future financial planning for remote workers and entrepreneurs

How can location-independent entrepreneurs and freelancers future proof their finances? Some top tips on Banking, Tax, Investments, and Savings for the long term.

The ultimate vision of remote work has always been the potential to truly live and work from anywhere, regardless of nationality, citizenship, currency, tax residency, or anything else.

This vision is moving towards reality, and e-⁠Residency is a crucial part of unlocking the world for globally minded entrepreneurs. Other elements in the jigsaw puzzle include digital nomad visas, employers of record, and a growing number of remote-friendly employers.

For those with the right professional skills and passport to start with - the world is increasingly open for business.

However, steering a path through the complexities of future-proofing your finances as a location-independent entrepreneur or freelancer requires a nuanced understanding of various factors, from tax obligations to currency fluctuations. Whether you're embracing a nomadic lifestyle or relocating to a new country, mastering financial planning is crucial for financial stability and growth. So it's time to unpack this, and explore actionable tips on budgeting, saving, and investing, tailored to help remote workers thrive in their careers and personal lives.

Tax obligations for remote workers

First, we need to look at the ever popular question of that age-old inevitability, taxation.

What follows here is general commentary, for the purposes of information only. Speak to a tax lawyer or accountant to get tailored advice and support.

No financial planning content would be complete without a reminder of tax obligations, which are made particularly more complicated if you live in one country, work for a company in another country, and run a private limited company in a third country. Future proofing your finances must involve consideration of your personal, corporate and social tax structures.

The first thing we need to think about when it comes to tax, is tax residency.

If you live and work in the same place, you might not give a great deal of thought to the idea of tax residency. But if you want to be a remote worker in another country, or to live nomadically, then things get a little more complicated on that front. Tax residency determines where you are obligated to pay taxes, based on your residence status. 

Did I mention… You really need an accountant!

There are tax software programmes to help you too, and good record keeping will always be your friend - like keeping careful track of days spent in each country, to ensure compliance, and avoiding unexpected liabilities.

For freelancers things can get especially complicated, and this is one reason so many solopreneurs find it far easier to work through a private limited company in Estonia, so they’re able to aggregate their income into a single currency and source.

It’s important for e-residents to understand however that it is your Estonian business which is tax resident in Estonia, not you.  Your e-⁠Residency Marketplace-approved business service provider will help you take care of your company’s reporting and tax obligations in Estonia, but how you manage requirements in respect of your personal income you pay yourself from your business, is up to you.

Managing different currencies

Another factor affecting remote work finances is the currency markets. Currency fluctuations are a natural outcome of floating exchange rates and global events, and can significantly impact the finances of remote workers, especially those receiving income or making expenses in different currencies.

Many international remote workers use multi-currency accounts to simplify transactions and reduce conversion costs, as well providing a quick overview of your total cash position in your currency of choice. There are some great low-cost neobank and fintech enterprises, and a surprising number of global names are in fact of Baltic heritage, like the unicorn Wise (formerly Transferwise.) 

If you are working internationally, you can deliberately reduce your risk by diversifying your income, and also fixing your rates in the currency of your choice. 

Financial Planning tips for remote workers

What about the future though, and managing your money and wealth for the long term?

Any glance at digital nomad and remote work social media and content, and you can’t help but notice a certain amount of short-term thinking. Living in the moment, seizing the day, etc. 

All that FOMO - but what about Future You? 

I recently attended the Bansko NomadFest, which brought together hundreds of remote workers and digital nomads from all over the world, for a week of learning and growth and celebration. 

Every morning I saw large numbers of participants gather together early, before the conference sessions, to go on hikes, do yoga, to meditate, and share practise in martial arts and relaxation. 

It was great to see everyone so committed to their own well-being and self-care, thinking about their future needs and healthspan, as well as their emotional health.

 But I couldn’t help wondering, are all these people paying the same attention to their FINANCIAL well-being and long-term health?

I summarised my observations and advice from experts on this conundrum into seven tips to help future-proof your remote working financial situations.

1. What you need WILL change and evolve over time

Past You and Present You had different needs, dreams and aspirations. 

When you were 8 years old, perhaps you wanted to be a farmer or a firefighter (or a knight, if like my girls you overdosed on Narnia stories at a critical age.)  When you were 18 you wanted to travel the world, meet the partner of your dreams… and your dream job probably no longer included driving a fire truck.

Think about what motivated you and drove you at different stages of your own life, and recognise that it’s highly likely you are a completely different person today. In fact, depending on your age and life decisions, you might have reinvented and reprioritised your needs and dreams and passions many times over.

