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Myths about the cost of living overseas

A crucial step in deciding to move abroad is to calculate your cost of living overseas and prepare a budget but its not as simple as it sounds here’s why.  As someone who has lived in several international locations, I can tell you that it is nearly impossible to plan a monthly budget with any exact accuracy. Every country will have its own hidden cost that you can not possibly be aware of unless you live there.  I will attempt to expose the myths and truths about preparing a budget to help you make informed decisions for planning your living expenses overseas.

Myth number one: “Cost of living calculators really help you with a monthly budget. ”Wrong, cost of living calculators are created by marketing people using government statistics in a spread sheet.  It can tell you about the local tax and give you a rough utility cost, and maybe even tell you how much it cost for a cab ride, but it says very little about actual hidden cost such as healthcare cost or any extra uncovered medical, dental, pharmaceutical expenses that may not be covered by your health plan. There are so many different circumstance where you could end up paying a lot more or less than your normal house hold budget because of local weather, transportation or basic supply and demand failures that exist in the region. There are many unexpected situations that cause budgets to fluctuate.  Calculators won’t tell you about the climates role in your food budget for example; humidity can sometimes cause food to perish at a rapid rate and it can be difficult to find frozen foods. Depending on what sacrifices you are will to make or pay more for will play a part in your monthly budget.  It’s not really worth using a calculator other than gathering a rough idea how much more or less you will need to pad into your relocation budget. Cost of living calculators do not speak for the experience of actually living in the country of your destination.

Myth number two:It should be easy to calculate a budget because my lifestyle will be pretty much be the same” Actually, not always. Get a feel for the lifestyle where you are going.  In the Netherlands you can save a lot of money on transportation cost because bikes and public transport is relatively cheap and are normal means of transportation while in Japan, London and New York the only way to get around is by taxi or train and it will take a bite out of your monthly cost.

Myth number three: “I will not be double taxed if I am employed overseas.”  In many cases you may be required to pay tax in both countries. In the US if you are an temporary employee physically living and working in another country, you will be required to pay most taxes to the local government in the country you live in if you are receiving a salary in the local currency and your work contract is with the company in a foreign land. If you own property in the US you will need to pay that as well. Canadian nationals are required to pay tax to Canada regardless of where they live as long as they hold a Canadian passport. Here are some facts about foreign earned income for US citizens. For Australia check the Australian government taxation office.

Myth number four: ” I think I got my budget pretty much figured out “ Chances are you don’t.  The fist six months your budget will be higher just based on the fact you don’t know your way around yet.  Many people are use to certain quality of goods and certain brands of products and waste time hunting these items down. If you at all find the quality and brands you are looking for expect to pay a lot more. Its better to do without and explore a few new brands if you want to save money.   As a new comer you need to be very active in learning how to beat hidden cost.  Locals know where the bargains are from half price Wednesdays, free parking, to the best hair salon at an affordable prices. When you see something you need, want or like the best way to find out how to save money is pay someone a compliment and ask them where they bought it. In time you will eventually reduce your budget knowing where the good deals are.

The truth of planning a budget for living abroad: If you take an exploratory trip to the destination you plan on living it will give you an idea of what the cost of living really is before you commit to moving.  Go to your chosen country and shop for housing, go to the supermarket, call the local utility companies and price their services, can you get tv programs from home? What does it cost for mobile phone service, transportation and how clean is the water supply? Are there any deposit fees? All of these things play a part in your budget and help you discover any problems in getting services and uncover any hidden cost.  Once you have a good idea what your going to need, pad in about 15% to 25% extra your first year. This is the most realistic approach to putting together a real budget. Falling in love with a country during vacation is only scratching the surface. If you really want relocate abroad feel, taste and experience a country. Don’t rely on word of mouth and myths of about the cost of living.

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