Budgeting and tracking is not a topic I discuss much on this blog. For one thing, I’m not personally a huge budget tracker. Having done it for six months in our first year of marriage, I decided that there are better uses of my time to improve our financial picture than trying to figure out how much of a single amazon order is for grocery vs. entertainment.

However, multi-currency budgeting and tracking is one thing many of my clients struggle with. The simple cases involve earning one currency and spending another. The more complicated ones deal with earning and spending more than one currency simultaneously. How do you create a budget when you will spend in multiple currencies? And how do spend the least amount of time checking to make sure you are on track?

This post will show you the process I employ to help my global professional clients set up their cash flow system that takes minimal tracking time while still keeping them on track.

A caveat upfront. This may not be a system for you if you are in a tight cash flow situation with very little room for error. This system is best for people who normally do not feel they need to watch their spending but want to be more intentional about how much they save vs. spend. It works well with my living within budget without budgeting approach.

If you are in a situation that requires you to track every dollar, or you simply enjoy finding out how much you spend on different categories, there are apps that allow aggregation across accounts in different countries and currencies such as PocketSmith. I don’t use them and cannot give you recommendation. The multi-currency budgeting and tracking system I’m presenting below is meant to help you bypass unnecessary information and get to the core of what you can control.

Multi-currency budgeting and tracking system

Before I show you an example, here are some steps / principals that create the backbones of this system. These steps apply to those with only one currency to budget for.

Step #1: Decide on saving amounts by currency

The idea is that if you remove savings from the pot in the very beginning, you will not dip into your savings. The savings bucket in the chart below combines short-term (for one-off travel, car or house purchase) and long-term savings (retirement or education fund.)

(Figure out how much you should save.)

Step #2: Tally up all the fixed expenses by currency

Fixed expenses are recurring expenses that do not change that happens monthly, quarterly, or annually. They can range from rent and daycare, tax preparation and financial planning, to gym, Netflix and Amazon memberships. The idea is once you commit to them, they stay the same.

Making a list of these expenses upfront also help you tease out all the recurring expenses that just hang out on your credit card without providing much value. Once they are on a spreadsheet, you only need to update when there is a price change, or when you commit to a new recurring fixed expense.

Step #3: Calculate how much you can spend on a discretionary basis by currency

After you take out savings and fixed expenses from take home pay, you arrive at the consumption within your control. These expenses are variable, meaning you have a say on how much to purchase based on the price.

Note that some spending like utilities can be a gray area. For some people electric and water bills don’t change very much from month to month, but for others the bills can have huge swings, and you can take steps to reduce consumption. It’s up to you to decide whether to put them in fixed or variable based on the level of your control.

If at this step you realize you barely have enough to eat, then it’s back to reducing savings in Step #1 and fixed expenses in #2 so you can meet your basic needs.

For those who tend to overspend, this is the step you add in mechanism that stops you from overspending before you make the purchase, such as using cash only, or keeping only budgeted amount in your checking account.

Step #4: Figure out cross-currency spending

My rule of thumb is that it’s always better to budget within each currency first before considering spending outside the currency you make. The reason is simple – there is always cost associated with currency exchange, even if it’s just purchasing with credit card or withdrawing cash from ATM.

Of course, after Step #1-3, you might realize you don’t have enough of one currency to pay for all the spending there. This is when you do some type of international transfer and currency exchange from earnings in another currency to make up the short fall.

Step #5: Track only the variable expenses periodically

In this system, only the actual variable expenses may deviate from your target. Your savings and fixed expenses should remain the same so no need to track.

I generally recommend tracking variable expenses as a whole to start instead of by individual categories. Our spending patterns are generally fluid. One month you’ll spend more on work lunches and uber, the other you will spend more on clothes. The important thing is that your overall spending is within your variable expense budget.

It’s unlikely that you will spend right on target every month unless you have a mechanism that gives you a hard stop, such as spending cash only. Most people using this system will see their spending fluctuate above and below the target.

Personally, I employ a “range” that functions like margin of error. For example, if the target is $3,000, I’d expect to see the actual spending between $2,500 and $3,500. If for six months it’s consistently under $3,000, it’s likely I’m underestimating how much I can save. If for 3 months in a row the spending is over $3,000, I’d make note mentally to spend less on non-essentials in the coming months.

Given this fluctuation in spending, I also recommend keeping a cushion in checking account when you start this system so a few months of spending above target won’t put you underwater.

Example 1: Earning and Spending two currencies simultaneously

multi-currency budgeting and tracking

Let’s say that you currently live in a Foreign Country (FC). One spouse earns local currency “FC” from a local job, and the other spouse earns USD from a remote position.

To make the example simple, both of you have accurately estimated your tax liability, so your take home pay represents exactly what you can spend or save after tax. One spouse takes home FC 5,000 a month, the other USD 5,000 / month.

The chart shows how your take home pay flow to your expenses and savings in different currencies. More importantly, you only need to track the amounts highlighted in yellow.

Note that the example assumes joint accounts. Many families I work with will further divide cash flow into individual accounts, which increase the number of amounts to track, but can also make finding the amounts to track easy. For example, if fixed expenses and variable expenses come out of different accounts, then you don’t even need to separate out fixed expenses from variable expenses.

Nevertheless, even if you use the same credit card or account to pay for fixed and variable expenses, you can derive the total variable expenses quickly because the fixed expenses is, well, the same every month. All you need to do is subtract that number you calculated in Step #2 from the total monthly debits from checking plus total credit card spending in the same time period to get to total variable expenses.

Example 2: Earning Currency and Spending Currency are different

The same principal above applies to situation when you earn one currency but primarily spend another one. The only difference is that you will definitely need to exchange currency. Depending on which country you are in, you may be able to put everything on a credit card associated with your earning currency, or you may have to exchange a set amount every month for living expenses. Or you can choose to do both. The numbers you need to track do not change. (See the chart below.)


Eventually, the idea behind this system is simple. Be intentional with fixed saving and expense amount upfront. Once you commit to them, focus on what you can control. Map out your cash flow will help you find the right number to track. Let me know how it works out for you!


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