What if I told you that you could move abroad, travel the world, experience other cultures, grow as a person AND radically improve your finances? Is that something that you would be interested in hearing more about?

I apologize for the sales pitch but moving abroad could be the best financial decision you ever make. I’ve seen people pay off a mountain of debt, save aggressively for financial independence, and drastically change their lives simply by moving abroad or traveling the world for a few years. How did they do it?

1. Reducing Their Income Taxes

Do you like paying taxes? Of course not. Well if you’re an American digital nomad or expat, you may be able to keep upwards of $100,000 of your income without paying any US income tax at all! That’s right, the Foreign Earned Income Exclusion could allow you to reduce your income tax rate to zero, zilch, nada.  How would your financial picture change if you could keep an extra 20-30% of your income?

2. Lowering Their Cost of Living

The world is a big place and there are a lot of countries where your dollar can go a long way towards a comfortable life. As an American abroad you may find that many of your biggest expenses (lodging, food, entertainment) are suddenly a lot more affordable.  (Check out Numbeo’s latest rankings to see how the country of your dreams compares.)

Housing

Living in the downtown area of a major U.S. city could be a budget buster, but it’s possible to live comfortably on a beach or in a capital city abroad for fractions of what you’d pay in the U.S. (To get an idea, check out International Living’s “The Cheapest Places in the World to Live”.)

Airbnb: While it may sound crazy to live full-time in an Airbnb, it’s quite affordable in many cities. Owners will give you a steep discount of 30% or more for booking an entire month. Living in an Airbnb will also save you from having to pay for utilities or buy furniture and kitchen utensils. You also won’t feel the urge to order all those home improvement items from Amazon.

House Sitting: Love animals and want to radically reduce your housing expense? House sitting could be the way to go. It allows you to stay in someone’s fully furnished home for free by agreeing to take care of their pets while they’re away.

Groceries & Restaurants

In any city you can find expensive grocery stores and high-priced restaurants, but discount chains and mom & pop restaurants dominate many markets outside of the U.S. If you “eat like a local”, buying in-season produce and avoiding tourist restaurants, you may find yourself spending much less on food.

Fewer choices means lower prices: American grocery stores are massive. We have entire aisles of the store that are dedicated to just mayonnaise:  regular, low fat, no fat, chipotle, dill, mustard, sriracha, bacon… Should I go on?  With choice comes cost. Abroad you may find only one type of each item, but that allows the store to offer lower prices. The same goes with alcohol in restaurants. That pint of beer probably costs a fourth of what you’re used to, and it’s because it’s the only beer on tap.

Travel Expenses

Do you like traveling to experience different cultures and languages? Well, starting from the U.S. can mean a long, expensive flight. If you move abroad and have a home base somewhere in Europe or Asia, travel becomes surprisingly affordable.

Ryan Air, Vueling, Easy Jet … if your travel dates are flexible you can fly for less than $10 to a new city in Europe. No, I didn’t forget a zero. My wife and I flew from Barcelona to Rome on a Tuesday for $10 each. Doing bi-annual week-long trips to explore new countries is expensive. Moving closer to what you want to see allows you to do shorter, less expensive trips and see more of the world.

Cell Phones

Tell someone outside of the U.S. how much you pay for your cell phone and their jaw will drop to the floor. The U.S. is a big country with only four major carriers. The rest of the world has competition and consumers benefit. With an unlocked cell phone, in most countries you can pick up a local sim card with data, minutes, and text for less than $20 per month.

3. Simplifying Their Life

Moving abroad may not only reduce the cost of things you buy, but it may reduce the number of things you buy.

Living Out of a Suitcase

When you’re moving abroad or traveling the world as a digital nomad, there is only so much you can take with you. If you buy something new, you may have to give up something you already have. This can go a long way to reducing your spending because it’s less appealing to impulse shop.

Hobbies

As an expat you may find that your occasional hobbies that require the most equipment and space are no longer your hobbies. Golf clubs, craft supplies, tennis rackets… Limited space will force you to focus on the hobbies that are most important to you, and you’ll stop spending money on the ones that are not.

Job-Related Expenses & Commuting

One of the biggest surprises for people when they become a remote worker, digital nomad, or embark on their adventure as a self-employed traveling entrepreneur is how many of their expenses were actually tied to going to an office.

There are the obvious ones: gas, tolls, metro rides, parking, and professional clothing. But also the others: happy hours, lunch out, the pick-me-up afternoon coffee, obligatory gifts for co-workers, and Girl Scout cookies. Much of your salary may be going to non-essential spending that’s a side effect of heading to the office each day.

Cars & Transportation

American culture is a car culture. My wife and I were visiting friends in the U.S. after living abroad for a few years. We needed to buy something, looked at Google Maps, and told our friends we were going to walk to a store that was about a quarter of a mile away. Our friends looked at us like we were insane and insisted that they drive us!

Many cities outside the U.S. have excellent public transportation and are very walkable. Removing gas, insurance, repairs, and other spending associated with car ownership will save you hundreds each year. Bonus: walking more may reduce your healthcare expenses too!

4. Having a New Lease on Life

Why are New Year’s resolutions so difficult to keep? Well, the status quo is just so much easier than change. But moving abroad is a life changing experience. When you’re in a new environment and there is no status quo, you may find it easier to shape your habits in line with lifelong goals. Moving abroad could be the catalyst that you’ve been looking for to live a healthier life, both physically and financially.

This Sounds Too Good to Be True

I agree, it does. But I’ve also seen it over and over again AND experienced it myself. If you want to travel the world, learn about other cultures, and improve your finances, then becoming an expat could be the answer.  By reducing your taxes and cost of living, simplifying your life (and as a result, your spending), and gaining a new lease on life, you may find yourself closer to achieving your dreams.