Why Digital Nomads Represent One of The Fastest Growing Lifestyles

In 1997, Tsugio Makimoto and David Manners predicted the development of a communication device that enables people to work from anywhere in the world, and the term digital nomad was born. Fast forward twenty-something years later, the digital nomadic lifestyle has become one of the fastest-growing lifestyles.

Cheaper and faster Internet, CMS (content management software), VoIP (Voice-over-Internet Protocol), Skype, Zoom, the spread of the gig economy—all of it made it easier to work without being tied down to a particular location. Then, the pandemic happened and just sped up the process. Even though remote work was a familiar and, for many, attractive concept even before the pandemic, the pandemic put more focus on work from home and remote work. Even those who didn't consider working outside the headquarters or found the idea frightening because of the technology aspect were just thrown into it with no other choice if they wanted to keep the job. However, what that did is made people realize that they could learn and adapt and that work from home, as well as remote work, was no longer this impossible idea.

According to the MBO Partners’ excerpt from the State of Independence in America Report (2020), 10.9 million Americans describe themselves as digital nomads, a 49% increase from 2019. Interestingly, the same study showed that the number of digital nomads who are independent workers also increased, but only by 12%. That means that most new digital nomads are those working at traditional jobs who got the opportunity to work remotely during the pandemic.

Without a doubt, the trend of working outside of an office, be it working from home, working remotely, or as a digital nomad, is on the rise, and companies around the world are becoming more aware of it.

The Definition

The definitions of the term “digital nomad“ are still ambiguous. There is a growing body of research on the topic. However, as Hannonen (2020) writes, the approach to defining digital nomads is usually coming either from the work-life or the lifestyle angle, depending on the research discipline that the authors represent.

For example, Müller (2016, p. 344; as cited in Hannonen, 2020) defines digital nomads as “a new generation of location independent freelancers, young entrepreneurs, online self-employed persons.” This definition is an example of a work-life perspective that looks at digital nomads as a type of remote mobile workers (Hannonen, 2020).

On the other hand, when described from the lifestyle angle, the focus shifts to the travel aspect of a digital nomadic way of living. Thompson (2019) defines digital nomadic lifestyle as "the ability for individuals to work remotely from their laptop and use their freedom from an office to travel the world.“

We could describe digital nomads as people who travel and live a nomadic lifestyle, whose work is location-independent and performed using information and communication technology.

For this lifestyle to be correctly defined, two key aspects must be included—remote work and traveling.

One of the main issues when defining who digital nomads are lies in the differences in the length and extent of their travel. For example, according to the MBO Partners' State of Independence in America Report (2020):

• Some digital nomads travel for years, regularly moving across countries and continents. Others are nomadic for shorter periods, taking “workcations” and working sabbaticals lasting from several weeks to many months. Some travel the globe, but many (and many more today) never cross a border, choosing instead to live and work while exploring a single location or country. (p. 3)

Another issue is the differentiation of digital nomads from other types of mobile workers. As Hannonen (2020) explains—a person can't be considered a digital nomad only because they travel and use technology on the road. The accomplishment of work-related tasks and professional activities while traveling is an essential aspect of this lifestyle.

The main difference between telecommuters and digital nomads is that digital nomads balance work and leisure and choose their location based on leisure and lifestyle. In contrast, telecommuters balance between family duties and employment and choose their location based on their work (Thompson, 2019).

Digital nomads are not the same as freelancers either. The most important distinction lies in the travel aspect. While some digital nomads might be freelancers (they don't have a traditional job and are location-independent), not all freelancers are digital nomads (they don't engage in ongoing travel) (Hannonen, 2020).

In an attempt to offer a holistic definition of digital nomadism, Hannonen (2020, p. 346) describes it as "a rapidly emerging class of highly mobile professionals, whose work is location independent. Thus, they work while traveling on (semi)permanent basis and vice versa, forming a new mobile lifestyle.“

Who are The Digital Nomads?

According to MBO Partners (2020), the pandemic has changed the demographic mix of digital nomads—the number of older digital nomads has decreased, while the number of Millenial and Gen Z nomads has increased. However, older groups are still well represented.

They provide the following information on specific groups who describe themselves as digital nomads: Gen Z – 19%, Millenials – 42%, Gen X – 22%, Baby Boomers – 17% (MBO Partners, 2020).

Most digital nomads work in industries in the knowledge economy, such as marketing, design, IT, writing, media, tutoring, and consulting (Hayes, 2021).

In research done by Thomspon (2018), it was shown that most digital nomads come from strong passport countries, which enables them to enter more countries without needing a visa and makes it easier for them to move across borders.

Digital nomads are, on average, well-educated, mostly having a college degree or higher, and they have stronger technical skills than those who are non-digital nomads (MBO Partners, 2020).

Where Do Digital Nomads Choose to Live?

As long as they have reliable Internet, the possibilities are numerous—digital nomads can work out of cafes, hotel rooms, hostels, from the beach, out of a co-working space, etc.

