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Moving Abroad Guide

Moving Abroad Guide >


Expat Topics

Cost Of Living


 

As unglamorous as it sounds, good budgeting for the cost of living in your destination country could be what makes the difference between your relocation’s success or failure.

Make sure you have enough money to support yourself and your family for the first few months, especially if you don’t already have a job lined up. It might take longer than you think to find employment and somewhere to live, and unless you have temporary accommodation or can stay with friends, you might find yourself paying for hotel accommodation for longer than expected.

As far as possible, try to work out what everything is going to cost during those crucial first months when you are trying to find your feet in a foreign land.

Consider what additional expenses you will be likely to incur that you may not have had in your home country, such as school fees for your children, or the cost of private medical treatment. When you have arrived at a total, double it to allow for unexpected expenses. Remember to take into account the impact of any change in your personal circumstances which might affect your income, such as a reduction from two household incomes to one.

Even if you are moving to a country with a low cost of living, you might find that you spend more than expected. Many expatriates buy familiar imported groceries, for example, which are more expensive than local goods, and there is often a temptation to eat out and to socialize more than usual to take advantage of the variety of new types of food and other experiences available. All of this will put pressure on your budget. However, the higher cost of some items, such as imported alcohol in parts of Asia, is often offset by savings in other areas, such as cheaper restaurant food.

Many western expatriates enjoy the luxury of the domestic help which is available at a low cost in many countries, especially those in Asia. Be prepared for unexpected expenses though – for example, don’t assume that fuel bills will necessarily be low in hot countries - year-round air-conditioning comes at a cost.

If you are moving to take up a job abroad find out what benefits (if any) you are entitled to in order to help with your relocation expenses and living expenses in the new country - some expats whose companies have initiated their move may find they are eligible for a significant relocation package. If this applies to you, find out exactly what is included in your relocation package as soon as possible and, if appropriate, consider negotiating for more benefits. Some relocation packages include the cost of flights, importation of personal belongings, regular visits home for you and your family, children’s school fees, a housing allowance and an allowance for domestic staff or a driver.

When assessing a salary offer you will need to take several things into consideration, not least of which is the cost of living in the country you will be working in. What may be a low salary in your home country could be much higher in the country you are considering moving to if that country has a low cost of living. There is also the question of income tax. Some countries require workers to pay little or no income tax, which gives them more disposable income.

Accommodation costs vary and in some countries you may have to pay as much as six or twelve months rent in advance when you first arrive. If the accommodation is not furnished then you will need to purchase new furniture and appliances which can be costly in a country which has to import these items (the alternative is shipping your own items from home, although this can be very expensive).

If your accommodation is close to your place of work then budgeting for transport costs may not be necessary although a car will give you the freedom to travel around. If importing your own car is not a cost effective option then it may be better to buy a vehicle locally. Take into account the cost of insurance and fuel and investigate whether you need to pay for a local driving licence.

Provision for education costs is also essential if your children are accompanying you abroad. In many countries using local schools is either free or only incurs a small cost, but if you need or prefer to choose private education then find out about school fees as early as possible - they are likely to be significant.

Several organisations publish rankings based on the following (or similar) cost of living categories. Consider the different categories below and their cost implications for your own circumstances:

1. Alcohol and Tobacco

In the Middle East, where alcohol is forbidden in many areas, the overall spend is almost nil so countries such as Saudi Arabia appear fairly low down in cost of living rankings. However, other countries that may be trying to discourage the use of alcohol and cigarettes may have forced the prices up, putting them towards the top of a cost of living index.

2. Clothing

Clothing costs will also vary depending upon the part of the world you are in. Some countries have a VAT type tax which is added to clothing and other countries may have to import a great deal from manufacturers abroad which also adds to the cost.

3. Communication

This takes into consideration the cost of renting a landline telephone and the calls made, connection charges for the internet and the cost of using a mobile phone. In some developing countries where communications are not as advanced as the UK and the US, landline costs may be higher due to the lower demand for services. However, a worldwide preference for mobile phones often means that costs are quite reasonable wherever you are.

4. Education

This category covers all school fees ranging from kindergarten to university and is particularly important if you are considering private education for your children (sometimes a necessity due to the quality or availability of places at local schools). The cost of private education can be expensive so budgeting is imperative.

5. Furniture and Applicances

This covers the basics such as a cooker or fridge freezer or extras such as a DVD player or iron. For some expats this category may not need to be taken into consideration if renting a furnished home. If not, you will need to choose between buying new appliances in your new country or importing existing appliances from home.

6. Groceries

This covers all foods and non alcoholic drinks, as well as cleaning products. In some countries the branded foods which you may already be familiar with have to be imported into the country, which adds considerably to the cost. It is tempting to purchase brands that you recognise, but often locally produced items are just as good and are far cheaper.

7. Healthcare

In some countries basic healthcare is free but private healthcare insurance is popular with many expats. Those moving abroad for work may find that medical insurance is provided by their employer.

8. Housing

This category includes rents, mortgages, utility bills and local property taxes. These costs tend to be much lower in developing countries than in countries such as the US or the UK, and it is often one of the reasons people choose to move, particularly retirees. Utility bills are also a fluctuating cost across the world and depend on various factors, such as whether or not the provider is privately or publicly owned, if the utilities are managed locally, and the general quality of the supply.

9. Miscellaneous

Includes items such as the cost of linen and dry cleaning, the cost of hiring domestic help, newspapers or office supplies. As these are small items which are not always necessary to buy, the costs are often quite low but there are countries where expats will find themselves paying over the odds for them.

10. Personal care

For example baby care items, cosmetics and toiletries. If you prefer branded items you may find that these are expensive if they have to be imported into the country although as with most items, locally produced versions will be available which are more reasonably priced.

11. Recreation

This covers leisure items such as the cost of purchasing a DVD or cinema ticket, a book, theatre tickets or items for sporting activities. Costs do vary, and some countries may have a relatively low cost of a night out at the cinema but charge a lot to purchase a DVD.

12. Restaurants and Hotels

Both standard restaurants and fast food restaurants. Most cities in the world will have establishments at both ends of the price range so even if the average cost of a meal out is fairly high in your chosen destination, it should still be possible to have a reasonably priced night out if you go off the beaten track a little.

13. Transport

Includes the cost of public transport, hiring a car, buying a car, maintenance of the vehicle and fuel costs. Transport is an important issue unless you are living within walking distance of work, school etc.


 

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Expat Health Insurance Partners


Aetna International

Our award-winning expatriate business provides health benefits to more than 650,000 members worldwide. In addition, we have helped develop world-class health systems for governments, corporations and providers around the world. We want to be the global leader in delivering world-class health solutions, making quality health care more accessible and empowering people to live healthier lives.

Bupa Global

At Bupa we have been helping individuals and families live longer, healthier, happier lives for over 60 years. We are trusted by expats in 190 different countries and have links with healthcare organisations throughout the world. So whether you're moving abroad for a change of career or a change of scene, with our international private health insurance you will always be in safe hands.

Cigna International

Cigna has worked in international health insurance for more than 30 years. Today, Cigna has over 71 million customer relationships around the world. Looking after them is an international workforce of 31,000 people, plus a network of over 1 million hospitals, physicians, clinics and health and wellness specialists worldwide, meaning you have easy access to treatment.