This shift in understanding is essential, when it comes to appreciating the potential and unknown desires of Future You.

For example, you might love the risk taking of serial entrepreneurship, the rich opportunities of digital nomadism, even swerving being tax resident in any country for a while. Some e-⁠residents use an Estonian company to do just this, and keep moving their own location around, juggling visas and entry stamps to live their best lives for years.

However, Future You might want to settle down somewhere, obtain credit for something like a mortgage, perhaps even retire someday and stop working for a living.  

You might one day have no choice about that for health or other reasons. 

2. Documentation and a paper trail

Future You may be very grateful that you kept a detailed and dated record of any professionally indemnified visa, tax and legal advice you obtained, at any stage of your journey. Be wary of generic advice or something you read somewhere, about what you have to do - this may be worthless in your individual case. Whereas personal professional instruction can be held legally accountable if required (and yes, this generally means you need to pay for it in the first place.)

Also be sure to mitigate risks, while they remain risks, rather than certainties. Long-term thinking, over YOLO, once again!  

For example, health cover. If you are tax resident somewhere and paying social security, you will usually be entitled to some kind of state health insurance, and in many markets that will be pretty good - but check it out. Private health cover may supplement this only when you are out of your area of coverage, being an affordable way to get you home from an overseas accident - or it may be comprehensive and replace your state care completely. 

Either way, private health will generally NOT cover anything you have already been diagnosed with. In the worst case scenario of something like a cancer diagnosis, you will have had to be on cover already, and only state care will be available to you on an inclusive basis. And some policies will need specific clauses if you undertake risky activities, like extreme sports.
So once again, Future You needs you to read the small print now, and think ahead - then you can take whatever risks you want to, with your eyes open.

A further example of documentation that matters: if you have assets, like property or investments, what do you want to happen to them, when (not if!) something happens to you? Do you have financial dependents, who would lose their income and security, if they lost you?  So another document you need is a will, that is legally valid in the country where your future heirs are resident.

And finally, when it comes to tax residency and location, make sure that you always sign out/renounce your status thoroughly and properly, and add the documentation to your file.

3. You don’t know what the future holds - so, save something anyway!

Let’s remember that the greatest investment minds in the world are just as much exposed to unpredictable ‘black swan’ events (the COVID19 pandemic is one example.)

The only way to protect yourself against what you cannot know, is to create some security for yourself. So at some point, you’re going to need to start accumulating something towards a some kind of regular savings or investment plan. In fact, the earlier you start the better - try to put away something, even if it’s just a few euros a month, on a regular basis. 

Banking apps make it easy to automate savings now, for example collecting the payment at the same time of the month as you usually get paid, or by rounding up a few cents on each payment you make into a savings account. Ideally you won’t notice, and you will forget that this is even happening, until you find a lovely surprise in your accumulated balance.

You just need to set it all up to start with, which means thinking about what you might need in future, including worst-case scenarios. And for remote workers, digital nomads, and expatriates, it can be easy to put it all off, just because you don’t know where to begin.

4. Do your research before moving to a new country

I spoke to Louise Carr, an expat tax specialist who runs a relocation service in Malaga, and the Investing & Managing Your Money In Spain community on Facebook.  She confirmed that a lot of the immigrants she works with (mainly Brits), have given little thought to their financial futures, and the long-term outcome of their life in the sun.

“Our company helps them with the visa to relocate, but surprisingly few contract our associated tax planning advice. They’re so excited about moving to Spain and their new life, they don’t worry about things like that.

“A lot are unaware that they can’t continue investing in their old pension scheme for example, or how they should report gains here on overseas investments.”

It’s not always easy to find out the rules in a new country, but it’s essential for all remote workers to look beyond the short-term visa compliance, and think about the future. 

Many of the experts in the e-⁠Residency Marketplace can advise about long term financial planning, but it does require some thinking about where you might ultimately want to settle down, and where it would be worth acquiring rights to services like public health care and state retirement benefits. And where it would be best to make regular investment savings.

5. Saving for the remote future

Everyone needs a cash cushion, and every financial advisor will recommend that you first use any excess cash income to pay off interest-bearing debt, then to stash away an emergency, instant-access fund. 

Some advice on amounts can be very conservative, and suggest saving 3-6 months worth of living expenses in this way, a quantity which might seem far out of reach for many. It might be easier to think of minimum living expenses, and what you could reasonably pare your lifestyle back to, and use that amount as a target.

