Living abroad can be a dream come true with many amazing life opportunities and experiences. Unfortunately, it is not uncommon to have financial stress when living in a foreign country. Managing financial stress and mental well-being are closely entwined.
Any money problems can quickly and negatively impact your health. Expats are susceptible to money worries in a new country as they may suddenly face unexpected financial pressures as they find themselves on unknown territory.
In this article, we explore the links between financial problems and mental health and provide some practical tips on how to manage your money as effectively as possible to minimize anxiety.
Common Sources of Financial Stress for Expats
Expats are more likely to suffer from financial stress when abroad. This can often be caused by finding that costs are higher, than anticipated. While you may well have compared food and utility bill prices between your home country and the new one, healthcare – for example – may prove much more costly.
There can be an unexpected cost if sickness strikes – involving a visit to medical specialists or hospitalization. Having to travel home unexpectedly for a family emergency can also put an unexpected strain on the budget. Managing financial stress and mental well-being must always be a priority.
While trying to manage the cost of day-to-day living, it is not uncommon to have worries in the back of your mind as you feel the need to save more for the future and to be contributing to a pension plan.
Fluctuations in currency exchange rates can easily affect an expat’s budget – especially if they are regularly sending money home or dealing with multiple currencies. Financial instability can also be triggered by employment uncertainty which is often linked to the renewal of visas and work permits.
All of these financial concerns can lead to anxiety and depression. According to the Money & Mental Health Policy Institute nearly 50% of people in debt struggle with their mental health and 86% of people who responded to a survey said that having money problems made their mental health worse.
Many people living abroad find they do not have the opportunity to earn any more money which would help them manage their money better and because of this, they do not always make good money decisions.
The Mental Health Impact of Financial Stress
Continuing worries about money can begin to take their toll in a number of ways and unfortunately, seeking mental health support in a new country can be tricky as it is not covered by health insurance policies and is therefore, expensive.
It is important to recognize the following signs as they can indicate when a person is not successfully managing their financial stress and mental well-being. The negative impact of stress about finances can be displayed in a number of ways:
Stress and Anxiety
The constant worry about money can lead to stress and anxiety, as well as feelings of helplessness. Everyone likes to treat those they love with an impromptu gift or meal out and if this is not possible, it is easy to feel wretched.
It takes a great deal of careful juggling to keep up the appearance of a normal life, but, this can be tricky if there is suddenly an unexpected problem with the car.
Strained Relationships
Financial stress can also impact personal relationships as it causes tension between partners and also parents with their children. It can be really hard for youngsters to understand why they cannot have the same outings, designer clothes and amounts of pocket money as their friends.
It can be tricky too if friends invite you to join them for drinks and/or a meal when you cannot afford it. This can be really disappointing for your partner – particularly if they are feeling lonely and homesick. A good way to ease this problem, is to invite friends around for a ‘pot luck’ evening which means, ‘bring a plate of food and bottle’.
Mental Exhaustion and Burnout
Moving to a new country can be very stressful as you try to learn the new language and culture and settle into a new job. When this is combined with juggling financial concerns, there is the risk that these could all lead to burnout or mental exhaustion.
There is also the pressure to “make it work” in the new environment. This may leave little time for rest or self-care – amplifying feelings of anxiety and fatigue. In a surprisingly short time, things can prove overwhelming. Addressing these challenges early on is essential to maintain your well-being.
Negative Impact on Daily Life
Financial worries and stress can soon have a negative impact on daily life. The constant pressure of juggling limited resources can sap energy, reduce focus and lead to disrupted sleep. The constant strain can also negatively impact your working life, reducing productivity, affecting decision-making and complicating social interactions -making them less enjoyable.
The huge emotional toll can also lead to feelings of frustration and loneliness as well as an increasing sense of hopelessness. These make your ability to adjust to your new environment an ever-increasing challenge.
Managing Financial Stress and Mental Well-Being
Create a Realistic Budget
When you first arrive in your new country, it is important to keep track of your income and your spending. It is true that you may well need to buy a number of items for your new home but best not to do this in a rush. If you need a washing machine for example, check retail prices in local stores against monthly rental charges.
Likewise, don’t rush to buy a car, shop around. While these large items will not regularly feature in your monthly expenditure, it is important that you keep track of them.
By tracking your expenditure, you will be able to adjust to the local cost of living. You will probably have researched this before arriving in your new country, but there will be some elements that cost more than you imagined. Try to live as local people do.
When you are out and about, see what food products they are buying and mimic them. Buying fresh, locally grown, seasonal food is always the most economical way. In contrast, buying imported foods is always the most expensive. Keep take-aways and restaurant meals as treats, rather than the norm.
Once you have a feel for the local cost of living, check that your outgoings are significantly less than your incoming money. It is good to sit down and set yourself some financial goals. The first priority is to accrue some ‘rainy day funds’ for when the unexpected happens. Once you have this in your bank account, it is good to set yourself short-term and long-term financial goals for personal projects, travel opportunities etc.
Build an Emergency Fund
It is good to build on your ‘rainy day fund’. Always plan for the unexpected and build your ‘rainy day fund’ into a bigger emergency fund to cover unforeseen expenses, such as medical emergencies, car problems or sudden job loss.
It is important to save some money every month. Setting aside a small percentage of monthly income is ideal. A large glass jar to fill with small loose change also works well as it is amazing how quickly and painlessly it will accrue.
