Before embarking on life as an expat it’s important to get yourself in the best financial shape possible as you begin your journey. The following five tips will help you make sure that you worry less about finances and more about fun!
1. Cut all your current expenses
Before embarking on the expat journey, you need to reduce or eliminate superfluous expenses. Your current spending has a significant impact on your future spending. Cutting out things that are not core expenses will help you get your financial house in order. For example, stop buying $5 coffees from Starbucks, eliminate monthly expenses like gym memberships and reduce your over all spending.
Action: Take a look at all your expenses and see where you might be able to eliminate costs. For example, can you reduce your car insurance costs, gym membership or cell phone costs by moving to a new plan? Small steps like bringing your lunch to work to avoid eating out can pay big dividends in the long run.
2. . Become debt free.
Now that you’ve reduced or eliminated frivolous expenses it’s time to allocate those extra savings towards eliminating debt. Becoming an expat and having to worry about how the credit card bills or mortgage are going to get paid is simply not a long term solution. If you are lounging on a beach in Ecuador or sipping yak butter tea in the foothills of the Himalayas, the last thing you want to think about is how your bills are going to be paid.
Action: Eliminate all sources of debt. Allocate the money you’re saving to pay off all credit cards. If you own a home sell it or better yet, rent it out. But only rent it if you can make more money than the monthly mortgage payment. Otherwise you’re simply subsidizing someone else’s rent.
3. Develop a safety cushion
Put money away for a rainy day. Becoming an expat means that you will have opportunities to explore the world. But should the unexpected happen and you need to return home or you need some quick cash, the last thing you want to do is start running up those credits cards.
Action: Once you’ve reduced your spending and eliminated your debts, it’s time to start funneling money into a savings account that will allow you to tap into it should you need it.
4. Determine where your income will come from.
For some people this may mean tapping stocks or other investments. For others, it may mean earning an income while being an expat. One of the easiest ways to do this is to teach English part time.
Determine where the income will come to fund your expat lifestyle. Will it be from savings? Will you need to start a business? Or will you teach English?
5. Develop discipline
It’s easy to make plans. After all, how many of us make new year’s resolutions that are forgotten by the time Valentine’s day rolls around. Staying on track means staying focused on your long term goal of making early retirement a reality.
Action: Determine things you need to do to impose self discipline in your plan. Perhaps that means setting up automatic payments into savings accounts or meeting regularly with a friend who will force you to stay on track.
Reducing expenses, eliminating debt and developing a financial safety cushion are the first steps toward making your expat dreams a reality. Then you can determine where your income will come from and you are well on your way toward making your expat dreams a reality!!