You’re on Cloud 9 daydreaming of quitting your job, along with other millennials pursuing a life where they work for themselves. Maybe even running their business while they travel the world.
Working online from home is something you dream of doing.
But there are a million questions going through your head:
- Can I do this?
- How soon?
- Am I financially prepared to quit my job?
- …and, can I travel the world whilst I do it?
Maybe you’ve read a horror story about someone who’s quit their job with no idea how to bring in income. They do something like move abroad and, with no idea how they’ll make money, they run their savings dry.
But speaking from experience, there are many more people who support themselves whilst working from home.
The world of working online from home surprised me when I first discovered it in 2017. Before then, I thought “freelance” or “self-employed” was a synonym for “unemployed.” Since then, I’ve started a freelance business of my own and have visited countries like Thailand, France, England, New Zealand… even Japan.
Before I moved abroad, I prepared a safety net that would keep me going during the turbulent ride of freelancing. I honestly love talking about money, so… here are three simple steps you can take to financially prepare to quit your job.
Of course, I don’t know everything and I can’t offer financial advice for your own specific, unique situation. But based on my own journey of financially preparing to quit my job, these are the steps I recommend to start your journey.
1. Estimate your expenses.
First of all, figure out what expenses you’ll have from month-to-month. I used a spreadsheet to do this!
If you’ll be traveling as a digital nomad, factor in estimated costs of traveling from place to place, and of course visas.
Here are some expenses you can plan for:
- Fun (going out, excursions)
- Business Costs (taxes, monthly business expenses, cell phone, etc.)
- Travel (flights & visas)
- Transportation (ubers, taxis, scooter rentals, etc.)
- Other (debt, unexpected costs, etc)
You can even look to websites like VentureCost where working travellers log expenses from their trip. Seeing how other travellers spend their money in places can help you start to estimate what you’re going to need month-to-month.
Lodging & Accommodation
Decide how much you’ll need to spend on rent month-to-month!
I travel regularly throughout the year, so it helps me to have a basic budget of how much I want to spend on lodging every month.
If you’re working and travelling the digital nomad way, you have many options:
- Book a long-term Airbnb. Oftentimes, you can book a long-term Airbnb and get discounts the longer you stay in one – weekly, monthly, etc. Airbnb owners make more when you stay in their accommodation for a longer amount of time, as opposed to needing to fill in the brief empty periods. Click here to use our link to sign up for Airbnb, and receive a $40 travel credit that never expires.
- Housesit with Trusted Housesitters. Housesitting as a digital entrepreneur bears a huge benefit to both parties. You’ll be working from your laptop. So basically you’re able to watch a person’s pets and home while you work. And in return, you get practically free accommodation. The membership cost is $119 for one year, which would really pay for itself with one week of housesitting… and the benefit just multiples with every housesit you get. Click here to start browsing housesitting opportunities with Trusted Housesitters.
- Stay in a hotel, and then find an apartment. Alternatively, you can book a hotel for a few nights or a week and then go apartment hunting once you get to your destination. I normally use Booking.com to search for and look for nice hotels in an area.
- Volunteer via Workaway in exchange for accommodations. You can also exchange a few hours of your day of work for free accommodations. Workaway partners travelers with people looking for different kinds of help around the world – babysitting, teaching yoga or English, web design, etc. It’s only $32 for an annual membership ($42 if you’re traveling as a couple), and well worth every penny even if you only use it once or twice.
The 3 Fs (Food, Fun, Fitness)
Always leave room in your budget for food, fun, and fitness.
For me, fun things are like booking excursions or tours (like a guided pub crawl or guided mountain tour). When it comes to fitness, maybe a gym membership is important to you, or you want to leave room in your budget to take yoga classes throughout the month.
Whether or not you’ll be running your own business, budget for any work-related expenses you’ll accrue on the road.
- Coworking spaces or coffees at cafes
- Books, courses, or even business coaching
- Advertising and marketing costs
- Taxes (if self-employed, set aside 20-30% for taxes)
- Technology upgrades
Think about what you will need to work while you travel.
Related Listening: Managing Your Biz Finances as a Freelancer with Amanda Altman
Travel and Transportation
Whether you’re going to be a digital nomad, or you’re staying in one location, you still need to think about travel and/or transportation costs.
- How are you going to get around? (Uber, Lyft, public transportation, vehicle, scooter rental, gas)
- What will the monthly cost be?
