Whether you’re already living the hobo lifestyle, aspiring to adopt it, or simply trying to make travel a more significant part of your life, sooner or later, you’re going to have to think about money. When your home is the road, managing your finances—well, let’s be honest, managing life in general—can present more than the average number of challenges. From simple tasks like opening a checking account to weightier decisions like finding a health plan that suits your needs, moving around makes things more complicated. Think about it. Financial institutions all want to know where you live, right? If the answer is “inside my Winnebago,” you may encounter a few raised eyebrows.
“Finances” is a catch-all word and people may disagree on what it actually catches. So for argument’s sake, let’s agree on a fairly simple definition. When we speak of finances, at least for the duration of this article, we’re talking about four things: your income, your living expenses, your savings, and the debt you’re carrying. How you manage each of these aspects of your finances can support or, oftentimes, sink your vagabond lifestyle. Understanding how they intertwine is key to building a financial plan that lets you live your dreams.
Income: The First Variable in the Equation
People who work for someone else can usually take a two-week vacation without it having a tremendous impact on their income. Paid time off is a pretty standard employee benefit. But full-time travelers are much more likely to be self-employed. Sure, they can take a paid vacation, but they’ll be paying themselves. Other full-time travelers take short-term jobs in series as they move from place to place and don’t accrue paid vacation time. Either way, maintaining a steady income can be a substantial challenge for nomads. But millions of people have risen to it. How did they do it?
For one thing, they marshaled quite a bit of discipline. When you work for yourself, no boss is overseeing your hours. It’s all on you. The sun may be calling you to the beach, the snow may be calling you to the slopes, but you have to put in the time to keep the money flowing in. If discipline isn’t your strong suit, take heart. It’s a quality you can acquire. Make a to-do list every day. Schedule short breaks—everybody needs them—and stick to them. There are hundreds of time management apps on the market that can help you establish and maintain a routine.
Successful nomads learn to be very resourceful. If you don’t have your own business, finding work in each destination you visit will take a fair amount of footwork. Nowadays, you can do that footwork with your fingers by using digital job search sites. I once received some very sage advice: never quit a job before you have another one. The corollary for full-time travelers might be something like this: don’t move until you find a job in your next destination. But I’m pretty conservative when it comes to finances. Your mileage may vary. Bear in mind that you may need to cobble together several income streams to meet your expenses.
Step Two: Focus on Frugality
When it comes to building a sound financial plan, here’s a maxim to live by: pay less and get more. It’s a good idea to bear that rule in mind before you launch your nomad experience. You may want to opt for a low-cost flight even if it’s less convenient. That can save you hundreds of dollars. If your dream itinerary features outdoor adventures, shop for high-quality, gently-used camping and hiking equipment rather than paying a premium for new gear. Often the best housing deals aren’t advertised online. You may be able to find cheaper digs once you’re on the ground in your destination. So rather than making a long-term lodging commitment before you depart, consider booking an Airbnb for a few days. That will give you time to explore less expensive living arrangements once you arrive. There are countless other ways to limit your expenses while traveling, from eating at home to using public transportation to choosing free activities like the museum and national park visits.
It’s also important to shield yourself from surprise expenses. Unforeseen medical expenses can be devastating no matter where you’re living, but a sudden illness or accident can be even more costly when you’re traveling. It’s critical to have adequate health insurance in place before you move abroad. For those of us who have no home address, travel insurance can be the best option. The best travel insurance plans include coverage for all kinds of medical expenses, from doctor’s visits for minor illnesses to surgery and medical transport.
Step Three: Be Sure You Have Adequate Savings
Financial experts recommend that we always have at least two months’ living expenses stashed away in savings. I’d argue that full-time travelers need more like six months’ worth, due to the uncertainties that come with living on the road. But in the US, nearly 25% of the population has no emergency savings whatsoever. Where do you stand on the savings continuum? Building a healthy savings account before you begin to travel long-term is one way to boost your chances of having a great travel experience. Many experienced travelers get in the habit of saving money exclusively for travel. You might want to set up a separate account for that purpose, too.
The Letter D: Debt Can Be Disastrous
Red alert. Full stop. No matter how powerful your longing may be, never, ever go into debt to travel. The temptation may be great—particularly when travel credit card companies dangle introductory offers via email and targeted online advertising. The perks that travel credit cards can be terrific. Who wouldn’t love a free companion ticket every year and cash-back on dining out and other purchases? But those offers can come with a lot of limits and travel credit card interest rates are typically sky-high.
You should also be certain that you’re able to manage any debt you’ve already accumulated before you become a full-time traveler. How can you be sure? Lenders use a measure called the debt-to-income ratio to decide whether you’re a credit risk. You can use it, too, to determine whether you’re in good enough financial shape to take on the nomad lifestyle. You can figure it out by using a debt-to-income calculator. If your debt is equal to more than 35% of your income, it’s best to stay home and pay down your debt before you take off for parts unknown.
Stay in the Safety Zone
Let’s see. Guaranteeing a source of income. Limiting your expenses. Having a travel nest egg. Keeping debt in check. Maintaining discipline and control of your finances. That may sound like a tall order. But if you want to be a nomad, you’ll have to dig deep. Many challenges await you. But they’re offset by the rewards of seeing the world and discovering how much strength you really have. You may be surprised, indeed.
Related read: Unexpected Travel Expenses and How to Avoid Them
About the Author
Susan Doktor is a journalist, business strategist, and principal at Branddoktor. She writes on a wide range of topics, including finance, technology, travel, and government affairs. Follow her on Twitter @branddoktor.