Why you MUST sort your money out before moving abroad
It’s a long-term goal you must work towards
Throughout 2023, one of my goals has been to sort out my finances. I don’t just mean this in terms of savings. I mean this in terms of savings. When you come from a background where you’re discouraged from any form of long-term planning or meeting long-term goals, it’s difficult. You have to unlearn a lifetime of habits and beliefs that do not match your ambitions. Yet unless you sort your money out in both practical and mindset, you won’t succeed.
Here are some of the key things I’ve learned during this time.
Passive income and multiple income streams are the key.
Do not rely on one source of income. Even if you never intend to live abroad, relying on one income source — usually a salary from an employer — is a terrible idea. This is especially important if you live abroad. Having multiple income streams from different sources — ideally from multiple countries eventually too — is the key to spreading risk and minimising disruption. Especially if you are unexpectedly let go by an employer and/or must move on suddenly.
Income sources can vary and include freelance writing on sites like Medium, investment income, and ad revenue from a blog or YouTube channel. It’s worth taking the time to grow these income sources before your departure. And yes, It’s OK to take longer to leave to ensure you do so with the best footing possible.
Take it from me — somebody who’s been working on growing my Medium presence and other side hustles. Am I making much money now? No. However, this is typical for early on in. The key is persistence. And the more I work at it, the more rewards I’ll get — including financially.
Even if you’re desperate to leave your home country and hence struggling mentally, it’s absolutely worth spending time building up a side hustle income (ideally a few hundred pounds at least) before you leave. That way, when you go, you’ll always have some money from it each month. That money could make all the difference in the future.
Understand what financial support — if any — you can get from your government.
In most Western countries, a welfare system exists as a safety net. While this will be alien to most Americans, in Europe this is something we’re very much used to. However, residency requirements exist, which make claiming social security (no, I’m not using the neoliberal “benefits” term) abroad difficult, if not outright impossible. Additionally, there are limits on what people can claim if they return.
So why am I bringing this up? As part of planning, you need to understand the social security systems, whether you can claim abroad and what you need to do to qualify upon your possible return. The answer is usually no. However, there are some exceptions and requirements you must meet. Research this.
An example is the UK’s Habitual Residence Test (HRT) which anyone attempting to claim social security must pass to qualify. If you have been abroad for 2 of the last 3 years, you won’t qualify for anything. This means you must plan a financial safety net if you must move back to your home country for any reason.
You will be on your own financially.
While this is a source of anxiety, it’s also a source of freedom. The world is your oyster. As long as it doesn’t put the terms of your residency at risk, you can do almost whatever you want. There are many employers you can work remotely for (despite many others trying to force their employees back to the office). You can move to almost anywhere in the world and work remotely from there (and potentially save lots of money for the future).
If you’re used to relying on social security, it can be shackling due to the requirements you have to meet to keep claiming. Ditto if you do not have long-term financial planning goals and skills. Yet if you can break free, the rewards are well worth the risks. Sorting out your money before moving abroad means you can better embrace the many opportunities available and take more risks.
I’ve still got a way to go
There are still things I’ve not touched on yet, like investing. I will cross that bridge when I get to it. However, I do know that I want to invest as sustainably as possible and with as international an outreach as possible. I still need to fully navigate research concerning this, hence why I’ve not touched on it here. However, I’m looking forward to taking all those next steps. I can’t wait to see where I’ll be in a year.
Final thought
It’s absolutely vital to sort your finances out. Much like moving abroad, financial planning is a long-term goal that must be done in tandem with migration. It’s the only way to guarantee success.
Note: This article is for informational purposes only; partially based on my lived experience. It should not be considered financial or legal advice. Not all information will be accurate. Consult a qualified financial advisor before making any major financial decisions.
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