More Americans than ever are leaving the rat race and living abroad. These 9 expats share their best living abroad tips on finance and making a new life.
On Tuesday, we saw from the Association of Americans Resident Overseas that more than six million Americans now live abroad in another country. Don’t get me wrong, I served my country in the Marines and still think the United States is the best nation on earth but I also enjoy some great benefits from living abroad.
Click through to Tuesday’s post to see some of the pros and cons of living in a foreign country, whether short-term or permanently.
Today, I thought I would get the opinion of my friends and other expats living here in Colombia and other destinations abroad. Many of the 9 expats below have lived in multiple countries, some making a permanent home in one and others moving around more frequently.
Reading through the ideas, there are some common themes on money and making a new life. Of course, your experience is going to be a little different as you apply your own skills. Please use the comments section below to add any tips or experience of your own.
Living Abroad Finance Tips
Harvey Kaplan: I can say that I don’t personally know any foreigner making a decent living here that solely rely on local income except a few guys renting apartments. Foreign owned businesses are not supported by the locals. My advice is to make money outside Colombia unless you are doing import/export of some kind.
This is going to be the recurring theme in making money with a couple of exceptions. Part of it is living in an emerging economy like Colombia, employment and wages is not what some expats expect. With an unemployment rate of 12% and higher for many groups, it is very difficult to get a job and most do not pay very much.
William Humphrey: Four words of wisdom right here – earn dollars, spend pesos
There are two pieces of advice here. As we’ll see in other comments, if you can earn money from clients in a developed economy like the United States and have you’re expenses at the cost of living in another country – you can do very well living abroad. I earn more than twice my expenses by doing investment analysis and writing for U.S. financial advisors.
Check out an earlier series on my Work from Home blog: How I Make Money Writing Online. The other piece of advice is that earning dollars means your money goes farther when the U.S. dollar has appreciated like it has over the last six months. The dollar has jumped 25% against the Colombian peso which is like getting a huge raise for anyone making dollars.
Chuck Howard: All my retirement income is in dollars. Staying on top of how to keep the income flowing into Colombia has been somewhat a challenge (i.e. getting a US bank to issue a chip debit card).
Chuck is one of the many retirees choosing to live abroad. I don’t know Chuck’s finances but many retirees are finding out that their social security and investments will not cover expenses in the United States. The average person 65+ has just over $200,000 in savings, which along with social security will provide less than $2,000 a month.
It can be difficult to get transferred abroad, especially if you live in a country where the banking system isn’t as strong or in a country like Colombia that has strict regulations on money flows from outside the country. Many expats keep a little extra in a local bank account just in case they have trouble getting money transferred sometime.
Silvia Cole: I would say finding a decent job and making money is one of the biggest challenges for foreigners living in South America. I had a nice apartment, a car and a decent salary back home and ever since I moved to South America I don't have any of that. I've been living in a shared apartment because here it's too expensive to have my own place. Oh, and then there are the visa/residency problems. But nonetheless, I'm happier here and I don't wanna go back.
Victoria DeDicova: It's cheaper to live in areas where locals live not gringos. Find a good international money transfer provider. Use a regional bank for typical banking and international for back up. Pick a favorable state to set up residency. If you work for yourself set up an LLC and run your life through that stateside, more favorable tax structure.
Want to make money working over the internet? Check out How to Make Money Freelancing and 9 Websites to Help You do It
Victoria offers a lot of good advice above. Here in Medellin, many expats move to a neighborhood called El Poblado at first because it is an upscale area and more similar to neighborhoods in the United States. They soon find that living in the neighborhood is two or three times more expensive than other middle- and upper-middle class neighborhoods.
As Chuck mentioned, banking can be difficult sometimes so it is best to have a couple of accounts with different banks to make sure you have money available.
Douglas Allen: One thing I learned is it does not pay much to work in Colombia, so make sure you bring enough or have enough dollars to live here. Job opportunities here are very scarce and pay hardly anything.
Always look at the average wage where you are planning on living. Even college-educated professionals here in Colombia only make a little over $1,000 a month and that is for a full-time job. There are two ideas here that you need to understand before trying to work in another country.
- Do you really want to work 40+ hours a week for less than $5 an hour? Is it worth your time or is there something else you could be doing, i.e. working over the internet for clients abroad.
- Opening your own business in the local market is no get-rich-scheme either. You will be competing against businesses where the owner is more than happy to make a thousand or two a month. Running your own business is no joke and you’ll be putting in double the amount of hours for little extra money.
Barry Brachfeld: Buying apartments and renting them out is no longer an end game. Buying apartments with air rights to build another floor and cost average down. Because building costs peanuts, but once you’re done it's worth $$$. If you’re really smart. You built above and you dig below, creating two floors. Otherwise what you can do? Open a restaurant and maybe make $900 a month? All my other friends here work online, or are retired and have 401K money and pensions.
Barry has been one of the most successful expats I know renting apartments but even that is no easy task. Dealing with the local property laws and regulators can be a huge pain. Real estate continues to be a good source of income for many expats but most still need to supplement their income with a side job.
Living Abroad Tips: Getting Around and Blending In
With a cost of living around a fifth of what it costs to live in a large U.S. city, it doesn’t take much to make a decent living in a country like Colombia. For many expats, getting adjusted to the culture and learning what is available is a bigger challenge.
Bill Howard: Smiling, greeting those around you and attempt to establish relationships and speak the language even if you speak it badly. Over time, you’ll get better and those people you have formed relationships with will have a sense of pride for having been a part of your progress.
Learning the language should be your first goal anywhere you go. It is so much more rewarding and less complicated when you can carry on simple conversations. For the most part, locals will be more than happy to talk with you and will be impressed that you’re making the effort to learn their language. The majority of expats I know that moved back to the States did so because they failed to learn the language and felt isolated.
Darren Howarter: Getting a credit card that does not charge foreign transaction fees AND builds air miles. We fly back to the states for free and we don't have to carry or exchange for tons of pesos. Getting an ATM card that will work consistently down here for little or no fees and be competitive with the exchange rate. Be flexible and adapt to your new culture, don't expect them to adapt to you (probably the biggest challenge I hear/read about from US citizens). Get creative with your income streams.
Darren offers some great financial tips but I like the one on culture the best. After more than three years, I still get frustrated sometimes when loud music from nearby parties goes on into the late night. I understand though that it is part of the culture and I try to adapt, and have a little more fun myself. Don’t consider yourself a guest in the country but a resident and try to enjoy the culture.
Got a living abroad tip of your own? Ever wonder about moving to another country but still have questions? Use the comment section below to share with the group.
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.