Nomads have many financial options. The most immediate thought that comes to mind is how much and in what form - cash, traveler’s checks, or plastic. Many people are justifiably concerned about carrying large quantities of cash when traveling, even though the risks are low that you will ever lose any or get robbed.

Credit, Debit and ATM Cards

Travelers tend to think they can use their ATM or credit card anywhere in the world. It’s probably true that they can be used in any country (except maybe Cuba or North Korea), but not necessarily in remote parts of developing countries. You will need cash because many small businesses will only take cash. There is a chance you will be charged as much as a 10% fee for a cash advance. In some places banks will give you an advance if you have a passport and credit card, but the fees can be high. Visa is slightly more widely accepted overseas than MasterCard. Places in developing countries that accept credit cards are going to be relatively expensive. The inexpensive hotels that do take plastic will usually slap a 3% or 4% surcharge on the price (or what their bank charges them, even though it's against Visa and MasterCard rules). These will include upscale “world class” hotels and restaurants. This is OK for tourists on a big budget, but for long-term travelers, vagabonds and budget backpackers you’ll need cash or travelers checks.

The solution is to get cash at ATMs using a Visa or MasterCard debit card. Before you leave for your trip you should make sure your destination has an ATM that will accept your card. Contact your bank to determine which fees will be applicable for overseas ATM cash withdrawals.

Visa and Mastercard have a directory of their worldwide ATM locations. Both web sites have information on emergency replacement of credit cards anywhere in the world. If you are traveling to a location with ATM service, it’s hard to imagine a need for traveler’s checks since a debit or credit card is easier to deal with than a wad of traveler’s checks. Also, when you make an ATM withdrawal overseas, your money is automatically converted into local currency. The exchange rate is usually better than you can get exchanging cash or traveler’s checks.

One advantage for having an American Express card is being able to cash personal checks at American Express offices overseas, though with plastic see widely acceptable you should not need your checks. While not as easy or convenient as a debit card, is a better alternative than the hassle of trying to wire transfer money (see below). You can go to any American Express office and request a replacement. It varies from country to country, but American Express cards are less widely accepted than Visa or MasterCard. Many countries have only one American Express office, though, so if you need emergency cash it may require a long trip. It is much easier to find an ATM that takes Visa or MasterCard.

SWIFT and Western Union Money Transfer

These are two methods for doing electronic money transfers. Both are costly, especially Western Union, and should be avoided if possible. For an emergency situation, when you need a friend or relative to bail you out with cash, Western Union is good. The transfer is instantaneous. It is even possible, in theory, to transfer the money over the Internet or by telephone. Sometimes, though, you may have to go into their office and give them cash. Then you go into one of their thousands of worldwide offices and pick up your money. The fees and lousy foreign exchange rates, when applicable, are, in my humble opinion, near criminal.

Banks around the world can transfer money between accounts using the SWIFT system. It takes a few days for the money to move between accounts, but you will get a considerably better foreign exchange rate than Western Union and lower fees also. Check with your bank for specifics.

Another option to transfer money between banks is through Paypal.com. This may be the cheapest and easiest method of all.

Traveler’s Checks

Many travelers still carry traveler’s checks. There are two things I don’t like about traveler’s checks. American Express, Thomas Cook and other check vendors charge you 1% to buy them. I always cringe when I have to pay US$10 for every US$1000 worth of checks. They’re somewhat inconvenient, since you have to worry about both the checks themselves and the stubs. In remote areas they can be difficult if not impossible to cash, particularly if they are in large denominations. US$20 may not seem like a large denomination to you, but in rural areas of most developing countries it is a month’s pay. Even if your bank provides traveler’s checks for free, that’s money you’re not making interest on and they are. Even so, they are an option for anyone who plans to travel in developing countries or away from major cities and tourist areas with ATM access.

Cash

The world standard currency is U.S. dollars, but lately the greenback status is challenged by the almighty Euro. You can change both of them anywhere (although you might have a rough time in North Korea). In some developing countries, such as Cambodia or Ecuador, you will need to pay in dollars. Panama uses both dollars and a local currency, the balboa, as official money. Ecuador discontinued their own currency several years ago; now they use U.S. dollars. In Cambodia they won’t even take the local currency, riel, from foreigners. It looks like Monopoly money anyway. Changing even a US$10 bill can be difficult at times, so remember to bring plenty of small currency U.S. bills if you visit such a place. In Laos, you may even get a bill or receipt printed in three currencies: U.S. dollars, Thai baht and Lao kip.

In some countries, like the Philippines, you get a slightly higher exchange rate for cash than traveler’s checks as well as a better rate for large denomination bills. The rate is also a little better at "unofficial" money changers rather than banks. In Thailand the rate is better for traveler's checks than for cash. If you are flying internationally with more than $10,000 cash you may need to complete a special form declaring the money upon arrival at customs. Once, when flying to Central America from Houston, a U.S. government official approached me as I boarded the plan and asked me if I had more than $3,000 in cash on me. Kind of creepy.

Second Passports

One way to help secure freedom to travel is obtain a second passport. While it may sound like you would have to live in a foreign country several years before getting a passport, the truth is a few smaller countries offer citizenship investment programs that do not require residency. Ireland, for example, has a program for people with Irish ancestry.

There are several companies that specialize in investments and second passports for permanent travelers. They often charge thousands of dollars for their services. The Dominican Republic is one country that has a passport investment program. For more information on second passports, try here.