One of the biggest struggles for expat partners is the loss of financial independence. If you have always made your own money and move abroad without a job, it can really catch you by surprise- how your partner’s money does not feel like your money. In this article I show 3 ways to contribute when you do not have a job as an expat partner.
My Secret Stash
When I moved abroad, I had 1.000 euro stashed away in my suitcase, enough to buy a plane ticket home if I hated it in Beijing (or started hating my husband). I laugh about it now, but it shows that I had no idea what to expect about being an “expat wife.”
Luckily, my husband made it very clear to me that my support made it possible for him to work abroad, and that he did see his earnings as our earnings. And still, I had trouble spending “our” money. Once we had children it became easier, but it definitely took time.
Whose Responsibility Is It?
Not sure whether this rings true for you, but in my family it was my dad who handled the money, made investments et cetera. My mother worked, but stayed clear of this. When my Dad became ill last year, my mother had to unexpectedly take more financial administration on and it really added to her anxiety about him being ill. So even though my Dad always told me I needed to be financially independent from a man, it was not what I witnessed in a marriage.
However, seeing my Mum struggle drove the lesson home that women also need to shoulder responsibilities for finances. Hence, do not let yourself (like me) be lulled to sleep because you may not be working abroad. It has at least kickstarted me into taking back control over my finances and looking how to invest, also for our kids’ study funds.
Becoming your Family’s Chief Financial Officer
One of my friends described her “unemployed period” abroad as follows:
“After initial feelings of disappointment about not being able to have a paid job in my host country, I felt empowered by becoming the self-proclaimed Chief Financial Officer (CFO) of our household. Not by nit-picking on the grocery bills, but by having the full overview of our personal finances, creating a long-term financial plan, and investing our money wisely. It feels very rewarding having contributed to my family during our expat assignment in this way, especially as we were able to buy our dream house upon repatriation.”
3 Ways to Contribute to Your Families’ Finances as an Expat Partner
Don’t get me wrong, you are contributing already tremendously to your family just by being there for them and taking the bulk of the parenting responsibilities. You know that right?
That being said, many women tell me that they want to contribute financially to their families. They want to be financially independent. So, how to do that if you do not have a work permit in the country where you work? Or if your family commitments or language abilities make it hard to find a job there?
Contributing financially can be done in many different ways, not just by having a job.
Here’s 3 ideas for you:
1. Pay Off Debt
One way to get your family on financially stable ground is to pay off any existing debt. Although interest rates are low these days, having debt can negatively impact your credit score. Furthermore, the interest you pay could also contribute to financial independence.
Do you or your husband still have student debt? Lent money for a car? A mortgage? Have a credit card overdraft?
Paying off these debts leads to long term financial stability and can free up funds for saving or investing.
While not technically a debt, do you rent storage space to store your belongings back home? Look into whether you still really need this or whether you can Marie Kondo your way out of this storage space, saving you money.
Suze Orman, American financial expert, has many suggestions on her blog on paying off debts: https://www.suzeorman.com/blog/tag/debt
2. Learn about investing
Another way in which we can create income for our families is by learning to invest our money. Obviously, I mean responsible investing, steering clear of any schemes that sound too good to be true.
But how to get started?
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Get An Overview
Firstly, get an overview of your assets. How much money do you have in the bank, in your mortgage, in your pension plan, in other assets? Don’t forget to include any debt in this overview. Create a document with your partner (also very useful in case something would happen to you) listing it all.
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Learn And Experiment
Start by learning about investing, read books or blogs. If you know the basics, you could consider experimenting with a very small amount of money for a few months, like 25 dollars a month (take this advice at your own risk of course). Then, devote some time per day or per week to learn about the differences between stocks and bonds. Also, define your risk profile (are you cautious or are you ok with more risks) and calculate what amount of money you would need for your goals (early retirement, study funds for the kids, a holiday home etc).
Take a look at for example the book Millionaire Expat by Andrew Hallam, The Little Book of Common Sense Investing by John C. Bogle or Investing for Dummies to get started.
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Develop Your Strategy
After the experiments (take eg 3, 6 or 12 months for this), develop an investment strategy for your family together with your partner. Obviously, you can also enlist help from a certified financial planner, from your bank or other trusted resources to do this. Just make sure that you have a basic understanding via step 2. That way, you will feel less at the mercy of others and more in charge of your investment plan.
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Other ideas
You could also join (or start) an investment club with friends or others around you. A serious change from a book club or a cooking club so to speak. It can be motivating to do joint learning, and you have a social aspect too. There are also online courses that you can take to learn more about investing.
My friend the Family CFO advises: “When investing your money, the key question is how much risk you’re willing to take. As a rule of thumb: the higher the risk, the higher the potential return, but never forget that it’s possible to lose everything. Creating a diversified portfolio (spreading your investments) helps to lower your overall risk, rather than putting all your eggs in one basket.”
3. Create a Passive Income Stream
Before venturing into the world of online business and location independent careers, I had never heard of the term “passive income.” The FIRE movement also did not ring a bell- Financially Independent- Retire Early.
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What is passive income
Passive income means creating another income stream apart from your day job. Ideally, this stream does not need day-to-day work on it. One of the best known passive income streams is to invest in real estate. In other words: buy property either to sell it with a profit in the future or to rent it out to others. An “easy” option here is if you still have a house in your home country that you can put renters in (I’ll write another time about why I put “easy” between apostrophes). You will need the OK from your bank if you still have a mortgage on your property. If you would need to buy property, be aware that banks in the European Union have changed over the years. Banks have become much stricter with giving mortgages to people living outside the European Union. This is meant to a.o. prevent money laundering, so you will need to do your research here.
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Other passive income streams
Other passive income streams are for example:
–creating a product that you can resell,
– investing in a (local) business,
– creating an online course or an app,
– licensing music you make
– selling stock photo’s
– selling digital files on Etsy.
Take a look at these links for more information:
Mr Money Mustache advises on his blog about becoming Financially Independent and Retiring Early: https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
Pat Flynn’s blog and podcast about Passive Income have a wealth of information: https://www.smartpassiveincome.com/
If you haven’t moved abroad yet, take a look at this brief guide on preparing your finances: https://www.bankrate.com/personal-finance/how-to-prepare-finances-working-abroad/
