Living on Less: The Value of Moving Abroad
As the cost of living continues to rise within the United States, many consider way to boost the value of their hard-earned money. Printing and clipping coupons is on option. But Being diligent about spending less than one’s income, setting aside for financial emergencies and steering clear of costly debt are sound methods to achieve financial stability; however, when the paycheck is failing to stretch far enough to cover expenses, it proves beneficial to get a little creative. For some, a solution to making their dollars reach further is to relocate overseas.
Moving abroad may seem like a radical idea to most, but in reality, living in a different country has clear benefits, especially relating to the value of a dollar. Developed countries offer not only a change of scenery, but also the ability to live comfortably and in some cases, better with less cash outflow due to a stark reduction in total cost of living. Individuals who work remotely, along with families and retirees have the option to relocate in order to save on monthly expenses, giving their earnings a much needed boost.
The most substantial savings is realized in housing costs
The majority of developed countries offering both rental and owned residences for a fraction of the cost of a home in the United States. For instance, beachside property in Mexico can be secured for as little as $150,000, more than 55% less than comparable properties in the United States. Similarly, a one-bedroom rental in central India costs an average of $173.53 per month, compared to the average $1,120 in the U.S.
Utilizing their money abroad save on food purchases and dining out in some countries.
Because a number of developed regions focus on fresh, local markets – a clear opposite of the supermarket grocery stores most are accustomed to in the U.S. – the total cost of food is relatively low. Also, high ticket items like property taxes and utilities are often less expensive in other countries than they are in the U.S. There is also a high probability that the widespread consumerism found within the U.S. is far from prevalent in other countries, leading to far less impulse buying and, ultimately lower monthly output. Finally, public transportation is well established in other areas of the world, leading to less of a need to own a personal vehicle. Each of these differences represent an opportunity to push the value of earned income that much further, and the ability to live off substantially less each month.
While moving yourself, and your money, overseas is an attractive solution to increasing the value of the dollar, caveats exist. First, currency risk by way of exchange rates threatens to dilute the purchasing power of U.S. dollars. If income is received in dollars as opposed to the local currency, and that currency rises in value against the dollar, the total value of earned income decreases. Additionally, health care is a growing issue around the globe, and finding quality care comparable to what is readily available within the U.S. can prove challenging overseas. More pressing is the fact that recipients of Medicare do not carry coverage while outside the confines of the United States, making it necessary to pay a hefty amount for quality insurance or plan for visits back to the states.
Living abroad may also bring up some interesting tax issues, as U.S. citizens are still required to file a tax return each year. Many countries provide protection to safeguard income from being taxed twice, but income is still taxed in some way, shape or form. Establishing a bank account that accepts U.S. dollars from direct deposits like income from an employer or Social Security benefits can also be a challenge, which in turn creates a headache around bill paying and in some cases, cash flow. The most pressing issue with transitioning to another part of the world is safety, however. Not all developed countries offer the same level of security as the United States, and it is important to understand the social risks affecting specific regions prior to making the leap.
Examples Around the World
There are a number of locations that offer the benefits mentioned above, sans the concerns of less developed regions. Ecuador offers widespread public transportation, beautiful scenery and quality healthcare for an average monthly cost of $1484, rent included. Similarly, Thailand, with its exotic landscape and bustling city options, comes in at nearly 60% less expensive than major cities within the U.S. and a total cost of living, including rent, of $1740 on average. Costa Rica makes for a great place to live with low utility costs and comparably low rental and permanent residence options, and an average monthly cost of living at $1925.
Transitioning abroad in an effort to make your money stretch is not a simple task, but it does offer a substantial payoff. The combination of generally lower costs for housing, food, entertainment and transportation, favorable tax provisions, and affordable healthcare in some regions creates the opportunity for some to live a similar lifestyle on a fraction of current income or savings.