Phuket Business: Budgeting tips and concerns for expats
PHUKET: Becoming and remaining an expat in Phuket, Thailand will require careful budgeting to avoid potential minefields or serious financial problems down the road. With that in mind, here are concerns or tips to keep in mind to help you avoid blowing a hole in your expat budget:
Track your living expenses
Most personal finance software like newer versions of Quicken will have a multi-currency function to track living expenses in any currency along with fluctuating exchange rates. If you have just become an expat, it would be a good idea to record every single living expense or transaction you incur (especially any banking or money transfer fees) for the first few months using such software so you can plan a more accurate expat budget moving forward.
Learn local price trends
It’s a good idea to live on a very tight expat budget for the first few months after becoming an expat and to use that time to learn about local prices and when the best time to buy something is. For example: prices tend to rise in Thailand during the tourism high season while countries that celebrate Chinese New Year may have sales up until the celebrations and big prices increases right after that.
Live (well) below your means
The days of cushy expat assignments where all housing and schooling fees are covered, defined pension plans and even stable employment with annual cost of living adjustments are increasingly becoming distant memories – meaning living well below your means now may help you live a comfortable lifestyle in the future should your financial circumstances suddenly change.
Budget for inflation
Developing countries like Thailand tend to have much higher rates of inflation than developed Western countries. Ask yourself if you could realistically afford a hypothetical 5% or even 10% across the board annual increase in your current living expenses for items like food and housing. In addition, don’t forget that some living expenses, like the cost of health insurance as you get older, will be subject to much higher rates of inflation or annual price jumps.
Budget for emergencies
Emergencies for an expat can mean everything from something medical related requiring a medical evacuation to being forced to relocate home. In particular, you will need to have a much bigger emergency fund to cover the possibility (no matter how remote it might appear) that you will need to return home permanently and reestablish your life there – a potentially expensive endeavor the longer you have been away.
Budget for the loss of government entitlements and for taxes
British expat pensioners have for years complained about frozen pensions after moving abroad while Americans generally need to be a state resident (with a physical address) to qualify for unemployment compensation, work for an American company (or work in a country with a US tax treaty) to ensure their income is included in future Social Security payment calculations and are taxed on their worldwide income. Likewise, few (if any) western countries will pay disability or pay for medical care to an expat citizen while they live abroad. This means you need to be aware of what government entitlements you stand to loose out on when you move abroad (along with any taxes you may still be subject to) and you will need to budget extra for insurance or be prepared by saving more money.
Protect your credit score
Many international banks and financial institutions will do a credit check on you back home or abroad before they decide to do business with you – meaning any late payments or unpaid bills you skipped out on paying will come back to haunt you in the future even if you are now living it up somewhere else. Protect your credit score and your reputation at home and abroad by making sure your bills are paid on time.
Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand.
He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970-5795 or email: freemancapital@gmail.com.
— Don Freeman
