Many overseas foreign workers tend to lament that despite that they are earning more than what they were earning before in their home countries, it seems that they would go back to their countries after finishing their contracts with no savings and a mountain of debts. I learned a long time ago from my mother the saying, “It is not in the amount of money you earn that is important, it is in the amount you save.”. I wanted to take that nugget of wisdom here as we are starting our new life here in Oman. I want us to maximize our saving habits and spend our finances conscientiously.
So I came up with some sort of a guide to help us save our money here abroad and I hope this list can help you too:
1. Stick to your budget
Create a money budget and stick to it. No excuses. Check out my money savings tips that I have written previously. I have written about the 60-20-20 rule there.
2. Pay off any debts and do not generate any more bad debts
If you have any current debts. Pay them as much as possible. You can use the Dave Ramsey’s Snowball Method or Debt Avalanche Method to pay your debts fast and effectively. Debts will eat up your monthly income with outrageous interests it would incur. Once you have paid it off, you have to have to make sure not to accumulate any more unnecessary debts.
Credit cards are the devil. Do not spend on anything with the money you don’t have. If it is not on your budget, don’t just swipe your plastic cards for your instant gratification. Ask yourself if you really really need it. If it is, then put it in your next month budget and better pay for it in cash. Identify what are bad debts and good debts. There are actually good debts that can help you increase your credit score. Read more about it in finance books or articles.
3. Automate saving of at least 10% of salary and any source of income
They say when your salary arrives, before anything else, pay yourself first. It doesn’t mean purchasing something frivolous for yourself as a reward. It means savings at least 10% of your salary for your retirement fund or longterm goals. Try to automate it with your bank to make it easier.
4. Don’t get suck into lifestyle inflation
One big mistake in most workers abroad is that we get suck in by the environment we are living in. If you are currently living in an urbanised country with propensities to luxury living, most people would be buying branded bags and expensive shoes, then we would follow the norm because it is what we are exposed to. We would noticed that our salary would increase every year but money is still not enough and we come up short. Why is that? It is because of lifestyle inflation. As we earn more, we also upgrade our lifestyle. Things that we previously don’t spend on when we are earning less, we now would indulge because we can. We buy more expensive & branded things. We add pampering routines like spa visits, weekly manicure & pedicure, hair treatments etc. We would indulge in luxurious travels and frequent eating out in restaurants. So we have to take note that even if we get promoted or have salary increment, we must live below our means and not get suck into lifestyle inflation.
5. Don’t be a lending machine
Just because you are working abroad, some people would assume that you are earning a lot. People working abroad are the usual ones whom people would approach if they need to borrow money. Being helpful to those in need is a good virtue but make sure they can pay back as promised. The problem is if you get too generous, you have been lending money to a lot of people and once you need that money or ask to return them to return the money they borrowed, you have trouble getting the money back. Some people who have worked abroad would go home permanently in their own countries and would never get back the money have lent. So just lend money to people you trust that would pay you back and only lend them if you have extra cash on hand.
6. Be prudent in bestowing gifts or “pasalubongs”
Giving pasalubong can be fun, seeing family & friends happy with the stuff you brought and having that satisfaction that comes from giving. But you must practice prudence when giving gifts. You can give gifts to family and friends without going overboard. The most important thing is that you remembered them. It is the thought that counts. No need to show-off with load of gifts and pasalubongs. Give your gifts only to those close family members and close friends. You are not obligated to give pasalubong to the whole barangay or your high-school classmates who barely talked to you in school before.
7. Be cautious in choosing or agreeing to any investments
Once people know you are working abroad, you are the easiest target for those agents who would sell you expensive investment plans or people who would persuade you to invest in their new business ventures. Do your research before you enter or agree to any investments introduced to you. Remember this is your hard-earned money, not theirs.
8. DIY as much as possible even if you can afford to pay someone
Once you earn a bit more, you would prefer to pay someone to do things for you rather than do it yourself. To save a little more, find things that you can do instead of paying someone to do it like cutting your own hair, manicure & pedicure, fixing stuff around the house, sewing the hem of your pants, etc. You will be surprise of what you can save. Every penny count.
9. Always mental compute the current currency you are spending to your country’s currency
One trick that can make us realised how much we are spending is by mentally converting the current currency to our country’s currently. If we realised that simple bag cost 4,000 Philippine pesos, you would put it back at the rack and make mindful shopping decisions. Or you wanted to buy 2 burgers for yourself because it is just 3 rials per burger but you will realised you will be spending 800 Philippine pesos for that thin burger patties. Some people wouldn’t agree to this method but this method does help some other people especially those careless spenders.
10. Shop only on sale as much as possible
Take advantage of sales. Shop in the sale section of the grocery. Shop only during sales. You will definitely save a lot if you can train yourself to be more patient and wait for sale season.
11. Don’t keep up with the Joneses
Keeping up with the Joneses is the usual culprit why people spend unnecessarily. You check out social media and see your Facebook friends having the latest sport shoes or wearing this new wardrobe you saw in the window of Diane Von Furstenburg, having a Hermes scarf tied to her neck, travelling to Europe or an exotic beach resort and you wanted that kind of life too even if you don’t have the money for that kind of lifestyle. Don’t spend money to keep up with your neighbours or to show off to other people who doesn’t care about you. Do your thing. Don’t live to impress people because you can spend all your money and they will still never going to be impress.
12. Save your pennies
Don’t discard your pennies. Save it in a little jar from the start of the year and you will be surprised with how much you have saved by the end of the year. Like I said earlier, every penny count.
I hope this list helps people who are working abroad to save their hard earned money so we can go home with a peace of mind and achieving financial freedom.