What Is a Digital Nomad?

Digital nomads are people who are location-independent and use technology to perform their job. Digital nomads work remotely, telecommuting rather than being physically present at a company's headquarters or office. The digital nomad lifestyle has been made possible through a number of innovations, including content management software, cheap internet access through WiFi, smartphones, and voice over internet protocol (VoIP) to keep in contact with clients and employers.

Key Takeaways

  • A digital nomad refers to individuals who work remotely using information and communications technology.
  • As such, a digital nomad may work out of cafes, on beaches, or in hotel rooms as they are not tied down to any one location.
  • Digital nomads tend to be younger, tech-forward, and ambitious, working mainly in IT, creative, or the knowledge economy.

Can I Work While Collecting Social Security?

Understanding Digital Nomads

Digital nomads can be found working all over the world. This includes cafés in France, libraries in Argentina, beach huts in Thailand, net cafes in Tokyo and office shares in Australia. While being a digital nomad sounds appealing, there are downsides. Although the location may be majestic, the work that is available may not always use your skills to the fullest or pay all that well. So, to maintain the lifestyle of a digital nomad, you may actually end up working harder for less pay when compared to a traditional office job.

There are, however, a few ways to make the digital nomad lifestyle easier. Of course, one is to focus in on the highest value jobs for your time and secure those contracts to increase your income. Another is to keep your costs modest and look for innovative ways to save through accommodation sharing, homestays and so on. However, the best way to make being a digital nomad a reality is to have a stream of passive income to supplement the contract work you'll be picking up on your travels. This removes some of the financial pressure so that you don't spend your entire time abroad staring at your screen. 

Who Are the Digital Nomads?

Digital nomads tend to be younger people, and can be found working in most industries in the knowledge economy: marketing, design, IT, writing, media, tutoring and consulting, among others. They may either be remote employees or knowledge process outsourcing employees. Although most telecommuters and freelancers are technically digital nomads, the term is most often used to describe people who are living or traveling abroad while working. Some digital nomads have a wide range of clients and make a living through the combination of jobs, while others have formal or semi-formal agreements with clients guaranteeing a certain amount of work or billable hours. 

When Digital Nomads Settle Down

Many digital nomads eventually end up rooted to their home offices. When the wandering is over, the client portfolio a digital nomad has often sets up the transition to being a full-time freelancer from whatever local they choose. If a digital nomad is strategic about the location, they can leverage currency and cost of living differences to find a locale where the dollars they earn go much further, reducing the amount they need to work. Even in higher cost, developed nations, digital nomads of the freelancer variety can usually get better tax treatment than an employee, allowing them to hold on to more of their earnings.