Case Study: Financial Planning Session for a Digital Nomad

by Kristin Hoppe

A girl with a hat and scarf in a French village

Editor’s note: I wrote this article before coronavirus hit, which has understandably changed a lot of things. I’m not sure what it means for my choice to travel long term — but I’m really grateful I got financial advice ahead of time, because it’s helped prepare me even more for the uncertainties that lie ahead.

When I was in my 20s and figuring out finances, much of it seemed pretty straightforward. Earn money. Save some of that money. Pay off student loans. Rinse and repeat. However, as a now-thirtysomething who travels frequently and works independently, I knew deep down that “just saving” wouldn’t cut it anymore.

I had more complex finances than I did in my mid-20s, and knew that speaking with an expert — even for a brief consultation — could make a huge difference for me. Getting professional help from a financial advisor helped me in more ways than I could have imagined. Below, I walk through my process and detail the benefits, both psychological and monetary.

What I already knew

Budgeting and personal-finance has often been a subject that stressed me out. In general, I was big on saving and I knew that I was doing some things right. For example, I had…

⦁    Paid off all my student loans

⦁    Used credit cards regularly and always paid the full balance on time

⦁    Saved a bit of money for retirement

⦁    Put away money in an emergency/cost-of-living fund

However, I didn’t know what I should do beyond that, or if I was missing something important. Doing all that research just stressed me out more, so I liked the idea of having a trustworthy financial planner who could advise me on best practices and I could take action from there.

What I was looking for

My work arrangement and lifestyle are a little less conventional. I am independently employed as a content marketing consultant, and I travel around and move a lot without a fixed address. As a “digital nomad”, my expenses and even tax situations are different than when I used to work a full-time job in New York City.

Overall, I was looking for a financial advisor who had experience working with other digital nomads and people who are self-employed.

I had specific questions, such as:

1. How should I be investing my retirement money in both my old employer account and my traditional IRA?

2. What is the best type of retirement account to have while I am a nomad/independently employed?

3. How much is advisable to put away for retirement for the year of 2019 given what I currently have?

4. What other kinds of retirement/savings accounts/tax strategies should I take advantage of as someone who is independently employed and a digital nomad?

How the process worked

Before ever searching for a financial advisor, I had a vague notion that not all advisors have your best interests at heart. But I didn’t know how to go about finding someone trustworthy.

Using My Financial Counsel’s matching tool really gave me peace of mind, because I knew that their network of advisors were required to be fiduciary, certified financial planners (CFPs®) . In other words, they wouldn’t try to sell me products for commission that I didn’t even need.

I started out the process going through the matching survey, and I received three handpicked matches the next day — all fiduciary CFPs®.

Instead of feeling overwhelmed around the labor of research and picking the right thing, I just had to take specific actions and knew I was making the best choice for myself and my future.

All I had to do was log in and decide who I wanted to call. One of my matches worked with a lot of freelancers, but another specialized in the finances of digital nomads.

I decided he would be a good fit after looking at his website, and scheduled a short consultation. After that, we had a brief phone call on what kind of help I was looking for.

Normally this advisor takes on longer-term projects, but we were able to agree on a scope and price for a one-time, hour-long consultation.

I paid him before the consultation took place, then went through the portal at rightcapital.com to confidentially and securely upload my financial information and documents.

This included my past taxes, savings and checking balance, 401(k), and bookkeeping records for my business. I was happy to give him the full picture, and it helped me to see it as well, even though uploading the documents took a little bit longer than I had expected.

I also sent him the four questions listed above so he could prepare to answer them for the call. After that, we were ready for my consultation!

How MFC helped

My financial advisor walked me through all the specific questions I asked in my email. He also made a lot of helpful recommendations on different banks, funds, and cards I could use based on my lifestyle and current financial needs.

Normally I would be very skeptical about any of this advice — how could I know if the financial advisor didn’t have ulterior motives?

But the fact that all of the advisors in My Financial Counsel’s network are fiduciaries and not commission based gave me great relief. I knew I could trust his recommendations to be in my best interest.

Some of the things we went over included:

⦁    Recommended high-yield savings account to earn more interest

⦁    Specific credit cards that have no annual fees and no foreign transaction fees

⦁    How I should roll over my 401(k), and what I should invest in

⦁    How much I should put in retirement for 2019, and in what type of account

⦁    Tax information when filing the foreign earned income exemption (FEIE)

Not all financial advisors are also certified to do your taxes, but mine was. I found this to be a huge bonus because it allowed us to discuss how my tax decisions impacted the rest of my financial planning, and he was able to give a general prediction of how much I would owe for the coming year.

My advisor emailed all of the suggestions afterwards, so I had easy notes to look through when ready to take action on his recommendations. It felt like a big relief knowing that I had confirmation that I was taking the right steps.

It also felt great not having to do all of that digging and research I wouldn’t have enjoyed doing — and getting it from a trustworthy and expert source instead.

What’s changed since

Since my consultation, I have taken action on all the advice he suggested to me. I opened up a high-yield savings account and rolled my previous savings into that. Now I’m making dollars instead of pennies on interest, which adds up.

I also rolled my 401(k) into my Traditional IRA, which means I’ll earn better overall compound interest for years to come. I got a more travel-friendly credit card, eliminating international charge fees and rewarding me better for my travel expenses.

I also plan to take action on some of the tax advice he gave me about my foreign earned income exemption (FEIE). Doing so could save me up to 20% or more on taxes every year. Understanding how it works can be very complicated, so I was grateful that he outlined my eligibility and how to go about it correctly.

Overall, I doubt I would have taken so many of these steps without external motivation. Having an expert who could give me a to do list was immensely helpful.

Instead of feeling overwhelmed around the labor of research and picking the right thing, I just had to take specific actions and knew I was making the best choice for myself and my future.

Even I found it surprising how much a one-off financial session could help ease some of my anxieties around personal-finance! A one-time session also didn’t require a long commitment, making it more affordable than many other options out there. I would recommend the experience to anyone.

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