Budgeting for expat life is just as important as it was when you lived and worked in Australia! Once your big move overseas has happened, and you are slowly settling into expat life in your destination of choice, it can be easy to forget that the same budgeting rules apply as when you were at home in Australia.
Perhaps you’ve relocated to London, and are having a ball touring the tourist attractions that your new incredible home has to offer. Maybe you’ve moved to Germany, and an immediate mini-break to Oktoberfest in Munich seems like an opportunity you can’t pass up. You could be a new expat local in New York, and a shopping trip to Madison Avenue is seeming almost impossible to resist.
Wherever your move has taken you, it’s easy to forget that visiting as a tourist and living as an expat are two very different things, and that you need to budget just as you would have at home – or even more so. In many instances, your take-home income will be greater working overseas compared to Australia, particularly in the lower tax jurisdictions of Asia and the Middle East.
The more we earn . . . the more we spend
This will provide you with greater opportunities to save and to invest. Be aware though, that although you’ll be earning more, budgeting becomes even more critical, because the more we earn, the more we tend to spend! Budget carefully, save that additional income and consider investing for the future, or for your future return to Australia. Speaking of that, we’ll run through some of the awesome, tax effective opportunities that exist to invest back into Australia in a future blog post.
Beyond budgeting to live and to invest, you’ll also need to bear in mind that you may still need to lodge an Australian tax return from abroad and you may have Australian income tax payable, if you’re generating income sourced in Australia.
Budgeting for expat life
On top of the usual expenses of renting, bills, everyday essentials or putting savings aside, there’s some other practical matters that you should budget for! As an expat working overseas, you may require an extra safety net for yourself in the event of unforeseen circumstances arising. For example, nothing is worse than relocating to the other side of the world and having a tumultuous event, such as job redundancy, a death in the family, or an accident or illness to you or one of your family members, forcing you to return home temporarily or permanently. If you fail to save, and fail to budget, you may find yourself with limited options and with no savings to sustain you in the interim.
Many expats throw caution to the wind and don’t set aside savings for these events, thinking that it won’t happen. A return airfare to Australia from anywhere can be expensive, as well as wages missed from your new job if you were to have to return home and maintain your new home abroad as well. Even if you set aside a small amount from every pay cheque, it could be the difference between presence of mind and an all-out financial emergency.
On top of a savings safety net, it is also important to budget as an expat as you would when you were at home in Australia. It can be easy to be swept up in the romance of a newly established overseas life, but set yourself a weekly budget as you would normally. If you wouldn’t usually go out five nights a week in your former life, it may pay to apply this to your expat budget as well!
Whatever you do, take full advantage of the wonderful opportunities of expat life . . . enjoy life’s adventures in your new city, but balance the fun by budgeting, saving and investing!
Well, that’s it from me until next time . . . in the meantime, safe travels!
Questions? . . .
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In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.