Emigration: financial planning

Emigrating can be a very romantic idea. Leave everything behind, start afresh and finally be free in a new country. However, the reality shows that even with a new start abroad, the obligations do not completely stop. Of course, life can change, but many factors remain the same. No matter which country a person lives in, money is always needed for everyday life.

But how much money is needed for emigration in the respective countries? How to live there financially and what happens if I have not saved enough money but I have already emigrated?

Get to know the requirements

To find out how much money is realistically needed for emigrating depends on your own lifestyle. Personal demands determine whether someone is satisfied with less or more in life. Generally speaking, demands change with age, so that, for example, the younger generation cannot be compared with seniors when it comes to emigrating. Who emigrates as a pensioner, has other desires and dreams than young people, who emigrate for example after their education.

Cost of living

If you are now aware of your own demands, you should get an exact overview of your own living costs. This means that all expenses of daily life are summarized in one list. Contrast this with the regular income at the current time.

This gives an overview of income and expenses as well as a potential savings amount per month. This allows future expatriates to find out how much money they have available to save each month and how long it will take to put money aside for emigration.

But not only the cost of living at the present time plays a role when emigrating. Who would like to build itself a new life abroad, must know also, how it looks financially in the everyday life there.

How expensive is health insurance? How much does food cost? What needs to be planned in terms of rent? This and much more belong to the costs abroad, which – just like here – have to be added up.

Four individual steps are necessary to find out how much money is needed for emigration.

  1. Demands: In the first step, emigrants must get to know their own demands and question them seriously and objectively. What do I want and need and what can I and would I not like to do without??
  2. Current cost of living: The second step is an overview of current income and expenses. Thus the future emigrant gets to know exactly how much money is currently available to him and where expenses actually go.
  3. Future living expenses: The third step is again about the cost of living, but those abroad. These values are of course only theoretical but very important. The future expatriate needs to know how much money will be needed in the chosen country for everyday things. At the same time, the income must also be planned, so that there is again an overview of expected income and expenses.
  4. Savings potential: In this fourth point, a person finds out how much money can be set aside each month to finance the dream of emigrating. At the same time, point 3 helps to make saving abroad possible as well. Those who plan now that there will always be some savings potential are less likely to run into financial bottlenecks.

The numbers – this is how expensive life is in a foreign country

Let’s get to the practical part. How expensive is it now to emigrate abroad? Of course, it is not possible to give a general answer to this question, because as we have already learned, it depends purely on the personal requirements, but also on the cost of living in the chosen country.

Important: If you have a permanent job in prospect, you still have to find out whether the salary fits your needs there. If a person for example 1.500 euros net earns and considers this in his current life as very good earnings, it may be that this same salary in the destination country is too little money to cover the same claims.

If we look only at Europe, Switzerland is the most expensive country in terms of cost of living. The index value in Switzerland is 158.5. Translated, this means that in Switzerland it is about 60 percent more expensive than in Germany (index value 100 as a base).

Private consumption in other countries is also higher than in Germany, for example in Ireland (index 121.4) or Luxembourg (119.2).

There are however naturally also countries, in which the cost of living is clearly lower than in Germany. This can also be described with the index value. In Macedonia this is 45.3 and in Bulgaria 46.1.

The World Bank also provides an international comparison between the global cost of living in different countries. This also shows that there are big differences. For example, living in Australia is more expensive than living in Paraguay. In comparison, however, the salary is also lower or. higher.

Attention: The costs for typical expenses can also vary from city to city. Therefore, emigrants must consider not only the country in question, but also the region and the chosen city. Even neighborhoods can make a big difference.

Saving for emigration

Image source: stock.adobe.com @bnenin

Already in advance of saving, emigrants should have built up a certain financial cushion, depending on the destination country. Although it is partly possible to take out a loan abroad, the hurdles would be much higher. As an alternative to saving, a local loan is an option, but it must be weighed up whether this is a sensible strategy. For this, corresponding online portals can be helpful to sound out both loan amounts, interest and terms. An obligation more also means to be able to cover the current credit costs. Thus, the dependence on the job is stronger, so that the flexibility suffers.

Image source: stock.adobe.com @Andrey Popov

Calculate starting capital for emigration

The cost of living is one part, which is mainly relevant when it comes to the daily life in the new country. But until the time comes, emigrants have to successfully overcome many more hurdles. A certain amount of start-up capital is needed, for example to buy furniture or to bridge certain periods of time.

  • Cost of living: This point concerns mainly the daily life, but the starting capital should be high enough to bridge the first months without a permanent job.
  • Housing : Emigrants can live both for rent and in their own home, but when emigrating above all a rental house or a rental apartment offers itself. These running costs should be able to be bridged likewise for some months, if for example a job fails.
  • Labor market: Does the emigrant already have a permanent job and what does it look like contractually?? This point is very relevant, because it determines for how many months the costs may have to be bridged, if it is perhaps a trial contract or a very short notice period was agreed upon.
  • Family : Who emigrates alone, has naturally less costs. Nevertheless, many families also emigrate. Here the costs must be planned accordingly increased, in order to be able to finance also the children or the partner.
  • The unexpected: As in any country, the unexpected can happen in your new adopted country. Be it broken equipment, a lost job or other difficult situations. For this, sufficient capital must be available as a nest egg.

But what does this mean in numbers? Unfortunately, this cannot be determined, as every person and every country is different. Who needs in the destination country perhaps only 300 euros per month for food, lives for 500 euros for rent and has a good, steady job, could dare for example with a few thousand euros the exit to the new country. However, this case is very optimistic, because a job is not always as permanent as it seems and cost of living is often more expensive than originally thought. Life in the new country could also change in such a way that one’s own demands adjust – so that the costs also increase. All this must be taken into account, so having as much money as possible on hand is always the best advice.

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