Saving Tips for Expats
Are you an expat on a budget? Do you believe your income is too low for you to start saving and accumulate wealth? With smart planning and the below 10 savings tips for expats, you will be able to meet your savings goal in no time!
The first step in creating a savings plan for expatriates is to make sure you don’t make any financial planning errors from the get-go, which can make it all that harder to start your expat saving plan. Amongst all expats, there are these three common errors we tend to make when we relocate:
1. Underestimating the Costs of Living in the New Country
Many expats factor in food and similar essentials but fail to research other elements adequately. Local transport, utilities, clothes and housing costs are too often ignored. People make assumptions about local rental costs for their new home. In Singapore, for example, reasonable standard housing costs are probably double that of Bangkok. But what may surprise many is that in India, prices are twice those of Singapore (compared to your local salary). Who would have thought it?
2. Moving Costs
Many expats think that the movers are the only cost in the actual relocation. In reality, you will often have to find temporary accommodation before moving into your main residence abroad. Also, different countries have different standards of what a “furnished apartment” is. In many countries, where you move into a new place, you will be responsible for having your own bed linen, cutlery, cookware, towels, and possibly even furniture. These can be very expensive, and when you are new in a country, you have no idea what is costly or reasonable. Don’t forget to factor in things like utility and telephone deposits and other possible local administration costs, such as letting/real estate agent’s fees, etc., for which you will have to have sufficient funds to cover.
3. Local Bank Account
Having a local bank account is extremely important. If you try to do everything from your bank at home, you will quickly be subject to some high unnecessary costs and face exchange rate fees.
Having laid out the most significant errors expats tend to make at the beginning of their journey, let’s now move to the section of this article everyone is looking for the most: the financial savings tips for expatriates living abroad!
Top 10 Savings Tips For Expats
Often, expats find it difficult to manage their money while living abroad and having to factor in liabilities they have both in their home countries and while they’re currently residing. Below are 10 savings tips for expats living abroad:
1. Create a Budget
Creating a budget of your monthly income and average monthly spending is the first step in creating any savings plan. Knowing your costs and how much money you need to budget for specific necessities can later help you establish the amount of money you can save every month and allows you to budget for everything – even the fun and spontaneous spending sprees.
2. Open A Separate Savings Account & Contribute To It Monthly
The best way to start saving an agreed amount of money every month is to set it aside in a separate savings account every month. This way, you won’t have any excuses or temptations to buy something spontaneously, as part of your funds will be sitting safely in a separate account.
3. Keep Records of Your Spending
Creating a budget and a separate savings account is one thing, but monitoring how exactly you spend your money is a powerful way to discover your money spending habits. Try downloading one of many apps to help you do this.
4. Compare Prices
The first few weeks or even months in a new country can stretch your budget as you are not yet familiar with the chains of low-budget supermarkets, or you have no insight on how the deals or promotion may work – or when to expect them. Explore your neighborhoods and ask your local friends or colleagues to share with you good places to shop and eat out without having to pay hefty prices for it.
5. Know Your Taxes
Understand the taxes you are subjected to, where and how to pay it and whether you might be subject to double-taxation in your home country. Stay up to date on the tax and finance news– especially those relating to taxes and investments in your home country. You’re still a citizen of your country, so you’ll still be affected by certain tax laws.
6. Use a Local Bank Account
While already mentioned earlier in this article, the most apparent reason for opening a local bank account is to help you manage your monthly transactions. Your offshore account can play an important role in helping you manage your savings and investments in a tax-efficient way. It’s also a great way to stash money while you wait for the exchange rate to move in your favour before converting to your home currency and sending those funds home.
7. Get Insurance
While some may not see it as a straightforward savings tactic, getting health insurance while living abroad has the potential of saving thousands or even tens of thousands of dollars, should something serious happen to you? It is not something to put aside, and it is one of the pillars to expat financial planning – or expat life in general.
Find the Best International Insurance
- Compare multiple quotes and coverage options
- Work with an insurance expert at no additional cost
- Find the best plan for your needs and budget
8. Retirement Fund
Pension or retirement is not an exciting topic, especially to the younger population of expats, yet it is an important and often overlooked part of an expats life. We want to highlight here is to stay on top of your pension that you have at home – see if you can still actively manage it from abroad, and make sure to understand correctly how the mandatory retirement system works in your new country of residence. State pensions are often inadequate to cover the cost of retirement when the time’s come – and opening a separate savings account – even with small contributions – can make a huge difference to your future retirement fund.
9. Live a Simple Life
While it may be the cause of major FOMO (fear of missing out) to many expats living abroad to NOT engage in every networking party or local activity, there is, if you are on a budget or simply want to start saving, ensure you live within your means.
Moreover, the country you’re living in right now may have a higher cost of living than the country you are from, so you’ll need to make changes to your lifestyle if you want to save money. For example, in many Asian countries, costs of the diary are incredibly high, and
10. Do Things At Home
Depending on where you live, eating out might be a costly venture. Cooking most of your meals at home, doing your own laundry, and even cleaning your apartment can save you a significant amount of money every month. Instead of going out every weekend, try inviting friends over to share a pizza – in simple words – try living like a local abroad and do things as you would back home to save money.
While saving money as an expat is not always an easy task, it is possible! With motivation, and if needed, a financial advisor’s help, even expats on a budget can start making smart spending choices while enjoying their lives to the fullest. Saving early for your retirement (in a designated retirement plan) also gives the money the availability to grow over time to ensure your future, whenever it may be, is secured.
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