Digital nomads seem to be obsessed by cost of living. There’s a million YouTube videos out there made by wannabe Anthony Bourdains, about how you can live off $500 a month in Chiang Mai. To me this lifestyle is not about barely surviving in South East Asia. It’s about freedom and celebrating life.
So how much do you need?
That’s a tricky question because it’s very personal and depends on a couple of things. But I’ll try to answer it in this post and I think the best way to do that is to break it down into bite size chunks. Maybe I’ll throw in some fancy research as well.
Where are you traveling?
If you’re planning on traveling to South East Asia you’ll need less money than if you were to go to the US or Europe for example. Basically your biggest expenses are food and accommodation and it’s cheaper to rent an apartment in Kuala Lumpur than it is to rent a closet in San Francisco.
Same thing on a local level. If you want to stay in the city center or on near the beach, you’ll likely pay more.
Your level of comfort. Survive or thrive?
Some people are just fine with sleeping in hostel dorm rooms and eating cheap street food or canned tuna. Others need more privacy and have higher standards regarding accommodation and what they put in their bodies. (Nothing wrong with street food and canned tuna by the way).
Obviously the higher your standards, the bigger your budget needs to be.
Cost of living as a digital nomad
Of course your cost of living as a digital nomad depends on your level of comfort but may include some extra stuff that’s different depending on your situation. We all need food and shelter but if for example you didn’t sell your house back home, you could have higher expenses.
I would consider these the bare minimum when it comes to expenses:
- Food and groceries
- Utilities such as electricity, gas and water (if not included)
- Phone, internet
- Personal care Public transport costs or renting a vehicle
Now depending on your personal situation you might also have other additional costs such as:
- Coworking space
- Eating out, take away
- Drinking (should probably go under bare minimum)
- Any expenses back home like rent or mortgage
This is how much money you need to be happy according to science
Studies show you can actually have too much money. So there’s a sweet spot when it comes to wealth. Psychologist Andrew T. Jebb and his team from Purdue University analysed the outcome of a worldwide poll called the Gallup World Poll. 1.7 million people from 164 countries participated.
They looked at the responses to questions about life satisfaction and overall well being and found that there’s a magic number for satisfaction when it comes to money. Ofcourse this number varies per country. But if you average out the results you can put a price on happiness.
Are you ready?
This amount is for individuals so for families it would be higher.
Again, this is the global average. Here are the numbers on a more local level:
- $125,000 in Australia
- $105,000 in North America
- $100,000 in Western Europe
- $70,000 in Southeast Asia
- $45,000 in Eastern Europe
- $35,000 in Latin America
What I found pretty funny is that it’s cheaper for men to be happy than it is for women.
This dude sums up the difference between men and women pretty well:
If you’d like to know more, check out the research findings about happiness and income satiation.
$5000 a month is enough for me
By answering the questions above you should be able to come up with a dollar amount that you would need each month in order to live the dream. For me that number is $5000.
1. I don’t want to limit myself to cheap countries
This answers the first question of where I would like to travel and live. If I want to stay in Malaysia (where I am now) I could live comfortably off $1500 a month but if I would like to stay in San Francisco I would need Around $4000 to $5000 a month.
You can find cost of living on websites like Numbeo:
2. I have a medium level of comfort
Privacy and healthy food are important to me in order to stay productive. So I don’t stay in dorm rooms and don’t eat fast food everyday. But I also don’t need a penthouse or to have dinner in a fancy restaurant every night. So I would say my comfort level is medium.
3. I don’t have a lot of other expenses
Since I sold all my shit, including my house, I don’t have any expenses back home. I use public transportation to get around most of the time. But occasionally I’ll rent a vehicle. I don’t go to coworking spaces. So I would say drinking is probably my biggest extra expense.
Remember: it’s not all about the money…
Grab a pen and paper or create a Trello board and start writing down the things YOU need to live comfortable. But remember it’s not all about the money. To me this lifestyle is about freedom. Not about living as cheap as possible in a foreign country.
You don’t want be surviving, you want to be thriving. This to me creates freedom. You can always make more money, but you can never make more time.
Let me know what you think in the comments and share the love by clicking one of those big blue buttons.