A while back, a good friend of mine recounted how she once spent six months living in a pricey Middle Eastern country, without a salary as she was transitioning from one job to a better one. The problem is she didn’t know it would be a six month wait. The new job repeatedly assured her the paperwork was in process and they would be able to have her on board within a few weeks. That stretched from weeks to months until she was finally able to begin. In the interim, she had to figure out how to financially support herself while waiting for the offer and subsequent paperwork to clear. The thing is, that’s not even that uncommon. You could be ready to jump on an opportunity that may take longer than you think to pan out.
She would readily admit she didn’t ask the right financial questions when she moved from home to her host country when she accepted the opportunity. Sure, she couldn’t control the length of the hiring process, but there are some financial questions you should get answered before you say yes to that job.
How Much Do You Actually Need?
This is both a practical and emotional question. Even though the world is seemingly on fire, some of us haven’t given up the dream of moving abroad. Regardless of when you’re making the leap, you can put steps in place to get you situated to get abroad. Now it’s a good time to figure out how much you need to make your life financially comfortable. You should know this long before a job offer shows up. It means that you’ve already figured out what your basic expenses are and this will help you make a smarter decision when fielding employment offers. It may also help you narrow down the countries on your prospective moving list.
There are some countries, where quite frankly, it’s easy to spend a lot of money. It just happens that all the ‘fun’ activities require quite a bit of money, and it can be easy to spend for the experience. You can think you have a lock on your funds only to find out down the road you’ve been embarking on $120 dollar brunches weekly. There are other times when that homesickness can hit you just right and you decided you will in fact spend $20 for that normally $5 bacon. Or you may be the type who says I can have brunch another time, forgo that bacon and focus on saving up for a travel adventure. Figure out what you are so that you can plan appropriately.
What is an Acceptable Salary in Relation to the Cost of Living?
An employer may make an offer that is significantly greater than what you are making at home. For some people that jump in salary is reason enough to move. But stop. Before you sign on the dotted line, make sure you understand how far that salary goes in your potential host country.
On one hand, earning $12,000 USD/month is great until you find out housing in your new country may cost you $6000. Some of the shine wears off further if housing is not included in your employee benefit.
You need to know the specific details to make an appropriate decision. If you don’t ask these questions, you may find that much of your income is being consumed by cost of living expenses that you didn’t anticipate. This means truly factoring all the things you need to have a relatively decent experience.
Who is Responsible?
You need to know from the beginning what that employer is covering. Some employers will cover your housing, transportation, healthcare, insurance and other benefits. They may also cover the cost to obtain the documents you need to give you legal status in the country. For others, they are simply providing you with a salary. You need to see, in writing, what they are responsible for.
For the employers who are covering a significant amount of the cost, assume that you will be reimbursed. In other words, you most likely will have to make the payments upfront and then receive reimbursement when you are in-country. This can get expensive. You need to assume you’ll need money for travel documents including visas, down payments for housing, moving and other initial relocation expenses. This includes money for traveling expenses for you (and your dependents), background checks, fulfilling country immigration requirements, and such, in addition to the actual transportation of your goods from one country to another.
Depending on your living situation, it is common to prepay for housing — this could be three months, six months or a year at one time. If you are not in employer sponsored housing, this is a huge chunk of change. You may have to prepay for a specific amount of utilities up front, as well.
For those with dependents, find out if there are educational benefits. This is key. In some places, most expat students attend international schools (essentially private schools) to ensure the same level (or in some cases better) of education as at home. Some of these schools can run upwards of $25,000 USD a year depending on institution, location, the student’s academic level and reputation. If you are receiving tuition assistance, make sure it works with your budget needs.
However, if you anticipate that you will need to hire house help such as maid, cook or driver, plan for that to come out of your budget.
What’s the Pay Schedule?
Once you’re in-country, you need to be prepared for those initial costs such as groceries, transportations and other incidentals. Keep in mind it may be up to a month before you receive your first paycheck and you need to have funds set aside to sustain you and your family while you wait. So run the numbers, figure out how much it will cost you get to move abroad, and then add some more money to it. Trust me. All of sudden you’ll realize you’ll need some IKEA furniture at the last minute because whatever is in your furnished apartment does not work. And that, like most things, costs money.
Prepare for the Unexpected.
In a perfect world that first paycheck (and each one after) is on time and continuous. But if anything, COVID has globally shown us is that just about anything can happen. You might assume pay is biweekly but it’s monthly. You may be accustomed to one currency but paid in another. Depending on who you work for, you might find that your pay schedule could be sporadic. Or, heaven forbid, you end up in a situation where the pay becomes irregular on the employer’s end. You want to be prepared to be without a paycheck for a variety of circumstances.
Assume just about anything can happen. Loss of job. Banking crisis. Emergency medical evacuation, coup attempt. You think it won’t and then it does. This should be a no-brainer. You need to be ready. Keep money aside in an accessible place (and even in a different currency) so that you have a financial cushion in case a problem arises. Especially if you’re a short term expat, you may not have the network of family and friends that you have at home, who can bail you out of an emergency.
The moment you start thinking about going abroad might be the time you want to start putting money away. It’s one thing to have financial issues at home. It’s another thing to be abroad. Make sure you talk to your employers and know the details before you sign that contract.