Become a sharp shopper and learn where others go to get food at cheaper prices. If you live near an industrial estate, are there any outlet shops selling clothes and other merchandise at remarkably good prices?
Currency Exchange and Banking Solutions
It is important to check that your money is in the correct type of bank account for you. Your money needs to work well for you. It is not a good idea to have to regularly convert money into the local currency as exchange rates are always costly. Have a look at the local banks and find on that is expat-friendly, with staff members who speak good English.
Open an account in the local currency as this will keep charges to a minimum and avoid international transaction fees. For example, the French bank, Crédit Agricole, has a dedicated online service for English speakers called ‘Britline’, while in other countries such as Germany and Cyprus there are usually several staff members who speak English.
The benefits of currency hedging are good to explore and also online multi-currency accounts such as Wise and Revolut and forward contracts as these all help mitigate the risks of exchange rate fluctuations – and these directly impact your wallet.
Manage Debt Responsibly
Many people do find themselves in debt at one stage or another. It is really important not to ignore your debts and to give top priority to debt repayments. It is important to understand local financial regulations relating to debt and financial agreements.
Whether you have a student loan to repay or are maxed out on your credit cards, look at which one is the high-interest loan (usually credit cards) and get that cleared first to avoid accumulating excessive interest charges.
Convert your money wisely and keep an eye on exchange rates if your debt is in a foreign country. It is vital that you speak with the creditors and advise them of your situation. Together you can negotiate workable repayment terms. If possible, do not to take out any new debts or to rely on credit as these will both compound your financial challenges.
If interest rates are high in your host country explore the options for debt consolidation or refinancing. Make sure that the repayment levels chosen are workable and do not empty your emergency fund.
If you feel that your debt is becoming overwhelming, don’t hide them and try and sort them on your own. Consult with a local financial advisor in your new country. They are trained to be able to help and guide you.
Strategies for Improving Mental Health Amid Financial Stress
It is important to give time to you and your mental health wherever you are. Managing financial stress and mental well-being if you have relocated can prove even more challenging.
There are a number of ways in which you can positively impact your mental well-being.
Practice Mindfulness and Stress Reduction
Wherever you are and whatever your schedule, take a few minutes aside to ease your tension. It is possible for you to practice mindfulness techniques such as deep breathing exercises or meditation. Both of these have been proven to reduce anxiety levels.
Making time for activities that promote relaxation and well-being will prove beneficial too. These include time spent outside, exercising or playing sport, or if you prefer, keeping a journal.
Seek Support from Mental Health Professionals
If you are suffering from financial stress living abroad it is important that you seek professional help before things become overwhelming. Managing financial stress and mental well-being can be eased using online therapy platforms and it is worth finding out about local mental health services.
Talking things through with a local financial counsellor can be really beneficial way for managing financial stress and mental well-being. It is particularly particularly effective with someone who specializes in working with international clients. They will be able to advise and help you to create a sustainable financial plan to get your finances in better shape.
Living in a different country it is important to establish your own support network of both local people and other expats. Gaining tips and advice from other expats can prove invaluable and they are also great if you just need some emotional support.
When things are not going so easily on the financial front, it is not good to keep a distance from your family. Open conversations with your loved ones are important if they rely on you for financial support. Even if they do not, a ‘long distance hug’ can certainly make you feel better!
Financial Tools and Resources for Expats
Arming yourself with some good financial tools can make you feel much more in control of your spending:
Budgeting Apps
There are some great budgeting apps such as YNAB and Mint. These can help you keep track of your spending and help you to meet your saving goals. Managing financial stress and mental well-being can be easier using one of these excellent tools.
Expat Financial Services
Using financial services that are tailored to meet the needs of expats can be a very effective way of managing financial stress and mental well-being. They can help advise you about all types of money matters when you are abroad. Such companies have experts who can offer international tax advice as well as offer information about banking and insurance.
Local Financial Resources
A good starting block when you move abroad is to thoroughly explore the financial resources available in your host country. Local banks, expat financial forums and government aid programmes are all worth learning about.
Long-Term Strategies for Financial Stability
Researching and planning long-term will help ensure financial stability.
It is good to assess your career prospects in your host country. Explore opportunities for growth and also additional income streams – such as freelancing – if these will ease budgeting. It is important to also check any additional legal requirements for the work such as an additional work permit. Working ‘on the Black Market’ is not advisable as most people do get caught out. Check whether any additional money that you earn will be liable for tax.
Get settled into your new home and know how much money you can save each month. It is good to explore all the investment and savings options. There will be local and international plans to consider. Investing regularly and wisely will help you to build long-term financial security.
It is crucial that when living and working abroad that you plan for your retirement. Planning in good time is essential. It is the only way to achieve a good savings to ensure a trouble-free retirement. If you are moving abroad for your retirement, manage your pension schemes and retirement savings well. This will ensure that you can live comfortably.
If you find yourself struggling to manage financial stress abroad, it is important to act promptly. If not, money worries can negatively impact your wellbeing. Understand what has led to your financial concerns and be open with creditors if you have got yourself in debt.
Seek professional help from your bank or other investment professional and work together to devise a workable repayment plan. Look after your mental health during this challenging time. Do not be ashamed to seek out moral support from family and friends.
Don’t stew on the negatives, but celebrate the positives as you slowly but surely get yourself financially back on track. It will take time and effort to ease your financial problems. The sense of achievement when you have sorted out your finances is certainly one to relish.
Leave a Comment