The 7 Phases of Expat Life – Are You Financially Mature Yet?

4. Social Maturity

There will come a time when you are done with brunches. You’ve travelled around the region, you’ve done the staycations, you’ve been to the bars and the fancy restaurants. You’ve filtered through your acquaintances and you’ve made some good friends who get you.

You’re also a bit older (brunches age you fast!) and a bit tired. A quiet evening with friends is fine most of the time.

If you do not reach this phase, there is a problem. The Honeymoon is not sustainable. It is Neverland, bad for your liver, bad for your wallet, bad for your career. You have to pace yourself if you are going to last the distance.

There is a hole in the heart of every expat, from leaving behind family, friends, ageing parents. From seeing your home country evolve away from what you’re used to. From being a bit rootless.

You fill this hole with work, with buying nice things, with partying a bit too hard. The friends and family who know you best may not be around to take you to one side and tell you to sort yourself out. You have to do it yourself.

If you do not reach social maturity, there is no way you will reach financial maturity, unless both are thrust upon you by a paycut, job loss, a death. These will more likely cause social loss and financial loss, which are much more abrupt and painful.

Ask yourself, am I a socially mature expat? Or am I living like there’s no tomorrow? Well, there is a tomorrow and there is also a distant future that will require some retirement income. As an expat, a pension is a rare beast.

5. Financial Maturity

Financial Maturity comes with pain and experience. You wake up one day and realise you must get your finances sorted out. Or your credit card balance gets out of control. Or you realise you have been seduced into a crappy long-term savings plan. You vow never to let anybody take control of your money again.

Hopefully at this point, you start reading the DeadSimpleSaving blog, join our Expat Investing Academy, sign up for coaching sessions, whatever works.

If you do not reach Financial Maturity, you are leaving this town with nothing but memories. Do not be that person. Again, only you can sort this out yourself. Everyone else is happy for you to spend.

An extended Honeymoon phase leads to excessive debt, no money left over at the end of the month. You spend excess money because you miss home, because you work hard, because you’re too busy, because you are keeping up with the Jones.

You must identify and tackle all the issues driving your lack of financial progress. Don’t keep your head in the sand. Find like-minded people trying to improve their finances and distance yourself from people who cause you to spend excessively. Get a mentor if necessary, to teach you and hold you accountable.

You are good with money. Repeat it in the mirror every day. You are going to use this expat opportunity to secure an amazing future.

Understand what drives your thinking around money, calculate how much you actually have and what you can save each month. Categorise your expenses and ruthlessly filter anything not providing real value. Set some goals for your investments and your time to ‘retirement’. Re-build that cash buffer of 6 months’ expenses if it’s been depleted.

If you have card or loan debt with an interest rate of more than 5% per year, do not rest until it is paid down. That is your life’s focus, for the time being. The other side will be so much better, I promise.

Think about what will generate income for you in retirement. Will it be stock & bond funds? Will it be property? A business you’ve started? A pension or two? Start planning your ideal mix of these, get educated and start pouring your money into them. Now.

You have your cash buffer and sinking funds for education, a new house, car, wedding etc. Everything else, all the cash sitting around doing nothing in the bank, all your left-over salary, can go into your investment portfolio.

Congratulations, you are a financially mature expat and it will transform your life.

6. Departure

Some people have to bundle out of the country within a week. It’s usually linked to having debt or no spare cash. The rest of us can plan our exit from in a more orderly fashion, and you really need to. A bit of planning here can go a long way.

First, plan how to close down all your bank accounts, utilities etc, as trying to do this remotely is unimaginably painful and international phone calls are expensive.

Second, understand the tax laws of the country you’re moving to. No need to start more than 18 months out from departure, as the laws can change a lot. But don’t leave this to the last minute.

Read articles, read books, ask questions on community forums and, most importantly, get some proper tax advice, preferably from a tax expert in that country who understands expats and isn’t tied to a company trying to sell you financial products like offshore bonds. This isn’t easy so tread carefully.

You may need to sell all your stock & bond funds before you move back, to reset your capital gains and avoid future tax (e.g. UK) or to get out of non-domestic funds not approved in your home country (e.g. Canada). You’re not getting out of the stock market because you will jump back in as soon as you’re home. Just a little tax-saving detour.

Tax laws dictate the rules of the game. It’s not particularly fun but a basic understanding and some good advice will ensure you don’t lose the momentum you have built up as a financially mature expat. You’re going to do things properly!

7. Nostalgia

When you are shivering back in the cold, tax-heavy country you call home, you will look back fondly on your expat days. You may see it as a missed opportunity and think, ‘I wish I had made the most of my time there’, as you poke miserably at the coals in the fireplace.

Or you can smile and thank your expat journey for transforming your finances and making you an infinitely more worldly, wealthy and impactful person than everyone else shivering around you.

Many of you have not reached this stage yet. There is still time to make the most of the amazing financial opportunities expat life can give you. If you are reading this not feeling very financially mature or even socially mature, it’s never too late to get started.

Thanks for reading.
Steve

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