the world of finance it is often said, you must save more or bring in more (sell or make more).
Before you officially start your business, one of the first things you must do is take an inventory on your finances. It is critical that you have a personal budget or financial plan which outlines the amount of money you will spend on expenses every month. A great budget will also factor in the amount you need to pay for taxes; repayment of your current debts; and an emergency fund or ‘rainy day’ savings as they say in America.
Many individuals have no idea where or how they spend most of their money. It is more common among households where you rely on your next check to get by and in most cases it is already spent before you receive it. How many times have you taken a few dollars from the bank machine and it seems like only a few days later it’s all gone. Even worse, a lot of times you can’t remember how you spent the cash, and most of it was likely wasted on unessential and impulse items. A budget or using an app such as YNAB (you need a budget) will help prevent this from occurring by making you accountable for the cash that you spend.
Here are a few ways to cut down on unnecessary spending.
Use a non-profit debt management company (U.S.).
In the United States where personal consumer debt is high, non-profit organizations exist that help you consolidate your debt. These debt management non profits help you to consolidate a manageable monthly payment based on your income; minimize or eliminate interest; stop harassing debt collection calls; and rebuild your credit. You do not have to pay fees upfront to use them but they do add an extremely minimal amount to your payment each month to cover postage and their overhead.
Minimize Your Vices.
Will power and self-discipline is tested the greatest when you decide to give up or cut back on some of your favorite vices such as coffee, cigarettes and alcohol. If you put into savings 4 dollars a day you’ve spent on that vice, the cash would grow in 30 years at five percent interest to $100,000.
Make food at home.
Pack your lunch and prepare your dinner at home rather than eating out. This will easily save USD $3 to $20 per day depending on where in the world you live.
When in doubt…
Whenever you are tempted to buy anything ask yourself 3 times “do I really need to have this NOW?” Chances are your quality of life would be better without it or at any rate the same.
Know the power of compounding interest.
Basically, if you start saving when you’re young (even if it is just a few dollars per week), time will be on your side. When you’re ready to retire from working in twenty to thirty years, your cash will be earning some severe interest.
Learn to live just below your means.
You don’t have to be super frugal and cheap. It just teaches you to be more disciplined with your money and not be stressed out if you are operating from a minimal income and budget. Outline your budget and go one step below what you have to get by with. Rather than a 2 week vacation, go for a 10 day vacation enjoy the other 4 days at home while you make money to stay at home and relax. Put the rest aside in the bank!