Happy 2016! The arrival of the new year means that I’ve officially passed the half way mark of my short stay in the US before heading overseas again. To kick start the year, I’d like to share some financial habits I’ve developed from moving around the world to inspire some new years resolutions in the audience. Hope you find some wisdom in these habits, and maybe develop your own.
#1: Ask why
Encountering different cultures as you move around the world directly challenges your preconceived notions of why you do or do not do certain things. The common name for this is “culture shock.” But the shock can make a greater impact on your life if you don’t just shrug it away. There is usually a history of how certain behaviors were developed and became acceptable or common. In the process of trying to understand others, it gives you a different perspective on your financial decisions.
One good example is buying real estate. In the US, it’s relatively affordable to own your dream home if you have a stable income. There is usually plenty of single family housing stock and a long-term fixed interest rate mortgage available to make financing easy. That’s not the case in most parts of the world, including my hometown Taipei and our last home, Auckland. The housing is either small or prohibitively expensive, and financing costs can be double the cost in the US when the interest rate is high. Though I have no need to own a house now, I question whether owning a house is what I would eventually want, or just what society says is the must have.
I use this process to develop a narrative of my own. It’s not to justify my financial decisions to others, but to give my actions meaning. It allows me to anchor myself with my values and goals, even though the wave of others’ opinions and society’s new trend surround me.
#2: Buy flexibility with financial cushion
Adjusting to a new home and country takes a lot of flexibility. There are known hurdles and unknown surprises – from having to pay your medical costs out of pocket upfront to replacing your suddenly broken laptop that costs 50% more in the new country. You might go to three grocery stores to find a product you know how to use, or have your clothes ruined by local cleaners who have never seen the material before.
It’s not always more expensive (or cheaper) living overseas. It’s just learning the new system with your time and money.
I’ve learned to keep a good cushion in our cash flow and emergency fund for the unforeseen expenses. More importantly, I keep the same cushion for my expectations. This way it doesn’t feel too painful when the unexpected actually happens. If all things work our way, great! It just gives me more savings to use for the “good to have”.
#3: Waste not, even if it costs less
Moving every 1-3 years means that I’ve seen many unused or still good things go into the trash, and it gnaws at me when that happens. Sometimes it’s because the next country I’m going to won’t allow the item in; other times it’s because of my own miscalculation. (I like cooking a variety of dishes, so there were all kinds of ingredients I couldn’t use up in a short amount of time.) Furthermore, no matter how well you plan, there are always things you end up throwing away when you move.
I’ve learned to plan ahead and buy only a small quantity when I can. It’s all about whether you can make good use of everything you purchase. Of course my system is not perfect, but it makes me feel better knowing that I’ve tried. According to this New York Times article, reducing waste is one of the most important things you can do to fight global warming. Moving around makes me aware of the waste that I did not notice before. Reducing waste is perhaps one of the best financial habits you can develop, even if it means certain things cost a little bit more. In the long run, you will see the benefit of more mindful spending, and will lower our collective cost of occupying this environment.
#4: Distinguish my needs and wants
Another way emergent culture experiences changed me was the habit to distinguish wants from needs as an ongoing exercise. On the one hand, you see how the locals live and realize that it takes very little to live a sustainable life. On the other, you realize many things you take for granted as “necessities” are actually hard to get in whatever country you are in. It gives you a chance to really question your needs and wants, whether you’ve done it before or not.
Of course, it doesn’t mean that I would only choose what I need and live as frugally as possible. It just makes me more aware of my choices and decisions, and thankful that I am in a financial position to fulfill many of my wants. As much as I can, I try to sustain my lifestyle locally and reduce purchasing what I “need” from the US. They may be what I needed, but now they are just a want. (Limiting unnecessary shipping also helps reduce green house gas emission!)
The opposite is also true – something you thought was good to have turns out to be essential. When I rented a small house with a few other girls in Mumbai, one of the conditions from the landlord was that we take the housekeeper. Before then I’d never hired a full-time housekeeper and didn’t think we needed one. However it’s not something we could negotiate. Later I learned that it’s a common practice, which also indicated that the landlord trusted the long-term housekeeper more than he trusted us. It’s not something I expected to need, but when renting a place as a foreigner, that was required of me.
#5: Spend on experiences, not on possessions
Experiences make you who you are, not your possessions. Living and transitioning overseas positions you to really live for the experiences the world has to offer, to travel to places and try things you never would if you stayed put in one place. Like many expats, we put traveling as the biggest perk of our lifestyle, and we are willing to spend on it. When it comes to buying a physical item, especially a big one (size, not value), I always default to “no” and have to talk myself into it, because it’ll need to be shipped at some point, and may or may not end up with me in two years.
For our one year in the US, we brought four suitcases, and that’s it. All of our other material possessions sit idol in a warehouse somewhere unknown. So whatever we buy that may end up in that situation better have some long lasting value. Shipping our belongings across the world multiple times is already not the greenest way we could live, so I’d like to compensate for that by not adding extra burden to the planet.
There will probably be other habits that will become apparent to me as we continue to live around the world. I will update this post as they come along. I hope this calls attention to some financial habits that you’ve developed from living overseas. If so, share with me below!