Change can be very scary, especially when it involves moving to a new location. You tend to be scared about what to expect and the things you are leaving behind. However, moving to a new location doesn’t only experience a new culture and have a broader view of life. It also helps you to grow as a person and possibly improve your finances. So, in this article, you will learn some of the ways moving abroad can improve your financial life.
You may not want to believe this, but moving to a new city could be one of your best financial decisions so far.
Travelling to a new city could help you pay off your debt, save for your financial independence, and drastically change your life for the better. How?
4 Unique Ways Moving Abroad Can Improve Your Financial Life
#1. Reducing Your Income Tax
I guess you are smiling at the mention of income tax reduction. Nobody enjoys paying tax, even if it’s every US citizen’s obligation. Income tax reduction is one of the ways moving abroad can improve your financial life.
If you are a digital nomad in the US or an expat, you can keep up to $100,000 of your income without paying tax.
The Foreign Earned Income Exclusion allows US citizens living and working outside the United States to exclude some income from taxation.
In 2020 alone, the Foreign Earned income exclusion allows $107,000 of foreign earned income to be reported US tax free.
Now think about how amazing your financial life would become if you could keep an additional 20 to 30 percent of your income.
Then again, the foreign earned income exclusion is not for everybody. To be eligible, you must meet one of two tests – the Physical Presence Test or the Bona Fide Residence Test.
The physical presence test requires you to spend at least 330 days during the last year outside the United States. Of course, the 330 days must not be consecutive, and they may not necessarily be for employment purposes.
The Bona Fide Residence test is one of the tests that will make you eligible for foreign earned income exclusion.
It requires you to stay in a foreign country consecutively for a period that covers the tax year. Now, this one is a bit tricky; it’s advisable to consult a professional to help you with it.
And if you fulfill the requirements of these tests, you can benefit from the foreign earned income exclusion program.
#2. Lowering Your Cost of Living
One of the ways moving abroad can improve your financial life is to lower your cost of living.
If you have a few thousand US dollars, it will help you live a very comfortable life outside the United States. Some of your biggest expenses like feeding, accommodation, entertainment, and electricity will become more affordable in a new location.
You can check out some of the cheapest places to live in the world according to the International Living Ranking to give you a general idea of what life looks like outside the United States.
For instance, getting an apartment in a major US city could be very expensive. But you can live in a capital city of other major countries with a fraction of what you currently pay for your apartment in the US.
If you want, you can live in an Airbnb, which is way cheaper than you think. It’s very affordable in most major cities around the world.
When you live in an Airbnb for a longer period, you tend to get a discount. And you don’t have to pay for utilities, buy kitchen Utensils for furniture.
Now you see why moving abroad could help you lower your cost of living?
Similarly, when you move to a new country in Asia or Europe, you tend to spend less on travel. That is because intercity travel is relatively cheaper in these areas.
In some European countries, you can spend as low as $10 on a flight from one city to another.
Similarly, you can spend as low as $20 on phone calls and the internet in some countries. Just do your research before you travel. Unlike what you think, there are many ways moving abroad can improve your financial life.
#3. Simplifying Your Life
Moving abroad can go a long way to simplify your lifestyle. Most times, you may be living out of a suitcase.
If you decide to buy something new, for instance, you may have to give up something you already have. It will go a long way to reduce your spending.
Just think about it; you can’t buy on impulse when you don’t even have enough space to keep your stuff.
Again, many cities outside the United States have exceptional public transportation, and some of them are walkable. So, you may not really need to buy yourself a car.
Think of it this way, not having to pay for gas, insurance, repairs, and other expenses that come with car ownership will save you a whole lot of money.
Plus, walking more tends to reduce your trip to the hospital.
#4. Having a New Lease on Life.
Having a new lease on life is one of the ways moving abroad can improve your financial life.
Sometimes, you may want to change a new habit or do things differently with your life. But because of your current environment and friends, you may find it difficult to achieve these things.
However, if you move to a new location, it’s a perfect opportunity to start afresh and have a new lease on life.
These are the 4 ways moving abroad can improve your financial life.