Do This To Save Money As An Expat ESL Teacher16 min read
Learning how to save money as a new expat ESL teacher is going to significantly decrease your levels of stress and help you more easily transition into your new life abroad. Financial planning for teachers is sometimes difficult as there are many factors working against you. For example, many teachers are paid a monthly salary which can oftentimes be hard to manage. Teachers may not always receive top dollar salaries in most countries and this is something that is no different for ESL teachers. Also, as an ESL teacher working in a foreign country you may not always have equal access to banking and may be forced to pay more to access your money and transfer between accounts (this is dependent on the rules of the individual country you are teaching in and what country you are from). I’m going to lay out a solid financial planning strategy for teachers based on multiple years of experience and go over what has helped me (and more importantly what has failed) so that you can avoid some of the financial pitfalls that come with working and living as an expat ESL teacher.
What steps should I take to create a plan for financial success?
Financial planning for teachers doesn’t have to be a stressful or complicated process. Over the past few years that I have been an expat, I’ve been able to develop a solid process for saving money each month despite a number of obstacles. This simple five-step process can help you to create a savings plan by identifying and eliminating any obstacles that stand between you and saving your money. Let’s first look at what these steps are then I will go into more detail for each:
Step One – Identify any obstacles to saving money
Figuring out what obstacles are going to come in the way of you and your goal of saving money is going to be a top priority when starting your financial planning as an expat ESL teacher. This is because one of the primary reasons that savings strategies fail is due to unforeseen obstacles that can get in the way of you saving money or wipe out the money that you have already saved.
Step Two – Calculate any expenses you currently have or foresee having over the next year
I mean everything. As mentioned above when you are creating a financial plan as a teacher the one thing that can work against your efforts is unforeseen obstacles and expenses that you failed to calculate for. So this means any expenses that you know you are going to have from the smallest to the largest and any that you think you may have in the future.
Step Three – Calculate your earnings and then figure out how much you can save each month
You will need to figure out how much you are making each month. Every single dollar that comes to you needs to be accounted for so that you are maximizing your savings. So if you freelance on the side of teaching English then don’t forget to add that to your total income. After you have totaled your monthly income you need to first take a certain percentage out for yourself to have for investment. You can decide how much you are putting aside but it needs to be at least ten percent. After this is removed you need to subtract your monthly expenses and then look at whatever is left to move into your various savings goals.
Step Four – Segment your savings goals and prioritize the most important
Not all savings goals are created equally. You should prioritize the most important areas where you need to be saving money. This includes creating an emergency savings fund if you don’t already have one and paying down debt. Having savings for different long-term major expenses such as potential medical expenses or travel or buying a house will help you to reach those goals more quickly.
Step Five – Automate the savings process
Automation is the key to success. The easier you make it for you to save money the more likely you are going to be successful in your endeavor. It is much easier to automate the savings process than it is to get into the habit of manually putting money aside each month.
What obstacles will I face financially as I transition abroad?
The first thing you need to figure out before you begin creating a financial plan is what obstacles you are going to be facing as a new expat ESL teacher. This is going to help you when you create your financial strategy to overcome potential drains to your money including daily expenses as well as fees that you may be paying for banking services or other potential expenses such as visas and work permits (this should be covered by your employer but this is not always the case).
You aren’t going to have a completely clear picture of your potential obstacles until you have lived in a new country for a while so one of the best things that you can do is identify the most obvious ones. For example, are you going to be able to open up a bank account at a local bank or will there be regulations keeping you from this? If not then how much is it going to cost you to access your money from your home countries bank? How can you minimize the fees associated with this? The first time I visited Thailand before I moved here, I did not think about accessing my money and instead was using my local bank card. Every time I used an ATM I was being charged over 6 US Dollars per transaction. You can do the math here but that is a lot of money that adds up fast. And, that was just over the course of a month as a tourist. Imagine these fees over the course of a year or more as an expat English teacher trying to access it continually for living expenses and you can imagine that those fees will be a significant drain on your finances.
Other hurdles you are going to have to think about before creating your financial planning strategy is what your tax situation will be. This is more complicated since every country is different but figuring out your taxes as an expat ESL teacher will save you a lot of headaches later on. Imagine, you have saved a significant portion of your income. You’ve been fastidious in saving your money. While everyone you know went out drinking most nights and invested their money in alcohol and partying, you were attentive to how much you saved and resisted spending money frivolously. But just one problem, tax season comes around and now all or most of your savings are gone. All of that work wasted. Just because you didn’t plan ahead.
