For less than a month’s rent in her hometown of Vancouver, Lydia Lee is having a second storey built onto the villa she rents on the tropical island of Bali. 

Relocating to Indonesia seven years ago has meant she’s been able to build her business and afford a much more lavish lifestyle than she could at home. A life coach, Lee can now eat out every day, employ a cleaner and get weekly massages. 

She ditched her six-figure salary in marketing and business development and now works for herself and travels the world. But relocating overseas doesn’t always work out so well financially. 

Financial shocks

Not all expats find they can afford to live the high-life. InterNations, a networking resource for expats, recently surveyed more than 12,500 people living in 188 countries or territories and the picture the data paint of their finances is remarkably diverse. 

Expats in locations including Italy, Israel and Greece said they’re often unable to meet basic expenses due to the high cost of living 

While professionals who move to Vietnam, Mexico and Colombia – all countries with relatively low costs of living – find their purchasing power increases substantially, expats in other locations – including Italy, Israel and Greece – said they’re often unable to meet basic expenses due to the high cost of living. 

And things can quickly unravel. 

For Russell Ward, a move down under put a significant strain on his finances and health. He moved to Sydney in 2006 with his Australian wife, who was keen to return home. They were drawn to the sunshine, warmth and ocean views – a welcome alternative to Canada, where the Englishman had been living since 2003. 

The couple were working in sales and government respectively, but quickly realised how much more expensive life was going to be. Everything from groceries and clothing, to the booming housing market in Australia’s largest city, meant daily life was more expensive for them than in Canada. The Wards found themselves struggling to make their mortgage payments. 

We soon realised that we'd changed the view out the window for the better but had replaced it with more expense. 

“Even with no kids, we were experiencing a very lean time,” says Ward. “We soon realised that we'd changed the view out the window for the better but had replaced it with more expense.” 

They cut down on eating out and socialising, but in 2010 the financial pressure pushed Ward to a complete emotional and physical breakdown. He ultimately lost his job and the Wards sold their home in order to rent something cheaper. 

But this was a turning point. After launching a content writing business, TheInternationalWriter.com, Ward and his wife took the decision to move back to less-expensive British Columbia in Canada and settling in Squamish, near Vancouver, in 2016. “It was honestly the breath of fresh air we needed,” he says. 

Disparities

The differences in the way expats’ finances stack up, can, in part, be explained by analysing their motivations for relocating. The most popular reasons given for relocating to a new country were either to fulfil a sense of adventure, or for quality-of-life related to health or climate. So, many weren’t in it for the money in the first place: only 15% said they were primarily motivated by financial incentives.

Although HSBC’s 2017 Expat Explorer survey found that just over half of expats surveyed said they can save more money in their new country than they did at home, less than 60% have more disposable income than they did before they moved. And this proportion looks set to decrease. 

Local compensation packages

Even at large multinational corporations, more and more expats are being put on ’localised’ packages – meaning that employers are asking employees to make a permanent move (often to a subsidiary or home office) instead of taking a temporary assignment, often for fewer perks and with no promises of a return ticket. 

Dr. Yvonne McNulty, a senior lecturer in the School of Human Development and Social Services at Singapore University of Social Sciences, says that the proportion of expats on generous compensation packages is now less than 50% and rapidly declining. 

“For companies, localisation is simple,” she says. “It reduces their costs. For expats, it’s more complicated. While they receive fewer traditional financial benefits, they receive in exchange an intangible benefit of not being financially tied to their organisation, and with more freedom to change employers.” 

For companies, localisation is simple: it reduces their costs. For expats, it’s more complicated. 

Even for those with generous compensation packages, many expats struggle to control their spending. 

“There is an implicit lifestyle you can be expected to adopt, which can mean excessive spending, drinking, going out and holidays,” says McNulty. And while full-package expats tend to live in a bubble, localised expats typically have a different experience. They tend to stay abroad longer – if they can afford it, McNulty says. 

But even for those who do move abroad with support from their company, a pile of cash isn’t always enough to keep them happy. 

Houman Lessani moved to Singapore – which has expats on some of the most generous compensation packages in the world – from Vancouver, in 2013. 

His firm, a mining company, gave him a housing allowance and generous salary that enabled his family to afford live-in help. But after two years of a high-flying lifestyle that involved travel all over Asia, the novelty of his increased wealth started to wear off. 

Lessani, his wife and their son eventually moved to Perth, Western Australia in 2015 and they’re much happier. They now have less disposable income but Lessani has found a better professional fit. 

“I pay much higher taxes, and we can’t afford live-in help for my son here or to go out for dinner all of the time,” he says. “But this just works better for us.”

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