Once you have built that emergency fund, you can think further ahead. 

Just as we discussed above in terms of exchange rates, most of us are not professional investors. But the good news is, you don’t have to be an expert.  Over the long term, investment in the markets has consistently outperformed even the power of compound interest, and while things may fluctuate day by day (or even year by year), investing in stocks, shares, and bonds is probably the best move for funds you don’t need to access immediately.  And every bank (as well as other specialist investment companies) offer automated ways to save into the markets regularly.

As Carr explained, “Robot-investor accounts are designed to automatically purchase investments for you across a wide range of different funds and markets.” 

“You can specify things like your appetite for risk, and they allocate different percentages to bonds, and to the riskier stock market. They even take account of things like your age, and rebalance to put more in the stable bond market if you’re close to retirement, while more goes into stocks if you’re young, because stocks fluctuate more but have the potential to make more gains.”

6. Think long term, when it comes to your money

Marketing professor and investment author Scott Galloway recommends dabbling directly in the stock market though, just for personal education on how things work, if only to get comfortable with the giddy price swings, and how different enterprises respond to the news cycle and other external factors. 

Many neobanks like Revolut make it possible to purchase shares in single companies, and even if you put most of your savings into a balanced multi market funds, it’s definitely interesting (and a powerful learning experience) to stick a tiny amount into something which resonates with you personally, or you have a hunch about - just to watch it rise and fall.

But Galloway, like everyone else, is also very clear that the only safe way to truly beat the markets is to average in to an exchange-traded fund - over something like 40 years, ideally.

7. Diversify your assets

“The key to successful investment is always to diversify, and ideally you will also have property and cash and bonds in your total asset portfolio. But auto-investing in the markets gives you a start on that side, because it's already spreading the risk for you.” So says Louise Carr, who we met earlier.

What about riskier investments though - alternative assets, like meme stocks, crypto, or collectibles? Carr cautions about over-allocation to any one asset, even to single shares, never mind more innovative investments.

“Of course it’s tempting, especially for younger people. But you have to see risk investments like these as gambling, and make sure you only commit such a small percentage that it wouldn’t hurt you to lose it completely. 

“Then you can play around with crypto or whatever, and you can learn from that - like how your emotions respond, because when it goes up you’re all excited and you want to buy more, and when it goes down you want to sell - whereas you actually should be doing the exact opposite!

“But overall, making sensible investments in things that sound a lot more boring, like a well-balanced portfolio of bonds and shares, makes far more sense. Like the FTSE 100 in the UK - if one of those funds plummets for some external reason, then you still have 99 in your fund that are unaffected. It’s far safer than going all in on any one of them.

Investing as Estonian e-⁠residents

If you operate your remote work through an Estonian company, remember that your business can also invest, and make money.  Banks like LHV offer their own products, where you can invest in a range of markets and funds, and there are other specialised brokers who can help you if you are resident in the EU, such as Lightyear and Grünfin.

Indeed, if you’re struggling to get an Estonian bank account for your business in the first place, you can always grow investments in Estonia as a way to demonstrate your financial involvement with the country and its economy.

Furthermore the fact that reinvested profits are not taxed in Estonia can make growing wealth within your company a very attractive prospect, building wealth in euro-denominated funds, and building a future fund for yourself. Take advice about how that might impact your local liabilities where you are tax resident, but the fiscal environment of Estonia makes it a great place to build your wealth overall, as you build your business.

The short and long term financial picture for remote workers

Managing your money and assets as a remote worker or digital nomad can be challenging, but with the right tools and knowledge, it is entirely manageable. E-⁠Residency offers a unique platform for globally minded entrepreneurs to establish and grow their businesses with ease. 

For all the nomads practising chi kung in the Bulgarian dawn (or wherever you are in the world right now!), this kind of financial preparedness will definitely help you to be mindful and present in the moment, as you seize the day and live your life. If you consider it part of your personal journey into creating the lifestyle of your dreams for all the versions of you, you will learn about your own attitude to risk, preparedness, diversification, and sustainability.

By understanding tax obligations, managing multiple currencies, and making informed decisions on saving and investing, e-⁠residents can secure their financial future while enjoying the flexibility of a location-independent lifestyle. 

Remember, while the journey may seem complex, resources like the e-⁠Residency Marketplace and professional advisers are available to guide you every step of the way. So that you can enjoy the opportunities of remote work and living where you chose, while you build a financially stable and prosperous future from anywhere in the world.