Saving money while working abroad is a good idea, whether you need it for an important financial goal like buying a house or because you want to dispose of an emergency fund in case of an unexpected problem. Spending everything you earn is common among inexperienced expats, because there are lots of attractions in a foreign country, from local food to souvenirs for family and friends. People who are not familiar with a place may also pay more on their groceries and consumables simply because they don’t know yet where to find the best deals. Furthermore, there are those who work abroad just to display an impressive lifestyle to friends and family from home, even if otherwise they can barely afford a decent dinner after work. Money management is an important skill everywhere, but it becomes vital in a foreign country where you may not have anyone to help you when you get into trouble. Here are some valuable tips on managing your finances efficiently and even returning home with a small fortune:
1. Research living costs
Before moving to a foreign country, you should identify costs such as housing, food, transportation, utilities, and entertainment. Calculate an average monthly budget and see if living expenses can be covered by your projected earnings.
2. Have an emergency relief fund
No matter where you find yourself, at home or overseas, you should always set money aside for emergencies. It’s recommended to accumulate several months of living expenses, in case you lose your job or have to support a considerable expense.
3. Pay yourself first
The first thing you need to do on pay day is allocate a portion of your earnings to your savings account. The next objective is to pay monthly expenses, and only afterwards should you make unessential purchases. Nobody says you shouldn’t buy a new pair of shoes, but if you’re not barefoot, put money aside first and only afterwards go shopping. Although it’s difficult to ignore today’s consumerist tendencies, you should focus on your financial security first, no matter what.
4. Stick to your budget
The amount of money that goes to your savings account should stay the same all the time, and the budget for discretionary purchases needs to remain limited, no matter how attractive prices are during the sales season. Sticking to a budget is easier when you have someone that holds you accountable, such as a spouse, and you can also try budget apps for your phone.
5. Avoid commissions
Many people working overseas send money back home. However, money transfer services can be quite expensive, especially when you choose the first traditional bank that you run into. It is definitely worth to look for a reliable service without hidden commissions and bank fees before you move abroad. A good alternative for money transfers is Revolut, a digital banking platform that doesn’t charge any commission.
6. Get a roommate
Sharing the room with someone else may not be for everybody, but you never know until you try. Many people working abroad choose this solution with the purpose to save money. Cutting your accommodation expenses to half means you can save a lot more money every month.
7. Learn how to cook
Eating out every night is expensive, no matter what part of the world you live in. Local ingredients may be different from the ones back home, so you’ll need to familiarise yourself with the food of the culture that has adopted you. You’ll be thrilled to see how much money you can save every week.
8. Choose cheap transportation
Options such as walking on foot, riding a bicycle, or taking public transportation are not only cheaper, but they also come with other advantages. You have a chance to explore the area where you live and forget about homesickness and you also get to work in an environmentally-friendly way.
9. Go to a warm place
When moving abroad for work, choose a location with a warm climate. If you go to a Mediterranean country you’ll only have to pay for 3 or 4 months of heating, while in the UK, for instance, you’ll have to support 9 or 10 months of heating costs. A country with a friendly climate can help you save lots of money on fuel costs.
10. Choose offshore financial options
Working abroad can allow you to legitimately avoid taxation. Being able to keep income offshore depends on your tax status in the country where you live and work, and offshore solutions are worth exploring as long as you take qualified advice. Last but not the least; the important thing is not to associate work abroad with a glamorous lifestyle. Many people make the mistake of spending a large percentage of their income on branded goods, luxury cars, and fashionable clothes just to impress friends back home. Your foreign stay should be comfortable and decent, but not luxurious, as long as you want to keep you savings account consistent.