The lockdowns that were forced upon the world when dealing with the pandemic put the concept of remote in the spotlight.
About 25 – 30% of the American workforce were at some stage working from home during the pandemic. However, the idea of remote working is not new. Digital nomads have been working their way around the world for at least a decade now.
In this post, we will look at what a digital nomad is and why this unusual life and career path has become so appealing for so many.
We will also discuss one of the most common issues freelancers and digital nomads face: moving your bank account abroad.
As always, because we love to dish out some practical advice, we will also look at how digital nomads and freelancers can manage their finances abroad.
Among the things we will discuss:
- The best way to transfer your money abroad.
- How to transfer money between two bank accounts.
- How to find the best foreign exchange rates.
- We will offer some insight on how to transfer money from the USA to the UK, as many freelancers routinely do.
What Is a Digital Nomad?
Simply put, a digital nomad is somebody who works remotely whilst traveling the world. They have no particular base and instead move around between countries.
Digital Nomads are typically either self-employed freelancers or online business owners. A few classic examples of digital nomad jobs include content writing, web design, and remote teaching.
Note that whilst Digital Nomads are (usually) freelancers, not all freelancers living abroad are digital nomads. Rather, some online freelancers have settled in as ex-pats in a foreign country. However, this is the only real difference between the two.
Why Become a Digital Nomad or Freelancer?
There are many reasons people choose to become digital nomads or freelancers. A common motivating factor is a love for travel or a desire to experience life living in a different country.
Another huge draw is that living abroad in India, Southeast Asia or Latin America is a lot cheaper than living in the “West”. Therefore, living abroad can offer a much higher standard of living for them with what they earn.
Digital nomad and freelancer hubs like Bangkok are ideal destinations for aspiring remote workers to network, make valuable contacts, and find new clients.
Finally, sometimes living and working abroad is as much a necessity as it is a choice.
The rising costs of living in the West have rendered it almost impossible for some of us to live there. Freelancers working in the creative industries where pay is frustratingly low are often simply unable to meet even rent costs in New York, Melbourne, or London.
Moving a Bank Account Abroad Or Transferring Money Between Two Bank Accounts
If you have ever traveled before, then you presumably know that it costs money whenever you use your bank card or withdraw cash abroad.
If you are taking a two-week trip, these costs are bearable. But when you live abroad, regular foreign banking costs are just not sustainable. Therefore, all aspiring digital nomads and freelancers need to be savvy about banking.
For a settled or semi-settled freelancer, opening a foreign bank account in their adopted country may provide the perfect solution – at least for managing day-to-day expenditure.
However, in some cases, opening a bank account as a foreigner can be very onerous, especially for digital nomads and freelancers who are not employed locally. They may not even be in the country on a visa that permits them to work.
Opening a bank account in an adopted country may also pose some issues to some when collecting payments from their clients.
Getting Paid as a Digital Nomad or Freelancer
Digital nomads and freelancers usually work with clients from all over the world.
Many freelancers (regardless of their nationality or where they live) quote their prices and insist on being paid in US dollars, even if it means dealing with the conversion from USD into their currency. This is because the USD is globally recognized, not to mention it is a stable currency and is simply good for business.
The Best Way to Send or Transfer Money From the USA to the UK
It is possible to open accounts with multiple online banks or money transfer specialists.
For example, if a British freelancer has a US-based client, then they could find out which provider offers the best USA-UK rates and open an account with them. This is for receiving USD and transferring money from the USA to the UK. But then they could still use a different provider for receiving payments in other currencies.
Still, whilst a digital nomad or freelancer can specify that they want to be paid in a particular currency, this is not always possible and some clients will insist on paying in Euros, Pounds, or any other world currency.
Finding The Best Foreign Exchange Rates
Getting paid in different currencies by different clients can sometimes prove challenging.
First, fluctuations in global forex rates mean the amount earned can change in real terms drastically. We also need to factor in the transaction fees and forex mark-ups when we exchange a foreign currency into our own bank account’s main currency.
These are simply the realities of doing business globally, and the best you can do is mitigate these costs. One thing that any digital nomad or freelancer can do is shop around to find a good money transfer service provider for receiving client payments.
Many of these providers now also offer bank cards, free foreign ATM withdrawal, and even multi-currency accounts. So, you can also use it as a de facto bank account for both getting paid by clients, paying bills, and withdrawing costs.
There are a couple of other world banking alternatives that digital nomads and freelancers can consider.
One option is to use an e-wallet to manage day-to-day expenditure. E-wallets are becoming increasingly acceptable and even small, informal businesses are accepting them now.
E-wallets can be opened in multiple currencies, so an American living in Chiang Mai could create an e-wallet in Thai Baht and use it to pay for meals and groceries in Thailand, cutting down on banking costs.
That said, there is still likely to be a transaction and forex charge for the initial funding of the wallet and sometimes it may erode the savings that using an e-wallet can offer.
Another outlying option is cryptocurrency.
Digital nomads and freelancers were amongst the earliest champions of Bitcoin. So, they are close to blockchain technology, have crypto accounts, and may well accept payment in Bitcoin, Etherium, or ‘stable coins’ like USDT.
While there are always “gas fees” for moving cryptocurrencies, they can prove cheaper than banking wire fees. Quoting in Bitcoin also means there are no forex issues to contend with.
Final Thoughts on The Best Way to Transfer Money Abroad
Working and living as a digital nomad or freelancer is incredibly exciting. Life-changing, even.
There are many challenges, but at least now we know how to save money on international banking costs. Whether we are looking to transfer money abroad or transfer money between two bank accounts, there are many options out there.
Just remember that the best way to transfer money abroad is not to rely solely on banks, but to look for alternatives and to shop around for the lowest transaction fees and the best foreign exchange rates.