Money, Money, Money: Can You Afford to Be Location Independent?

Miami Beach

Hey, big spender, you say you wanna be location independent? I fully support the decision, and speak from experience when I say, “Before you go, get your finances in order!”

Well, I’d say that, and, “GO! Just go, for goodness sake!”

Once you’ve figured out what kind of work you’re going to do while you’re location independent, your next step prior to hitting the road should be figuring out your finances.

I know an alarming number of people who work full-time or freelance, who still haven’t quite mastered the art of retirement savings accounts like 401Ks or IRAs, and who aren’t saving for quarterly taxes, or saving for anything, really.

But even people with their financial affairs in order look at my lifestyle and ask how we can afford to do what we do. The funny thing is, now that we’re location independent, we’re spending half (if not less) than we did while living in New York City.

That said, our income has dropped since we left corporate America, so we’ve made a good effort to stay on top of our ducats.

After 2 years on the road, we’ve accumulated a lot of tips, tricks, and financial know-how that I want to share with my fellow wandering souls.

1. Clear Your Debts

Student loans, car payments, health care bills … Whatever debt you may have accumulated in this life, I recommend paying it off before you choose to be location independent. Of course, this isn’t an absolute must, but it’s smart to do so, and it will make your life on the road considerably easier if you know you don’t have monthly debt payments to make in addition to regular expenses.

The reality is, if you’re working as a freelancer or contractor, gigs come and go with surprising frequency. There’s a major relief in knowing that if one should drop, you don’t have a scary stack of debts to still pay off.

Ayaz and I have both been pretty meticulous about our finances since graduating college, so we didn’t have to worry about clearing debts, but I’ve seen it become a very valid concern for others. If it’s at all possible, clear it up before you take off — even if that means delaying your departure by months or a few years.

2. Estimate Your Income

In an ideal world, you will have a sense of exactly how much you’ll be earning each month from your job(s). That said, it’s not always possible to be precise, since clients can come and go, depending on your work.

Still, estimate it as best you can (and be realistic!). It’s better to shoot a bit low and be pleasantly surprised.

Now, take that number and subtract your estimated federal and state taxes (if you’re a United States citizen). I always go with 30%, though it might vary depending on your state of residence. Check with an accountant!

Next, subtract retirement savings. Again, everyone is different, but after looking at long-term savings equations, I put aside 12% of my earnings for retirement. Talk to a financial planner if you’re unsure how much you should be saving, or use a financial calculator tool.

Your total income is your earnings, minus taxes and minus retirement savings.

3. Save!

Well, duh, right? But really, this can be the hardest part for a lot of people. Once you’ve estimated your taxes, put that amount into a special checking or savings account that is earmarked for taxes, so you don’t spend the money.

And, take the amount you’ve set aside for retirement and place it into a 401K or IRA. If you don’t have one set up just yet, do it! NOW! If the thought of retirement plans is overwhelming, you can work with a firm like Fidelity or Charles Schwab. (I use Fidelity).

4) Create a Budget

I’m a lucky girl because Ayaz loves spreadsheets. Seriously. He’s great at making these auto-populating pages that account for all sorts of costs.

First, we have a, “Income” tab that accounts for our monthly income, minus taxes and savings.

Next, we have a “Set Monthly Expenses” tab. Your set monthly expenses might differ (in fact, I’m sure they do), but to give you an idea, these are the things we account for in monthly spending:

  • Groceries
  • Business stuff (website server costs, ad buys, etc)
  • Storage units (um, we now have 2 – 1 in PA and 1 in FL)
  • Car (gas, washes, maintenance)
  • Mobile phone bill
  • Health care costs (doctor visits, etc)
  • Health Insurance
  • Car Insurance
  • Spotify/Netflix/Kindle Stuff

Finally, we have our “Budget” tab. This is the final calculation for monthly spending Here we take our monthly income, and subtract our set monthly spending as well as 2 these things:

  • Rent
  • Going out/General Living (meals, drinks, weekend getaways)

Ok – this has been a looooooong doozy of a financial post. I hope it made sense, but if you have questions, leave them in the comments below, or send me a private message. I’d be happy to talk more!



  1. When you say account for taxes, is that specific to locations in countries/cities where there’s taxes only? Or you mean accounting for taxes in general if you are still paying taxes in USA while living abroad in a country that doesn’t have income taxes?

    • Valerie Conners says:

      Hi BJ – I’m really considering anyone who is in a position to be paying US taxes (Federal and/or state). I know there are some exceptions to people who have declared residency abroad, but it’s a sticky field, and I’m not too familiar with that world, though people should check with an accountant for details.