Some digital nomads choose to travel abroad and explore other countries, while others prefer to stay closer to home.

Some of the most known digital nomad locations include Chiang Mai in Thailand, Ubud in Indonesia, Ho Chi Minh City in Vietnam, Medellín in Columbia. Other popular destinations include Bangkok in Thailand, Lisbon in Portugal, Budapest in Hungary, Tbilisi in Georgia, to name a few.

Many countries recognized the growth of the nomadic lifestyle and have started to market themselves as digital nomad friendly. Many cities are now becoming up-and-coming places for nomads. For example, nomadlist.com offers a list of the best places to live for a digital nomad. Hannonen (2019) explains that many countries now offer attractive taxation, visa-free stays, e-residency, and digital nomad visa schemes to attract more digital nomads and other temporary residents. A growing number of businesses focus on serving the digital nomadic lifestyle, which is another evidence of its popularity.

Although traveling is usually the key motivator for choosing this lifestyle, there are other important motivators such as arbitrage. When deciding on a location to travel to and work from, many nomads choose places with low living costs. At the same time, they offer their services and earn their income at the wage rates of higher-cost locations, enabling them to work less but earn enough to support themselves and fund their travels (MBO Partners, 2020). This concept is also known as geoarbitrage and was made popular by Tim Ferriss's book The 4-Hour Workweek. Getting paid in one currency and spending in a weaker currency enables people to have more spending power and a higher living standard than back home.

According to Thompson (2019), digital nomads choose locations where their demographic privileges are maximized and where they can have a kind of a hedonistic lifestyle. However, she mentions that they don't focus much on learning about the local culture, traditions, or learning a local language. They also usually stay socially distanced from the local population and mostly socialize with other foreigners and digital nomads.

The Pros and Cons of Digital Nomadic Lifestyle

The advantages of this lifestyle are apparent—digital nomads travel and have the opportunity to explore and learn about different cultures. They can meet new people from all over the world. Many manage to save more money than they would otherwise because they choose to live in low-cost locations. If they are open to it, they might learn new skills or a new language while living in a foreign country.

Many traditional job holders long for the freedom from the commute and restrictive, traditional office settings and working existence, which the digital nomadic lifestyle also offers. The flexibility and more freedom to control one's time are often seen as one of the main benefits of living as a digital nomad. However, as Cook (2020) described it, this might actually be "the freedom trap.“ As wonderful as the opportunity to be more flexible with our time may seem, it can also be a source of issues and stress. Digital nomads must be very well organized to have an optimal work/life balance. According to a study done by Cook (2020), digital nomadism isn't always experienced as free as it might seem and requires high levels of engagement with various levels of discipline. Even though many people dream about not having to work 9 to 5, for many digital nomads, often blurred boundaries between work and leisure are a source of stress. Without a clear structure, they may be available and "switched on“ 24/7. They have neither precise work hours nor clearly defined leisure time because the two often merge. Therefore, many digital nomads use disciplining practices to separate the two and establish some structure, contrary to the belief that digital nomads actually want to combine work and leisure.

Cook (2020) also showed that the questions of discipline and self-discipline are a common preoccupation for digital nomads, especially for those traveling alone.

Because they often work with clients in different time zones, establishing a regular work pattern gets even more complicated. They may have to work during the night or in the hours that are usually dedicated to socializing.

Mobility and the opportunity to travel to another location whenever they want may sound like an attractive idea. However, constantly moving is often exhausting. Changing locations also means setting up new routines and discipline practices which requires effort and constant adjustment.

Thompson (2019) writes how digital nomads often highlight their experiences of loneliness and isolation in their blogs and online posts. It is hard to be away from family and friends; it may also be challenging to form new friendships because of constant moving. Co-living and co-working spaces are places where some digital nomads try to find other like-minded people they could spend time with.

Most digital nomads report that they are satisfied with their earnings, regardless of how much they make, even though some work more and earn less than if they worked at a 9 to 5 job. Their satisfaction could be explained by the fact that they are focused on the journey, not just the money (MBO Partners, 2020).

It can be concluded that this lifestyle is not for everyone. There are many advantages, but also downsides to it.

What does it all mean?

The pandemic has taught us that remote work is not impossible and that it can work without significant issues. According to a Stanford University study, in May 2020, 42% of Americans reported working from home full-time (Bloom, 2020). Currently, it seems that remote work and work from home are here to stay. After experiencing more freedom, many people won't exactly rush back to their office if they don’t have to. The face of business and work is changing, with many executives and managers realizing that their employees are even more productive when given more flexibility with their work schedules.

Some of those who get the opportunity to continue with remote work will decide to combine work and travel. We can expect more traditional workers to continue working outside of their offices, and many may embrace a nomadic lifestyle.

The digital nomadic lifestyle is on the rise, and we can expect it to spread even more—it's definitely a phenomenon worth looking into.