Preventing Initial Money Mistakes
Moving overseas results in change. For some, this change is exhilarating and makes them feel alive. For others, this change can be overwhelming. The further you move from your home-culture, the more dramatic those changes become. Spending patterns are no less affected by those changes. For many, there are basic assumptions that can be disastrous if not closely examined. For instance, the cost of living in Asia is much cheaper than the cost of living in the United States, therefore assume I can live like a king anywhere in Asia. This statement can be true or false (consider Singapore vs Cambodia), depending completely on where and how you are trying to live like a king.
Some key steps to getting off on the right foot financially in a new country:
1. Keep track of it all.
As you begin to set up your new life, the first thing you should do is keep a record of your finances. How much you are starting with in savings and investments, how much you are bringing in, what you spend your money on. Having a baseline in your financial life lets you know where change is occurring. Knowing if that change is good or bad is a different question, but without the information to analyze, many people are left with a general feeling of "I'm doing great!" or "My world is collapsing in around me!"
Determining what your new life spending habits will be can be a daunting exercise. Keeping track of utilities, not a problem (although figuring out how to pay said utilities might involve hurtling through traffic at speeds which make Tron seem pedestrian!). But in many areas there are social expectations regarding house helpers, community assistance, neighborhood security patrols, death contributions, registration fees and more. Ask a lot of questions about what is normal for someone of your economic stature in your area. Depending on where you live, these expenses will vary greatly. The expat community is invaluable in understanding the nuances of these communities, and a trusted local is generally worth a dozen or more expats.
3. Ask around about the 'deals'
Finding your "deals" is an essential part of frugal living overseas. Finding local fruit, meat (assuming that it is reasonably safe), snacks, drinks, haircuts, transportation can all greatly help your financial bottom line, plus they often provide some great cultural experiences. Learn about your particular area and find out what is grown in that area, or what is produced locally. Depending on where you live you can find great deals. For instance, I just happened to move to an area where the 'average' coffee is considered top shelf by the rest of the world. The price is low, the quality is high. There are a lot of fruit and flowers which are grown locally. These are my deals. Electronics? No way. My price is double what the average American will spend. The same goes for alcohol and cheese. Know your deals, and leverage them.
4. Be aware of gravitational spending.
Housing, transportation and education are some of the most significant financial decisions one can make overseas. Housing costs can vary from virtually nothing to first-world opulent. However, be wary - housing choice often impacts neighborhood fees, taxes and service costs. The same goes for vehicles. Service costs for the 'normal' vehicle in your part of the world can vary dramatically. For many parts of Asia, scooters or mopeds are immensely popular because of low gas costs, low annual taxes and and low maintenance costs. Add on that many roads simply weren't created for cars, and you've got the perfect rationale for the vehicle. However, knowing the trade-offs are essential. Many families feel that they cannot function without a car, which is often true. Does your country have a rainy season? Know what your facing before deciding on your transportation mode. Different people make wildly different choices that work for their situation. But be sure to know what you're signing up for. Get an idea of the maintenance costs, annual taxes, the initial costs and resale costs of a vehicle, and the functionality of the vehicle. Often access to a car and driving service are available on a schedule (kind of the adult version of carpooling), or using services like Uber and Grab can eliminate the need for a personal vehicle completely.
5. Identify your new financial boulders, and plan for them.
Visiting family living overseas is often a large financial hurdle financed by debt (credit cards). School fees, visa expenses and purchasing a new vehicle can also fall into this category. Keep these new expenses in mind and begin preparation long before the bill comes due. Decide how often your going to visit your home country and work that into your budget. Vacations also are in this category and are often vital for mental and emotional health, depending on your life circumstances. Plan ahead. Be proactive. Don't reach for that Visa without knowing you are going to pay it off at the end of the month.
6. Watch locals and ask questions.
Humility is essential for living overseas. It is generally best to ask how a local would solve a problem of how they would buy a dress. Knowing where locals buy their clothes, or which stores will have high-quality products becomes extremely helpful when pinching pennies (or whatever currency your using today). Learning how to select ripe fruit, pick furniture that is high quality buy still relatively cheap, or find used office furniture are all tasks that a local knows almost intuitively, but an expat will squander lots of money simply because they don't know who, how or where to ask the right questions.
7. Leverage your location.
Living overseas provides incredible opportunities and challenges. The saddest thing is to get so overwhelmed by the challenges that you fail to experience the beauty and wonder offered by a new locale. Find new restaurants. Find local natural wonders. Search the historic quarters of your city. Seek out clubs and excursions. Find beaches, or mountains or whatever it is that your corner of the world is currently offering. Whether it is hot springs or sophisticated spas, jungle treks or snowy parks, find what makes your specific area unique and exotic. Think about what you are close to, what appeals to you and pursue it. Many countries in Asia have budget airlines which provide cheap, fast connection to areas off the beaten path. Often vacations can be had for pennies on the dollar if your willing to go to a lesser known area compared to nearby tourist meccas. If you feel that you are suffering by living overseas, that will manifest in your financial decision making. If you love where you live, enjoy your culture, and are thriving, you can make healthy financial decisions.
Moving overseas can be stressful. Don't compound that stress by adding financial stress. Instead, make wise financial choices initially so you can enjoy the offerings of your particular corner of the world!