Budgeting | Career & Education | Life | Personal Finance | Article

Digital Nomad Diaries: 4 Huge Mistakes You Want To Avoid To Stay On Budget When Working Overseas

by The Simple Sum | June 12, 2024 | 7 mins read

The traditional office walls have crumbled in recent years, giving way to remote work—a trend accelerated by the pandemic.  

Professionals can now trade in their daily commutes for a chance to log in from locales as varied as Tokyo’s bustling streets to quiet beaches in Bali.  

While remote work offers the ultimate freedom to work anywhere, it also brings its share of financial snares—from unforeseen living costs to the tourist trap of endless exploration. 

As the lines between office and abroad blur, meticulous budget planning isn’t just helpful; it’s necessary.  

Without it, the dream of working in exotic places can quickly morph into a budgetary nightmare.  

As you embark on your own remote work journey, here are four common financial missteps remote workers make and how to sidestep them, ensuring your budget stays as balanced as your work-life.

Mistake #1: Underestimating living costs 

The most common pitfall for remote workers abroad is underestimating the cost of living in their planned destination. 

Many remote workers base their budget on superficial research or the more noticeable costs like rent, often overlooking daily expenses or assuming they will be much cheaper than in Singapore.  

But day-to-day costs can significantly impact your financial health abroad. 

In Southeast Asia, rent, utilities, groceries and local transportation can vary dramatically from one city to another, sometimes higher than expected. 

For example, Bali and Bangkok can be surprisingly expensive, particularly for accommodation and dining. 

What seems like a paradise can quickly turn into a financial drain if not carefully budgeted for. 

Tips to avoid this mistake: 

  1. Deep dive into cost research: When choosing a remote work destination, utilise cost of living calculators, expat forums, and digital nomad blogs to get a realistic picture of everyday expenses in different areas. Websites like Numbeo or Expatistan offer detailed insights into local costs.
  2. Plan for variability: Include a buffer in your budget for unexpected costs such as healthcare, emergencies, or price hikes in local goods and services.
  3. Track and adjust: Once you arrive, keep a close eye on your spending. Use budgeting apps to track expenses and adjust your budget monthly based on real spending patterns.
  4. Live like a local: Embrace local markets and transportation options, which can be significantly cheaper than those aimed at nomads or expats.


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Mistake #2: Not properly managing currency exchange risk 

Heading to Tokyo or chilling in Bali? Don’t make the mistake of assuming your costs will remain stable throughout your stay.  

Exchange rate fluctuations can really mess with your budget especially if you’re earning in Singapore dollars but spending in local currency. 

Japan has been an attractive destination for remote workers lately because the yen is on a downtrend against the SGD (as of April 2024). While you’re getting more bang for your buck right now in Japan, currency trends can reverse unexpectedly. 

If the yen starts appreciating, the same amount of SGD will convert to fewer yen, potentially leading to unexpected expenses that could affect everything from rent payments to daily costs. 

Don’t get caught out with the wrong financial tools, too. Using credit cards with high foreign transaction fees and unfavourable exchange rates can unnecessarily inflate costs. 

Additionally, not planning the right balance between how much money to convert upfront and how much to leave in SGD can lead to either excessive conversion fees or emergency cash withdrawals at high fees.

Tips to avoid this mistake: 

  1. Research credit card options: Find credit cards that offer the best rates and lowest fees for overseas spending. 
  2. Pay ahead: Know you’ll be in town for a while? Paying upfront for fixed expenses like rent allows you to lock in the exchange rate and reduces the risk of price fluctuations affecting your major living costs.
  3. Plan your cash flow: Alongside a well-prepared budget, estimate how much cash you’ll need for daily expenses and convert an adequate amount to avoid frequent, high-fee ATM withdrawals.
  4. Use a multicurrency account: A multicurrency account lets you hold and manage multiple currencies. Monitor exchange rates, convert your cash when rates are favourable and keep it in the account. 
  5. Buffer for fluctuations: Set aside a little extra cash as a buffer for when rates move against you. 

Mistake #3: Living like a tourist 

It’s tempting to slip into vacation mode where every day feels like a holiday in a new city or country. Bali can be a very affordable place to work remotely from but if you’re in the tourist mindset while you’re there, you’ll quickly burn through your budget. 

The tourist mindset is really just lifestyle inflation.  

You might start out thinking you’ll just try one izakaya in Tokyo or venture to Chatuchak only on your first weekend in Bangkok.  

But without realising, you’re dining out every night, taking cabs instead of local transit, and hitting every pricey attraction. It’s fun until your wallet wails for mercy! 

Tips to avoid this mistake: 

  1. Set a fun budget: Decide how much you’re willing to spend on leisure each month and stick to it. And remember, fun doesn’t always have to mean fancy.
  2. Embrace local life: Swap tourist hotspots for local hangouts. Not only are they cheaper, but they’re also an authentic slice of everyday life. 
  3. Look for free fun: Every city has its freebies. Enjoy your downtime with free museum days, public festivals, picnics in public parks, or walks on hiking trails. These activities offer great experiences without the price tag.
  4. Track your spending: Regularly review your spending. If you’re overdoing it, you’ll catch it early and can adjust before it’s too late.


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Mistake #4: Failing to factor taxes, emergencies and other unforeseen travel costs

Living the remote dream of hopping from Bali to Bangkok and then Ho Chi Minh sounds epic, right? Amidst all that excitement, it’s easy to forget the less flashy but super important stuff like taxes, emergency funds, visas, and insurance. 

A rookie remote working mistake is only focusing on the immediate costs of living and working abroad—rent, food, and entertainment.  

If you’re not properly prepared, unexpected costs like a sudden tax bill, renewing your visa, or a trip to the hospital can throw an expensive wrench in your remote work plans.

For example, you’ll need to be aware of visa regulations – how much would you need to earn to qualify for a digital nomad visa in, say, South Korea?  

You’ll also need to be conscious of your tax liabilities in your destination country and back home in Singapore.  

And the last thing you want is to catch a nasty bug, need medical help, and face a hefty bill because, oops, you skipped on insurance. 

Tips to avoid this mistake: 

  1. Understand your taxes: Research the tax laws for both your home country and the country you are staying in. You might need to set aside funds for dual taxation unless there is a treaty in place that provides relief.
  2. Visa check: Know what visas you’re eligible for, what documents you need to provide, what it costs, and when to renew. Some visas require proof of financial stability or upfront payments that need to be factored into your budget.
  3. Invest in health insurance: Opt for international health insurance that covers you adequately for the countries you’re planning to work in. Check if it provides for medical evacuation in case of serious health issues.
  4. Create an emergency fund: This is your “Oh no!” fund. Aim to stash away enough cash to cover about three to six months of living expenses. This fund should cover unexpected costs like emergency flights home or sudden medical expenses. 

Working remotely overseas offers an incredible chance to blend your lifestyle aspirations with your career goals. 

But make no mistake, it has its unique set of financial challenges. Whether it’s underestimating living costs in vibrant cities like Tokyo, dealing with fluctuating exchange rates in Bali, avoiding the tourist spending traps in Seoul, or planning for unexpected costs like taxes and health emergencies—the key is preparation and awareness. 

Remember, the goal isn’t just to survive in a different city but to thrive without financial worries dragging you down. By steering clear of these common pitfalls, you can enjoy your remote working adventure to the fullest.