Break Old Financial Habits When You Get New Life Abroad

What better time to adopt healthier financial habits than when you leave your old life behind and start on your new adventure abroad?  If you’re expatriating or have recently made the move overseas and you want to get out of unhealthy money practices, then this article is for you.

Whether you have a habit of maxing out your credit card, spending more than you earn or blowing your monthly budget on unnecessary items, a move overseas could herald a whole new you.

Whilst we always preach that you can’t escape yourself and your life by moving abroad, you can use this period of transition and change for positive personal development.  And if you want to develop personal and positive financial habits that match your lifestyle requirements, here’s how…

Draw Up Your Basic Budget

Before you even begin to look at improving your money habits, you need to get to grips with where it’s all going wrong!  So you have to draw up your budget – and it isn’t difficult.  On a piece of paper (or in a spreadsheet) have 2 columns.  The first should be for your income.  For most people this is a single figure, namely their net monthly wage – however, if you’re in receipt of rental income or interest from an investment for example, list it all in this first column.  The second column can be a bit trickier…it’s for your outgoings.  With a bank statement to hand you can plot where most of your money goes – rent/mortgage, bills and so on, but you also have to look at each time you have withdrawn cash over the month and you need to try and remember what it got spent on.  Maybe it was for morning coffees at work, a night out, an impulse buy from your favourite fashion shop?

List every single thing you spend money on each month…do not cheat because you’re only cheating yourself and your future financial health.  And don’t forget to include anything you’re paying for with your credit card too.

At the end of this exercise you will be able to see exactly how much you have to spend each month, how much has to go out on essentials, (i.e., rent/mortgage and bills), and how much is perhaps wasted, frittered away or not spent/saved wisely enough.  It is at this point that we can move forward and help you battle your bad financial habits.

Get Rid of Your Overdraft Mentality

I have to admit that I didn’t even know what an overdraft was until I started my first job and got chatting one day in the canteen.  Many of my fellow workmates were joking and lamenting at the same time – all about their overdrafts.  It was shocking to me how many of them only went into the black for one day a month when their salary went in and how, from that day on they lived off their overdraft!  Your overdraft is a high interest loan.  It is not your money, it never was your money and it never will be your money.  What’s more, it is not even an effective way to borrow money.

Did you know that your bank can demand you pay back your overdraft in full at any point and cancel your right to have one too?  Therefore, you need to get rid of it quickly and never fall back into the trap of using it either.

Ditch Unpaid Credit Card Debt

Credit cards are very useful and they have unique benefits too, such as insuring some purchases etc., however, unless you’re enjoying an interest free period and have every intention and resource available to you to pay your debt back in full as soon as the interest free period is about to expire, credit cards soon become evil!  If you have unpaid credit card debt can you transfer the balance to an interest free card and work hard during the interest free period to pay it off?  Can you take out a loan for a short period of time at a lower rate of interest than you pay on your credit card debt and pay it off?  If not, the bottom line is you need to chip away hard and fast and getting rid of your very expensive credit card debt.  This should be a priority.  Once you’ve cleared your card/s, cut them up!  This may sound drastic, but if you have a habit of using your card and not paying back your debt, that’s a bad habit you need to break.

Don’t Erode Your Savings

Many of us are in the situation where we’re not earning as much a month as we were before the recession – for us it is very tempting to eat into our savings and maintain our lifestyle.  Expats are in exactly the situation as their peers onshore – and you need to know that by eroding your savings in this way you are laying yourself open for serious financial trouble ahead.

Leave your savings alone – stop spending them.  If your outgoings exceed your income you have two choices – stop spending as much or earn more!  Do not think that taking a chunk out of your offshore savings account this month with the intention of repaying it next month is acceptable.  Money saved should be money well protected and money used for your future – it should not be frittered away and whittled down to nothing.  It’s very hard to save money, all too easy to spend it and once all your savings are gone, you’re still going to have to face the fact that you need to either reduce your outgoings or increase your income.  So stop spending your savings.

And Finally Leave Your Bad Habits Behind in Blighty

If you smoke, socialise excessively, have a shoe fetish or are addicted to your morning Starbucks, moving abroad and breaking your patterns of behaviour and your daily routine makes it so much easier to break a bad habit.  Be very well aware of the habits you want and need to break, and then find ways to avoid getting back into your old routines and habits once you’ve relocated.  It’s so much easier to do once you’re in a new country with new friends, new challenges and opportunities.  And once you break your old bad habits, there’s no better time than now to get into a good habit – namely saving as much as you can each month towards your future financial security.  As an expat you have far more attractive savings mechanisms available to you – so make the most of them and squirrel what you can away so that you can relax when it comes to money matters.