For us, we have to think about flight costs (if any), the cost of any visa extensions if we want to stay in a country for an extended period of time, the ride to/from the airport, and of course how we’re going to get around every month.
If you have insurance through an employer who provides benefits and allows you to work remotely, you can probably skip this step.
Otherwise, you should think about the cost of dental/vision insurance, health insurance, and maybe even travel insurance as you start traveling the world managing your own business.
Other (debt, monthly payments, annual payments, unexpected expenses)
Then think of other costs, and allocate money for that.
- Student Loan or Credit Card debt – what are your monthly payments for these?
- Annual or monthly payments – like car registration, Amazon Prime membership, and those other subscriptions you have
- Unexpected expenses – maybe you have to go to the hospital, or you have to buy something while on the road. Always prepare for the unexpected.
It’s just wise to be as prepared as possible, especially financially, if you’re about to pick up and travel the world. Think about the year ahead, and any possible expenses that could come up. By thinking ahead like this, you won’t be surprised and fishing for $100 when it comes time to renew your Amazon Prime subscription.
It’s important to be credit smart before you hit the road. Click here to check your credit score for free with Credit Sesame.
Savings & Your 401k
Lastly – it’s so important to continue saving. Skip that coffee if you have to. And even if it’s a small amount, contribute to your 401k.
When all else fails, it’s important you have an emergency cushion to fall back on.
- Don’t steal from your future by withdrawing from your 401k. Contribute when possible, as much as possible.
- But at the same time, save enough to fall back on when emergencies come up.
Allocate a certain amount to be set aside each month – divide that (however you wish) between your savings account and your 401k.
2. Determine how much you’ll need to save.
After you figure out your expenses, determine how much you will need to save to start chasing your dreams and living abroad.
Some costs you’ll need to factor in:
- The cost of flights to and from a location,
- The cost of a passport (if you need one, and if you don’t have one),
- Any costs of visas, or visa extensions, while you travel.
Honestly, this amount is different for everyone. Some people have families, or maybe even mortgages, to pay. I am still pursuing the debt-free life and paying off my student loans.
So, do you save for a month? Three months? Six months?
If you do not have a guaranteed full-time income, save for three months of expenses at the absolute least. And if you have a family, you should save for at least six months of expenses.
No one can really tell you how much you need to save except yourself.
3. Start your side hustle. Or find a remote job.
Don’t quit your job unless you are beginning to have a steady source of income from your side hustle.
Some people can do it: quit their job, live off their savings, and start making everything work for them. Maybe you’re one of them.
But to veer on the safe side, prove to yourself you can make a consistent monthly income before you quit your job.
At the same time, don’t watch yourself succeed at your side hustle, only to prevent yourself from taking the leap to pursue it full-time.
Find that sweet spot.
This is how I started my own path to self-employment:
- I started a blog (actually, at one point I had two blogs).
- My blogs started making money from affiliate marketing, as well as from services offered.
- I saved as much as freaking possible, all the while working on this blog on the side.
- After a few months, I had enough money set aside to comfortably quit my job in order to commit to this business full-time.
If you plan to work remotely for a company, that might be enough of a structured environment you need to be productive. But if you’re trying to build a business – being able to work on your side hustle after work proves whether or not you have the work ethic it takes to build a business.
So take the time to think about the side hustle you want to start. And, trust me, there are tons of ways to make money online.
So either: start working on your side hustle and prove to yourself it’s profitable before you take the risk of quitting your job; or, find a job where you can work remotely.
It’s okay to be scared.
Quitting your job to work from your computer goes against everything we’re taught about growing up. Because we’re taught to go to university, start a career, and settle down.
So going against that is scary.
But, it’s okay to be scared and feel afraid. You’re not alone, and you can do this.
Even though I proved to myself I could make money online, as the last day at my job approached, I was scared. But, before the end of my last day, I also landed my first web design client. We’re not where we want to be. But we work hard as heck, every day, towards it.
Success doesn’t come to those patient enough to wait. It comes to those who work hard for it.
If my dream can come true, so can yours. Just know you have to put in the work to make it happen.
If you haven’t started your blog yet, or you want to take your blog to the next level and go self-hosted, click here for a step-by-step tutorial with an incredible deal on website hosting.
Want to Keep Reading?
- How to Make Money Blogging: Make Your First $1,000 Blogging
- Living Abroad in Your 20s: An Interview with The Canadian Wanderer
- The Influential Blogger’s Guide to Using Maven to Make Money Online
Are you preparing to quit your job? What do you want to do for income, and how do you plan to get there?