Is the digital nomad lifestyle feasible for you?

More and more people are looking for more freedom and a cheaper life abroad

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The digital nomad lifestyle is the envy of many. Who doesn’t love the idea of ​​flying to a new destination to work remotely by the beach, with a laptop on one side and a coconut on the other?

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However, looks can be deceiving and being a digital nomad isn’t necessarily as easy or as lucrative as some might think. So, for those wondering about the financial feasibility of the digital nomad lifestyle, here’s what you need to know.

What is a digital nomad?

A digital nomad is someone who earns income by working remotely online. This allows them to work from anywhere in the world without the need for a fixed location. As such, digital nomads often move around quite a bit, without having strong ties to a specific location.

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An estimated 38 million people live the digital nomad lifestyle.

Some of the most popular destinations for digital nomads include:

  • Costa Rica
  • Czech republic
  • dubai
  • Estonia
  • Georgia
  • Malta
  • Mexico
  • Greece
  • Croatia
  • Portugal

Earning potential

One of the biggest appeals of the digital nomad lifestyle is that you can choose to stay in destinations where the cost of living is much lower than in Canada. For some, this represents a great opportunity to save money for the future. For others, it’s a way to live a more luxurious lifestyle than they could afford at home.

We often associate the idea of ​​being a digital nomad and being able to travel the world with financial success. However, this is not always the case. Some digital nomads may not earn enough to earn a decent income in Canada. That’s why they can choose places like Thailand, Mexico or Bali, where the cost of living is considerably cheaper.

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The earning potential of being a digital nomad depends on your income and where you choose to base yourself while you travel and work. You can earn an average salary and choose to live in a place with a low cost of living, which saves you a lot of money. Or you can earn an above-average salary and choose to live a simpler life in one of the most expensive cities in the world. Ultimately, it depends on what you are looking to get out of this lifestyle.

What is its impact on retirement savings and long-term investments?

The status of your retirement savings and investments in Canada will depend on whether you are resident or non-resident. According to the Government of Canada, you must have been in Canada for at least 730 days in the past five years to maintain your permanent resident status. These days do not need to be consecutive.

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If you lose your permanent residence, long-term investments in Canada become tricky. For example, if you have a TFSA, the year you leave will be the last time you will have contribution room. If you continue to contribute as a non-resident, you will have to pay a penalty of 1% per month on these contributions. For RRSPs, you can continue contributing until you leave, but only if you continue to have a Canadian source of income. If you have no employment income from Canada, you will lose RRSP contribution room.

It’s also not as easy as it used to be to get non-resident accounts with banking or financial institutions, even if you already have ties to Canada. There are now additional restrictions to prevent money laundering and the financing of terrorist organisations. That being said, some financial institutions cater to non-resident Canadians who still wish to hold Canadian investment accounts. CI Direct Investing (formerly Wealthbar) is one of the most popular investment options for non-residents of Canada.

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As a digital nomad, it is in your best interest to maintain your permanent residence in Canada.

Visa requirement

As a digital nomad, working remotely means you can often choose tourist visas for the countries you’re staying in. Although this can reduce costs and simplify administrative problems, you must respect the time limit during which you are allowed to spend in a country, or you risk legal and financial penalties.

For example, Canadians can only stay in Europe’s Schengen region – an area made up of 26 European countries, including France and Italy – for a maximum of 90 days in any 180-day period. For Bali, one of the most popular digital nomad destinations, a 30-day tourist visa costs around $45. It would then cost around $90 to extend the visa for another 30 days.

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Some countries allow you to renew your visa or offer longer stays with their visas. Every country is different, so it’s up to you to do the research and understand the rules and regulations and make sure you follow them.

However, the growing popularity of the digital nomad lifestyle has led to the continued development of digital nomad visas in some countries, in an effort to attract more remote workers. Since these types of visas last longer, they tend to come with minimum income requirements to ensure you can support yourself while living and working in the country.

Although you can find information on “digital nomad visas”, the visas are not necessarily called that by the country issuing them. Forty-one countries currently have these visas in place, all with different requirements, costs and durations.

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Georgia’s one-year “Remotely from Georgia” program is free, but requires proof of income of $2,000 per month. Meanwhile, Norway’s “independent entrepreneur visa” requires proof of around US$47,000 of income and proof of accommodation. There is also a fee of US$640 for the Norwegian program.

Other popular digital nomad sites such as Italy, Bali, and Thailand also offer remote visa options.

More and more countries are expected to jump on this bandwagon as remote working increases in popularity, and as people start to travel more with loosening Covid-19 restrictions.

Meanwhile, the United States has announced plans to increase fees for nonimmigrant visas. It’s always possible for a country to decide to increase its fees, so keep that in mind if you want to pursue this lifestyle.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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