Look at how often you are being paid. When I began working as an online ESL teacher I had never been paid once a month. This was a new experience for me as every job I had prior had paid out weekly or at the very least bi-weekly. When your next paycheck is just a few days away the pressure to save money becomes significantly less. The transition from that to living in a foreign country with no safety net and your next paycheck being weeks away and you can see that if you don’t save money properly and take into account financial hurdles that could arise you may find yourself in a bad way.
Identifying these financial hurdles and obstacles that will come up as you attempt to save money will significantly lower your stress levels but can also potentially save you hundreds and even thousands of dollars in fees and expenses that could accrue over the long term as a result of ignoring them. But, remember, the biggest obstacle to you saving money is going to be you and your lifestyle. Avoid situations that can challenge your savings discipline and temper your lifestyle to be more in line with your long-term savings goals and you will eliminate the largest obstacle you face.
How can I calculate my expenses?
This part can be tough when you first move to a new country as you aren’t going to have a clear picture of how much things cost and what your expenses are going to be. The best thing to do is to make a list (if you have excel or google sheets those are great for this) and write down everything that you think you are going to have to pay for each month. You need to be completely honest here. There are the obvious ones such as rent and utilities and food but then there are the less obvious expenses such as your entertainment, beauty and hygiene products, work-related expenses that may not be covered by your company, etc. You also need to factor in potential expenses such as medical bills that might arise or if you need medicine for stomach pains or headaches. This may seem like a lot to go through and you may think that you can skip out on the small expenses but what you need to remember is that it is those small expenses that are going to eat away at your budget and cause you to have to dip into your savings. In my own life, I failed many times to budget for things such as entertainment and traveling around my new home of Bangkok and even when I put money aside each month I ended up having to dip into this savings because I didn’t account for these random and what seemed at the time to be minor expenses. I cannot understate how important this step in the process of financial planning for teachers is as this is where most savings plans fall apart.
Make sure that you take into account whatever money you will need to save for taxes. We all hate paying taxes but this is part of life and the best thing to do is to play the game and you don’t have to worry about all of your savings being seized for failure to pay. As tax laws are different for each country you will need to do some research here on your own and consult with a tax professional in your country (preferably one with experience working with expats).
How do I figure out my monthly earnings and savings?
This is going to be relatively straightforward. Every dollar that comes through your hands is earnings. Even if it’s money that you find on the street it needs to be accounted for. The best thing to do here is to do some bookkeeping so that you have a good idea of how much you are making. Especially if you are making money from a few different sources such as private tutoring or teaching ESL online to make extra money along with your primary teaching income. After you have your total monthly income you will need to subtract your total monthly expenses in order to figure out how much you have left over for savings. I cannot stress this enough but you need to make sure that you are first taking out at least five percent before you pay your bills or do anything else. If you cannot save at least five percent then it is absolutely imperative that you reduce your cost of living.
After you have subtracted your monthly expenses from your monthly earnings you are going to need to figure out how much to put into your different savings goals you will set in the next step. You can do this by either setting a fixed amount for each goal or setting a percentage that you will save. I highly recommend that you set a percentage as this will allow you to easily adjust how much you are saving as your monthly earnings increases or decreases.
How do I create savings goals and which are the most important?
If you try to save money without setting specific goals then you are most likely going to find it hard to stay motivated. Aside from setting aside a certain percentage of every dollar you make for investment, you need to create specific savings goals for the larger expenses you face in your lifetime. The first, if you haven’t done so already, is to create an emergency savings fund so that if anything happens and you are unable to work for a long period of time you won’t have to worry about how you are going to eat or pay the bills. The first goal should be for three months of expenses. Keep in mind this is going to be emergency expenses if everything goes awry so you want to focus on the necessities and add a few extras after those are covered. You should make sure that you have your rent, utilities, more than enough for food, transportation costs if you are going to be trying to find a new job, medical costs for minor things such as doctors visits (especially if you won’t have medical insurance), and then a certain amount for entertainment such as going to the moves a few time each month or whatever you prefer to do (this is going to help keep you sane and you will be thankful for having that extra bit of money budgeted for this so that you don’t blow through your other savings). After you have the first three months put aside then focus on the next three months and continue to do so until you have a full year worth of living expenses put aside. Keep in mind that during this entire process of saving money for your emergency fund you will still need to be putting a certain percentage aside from every dollar you spend. This is going to be for investment purposes as your end goal should be having every penny you own working to make you more.
Once you have your emergency savings fund created (which I am in the process of working on now) then the real fun is going to begin. Now is when you are going to get to save for the things that you really want. Have dreams of opening a business? Do you see yourself as a future homeowner? Write down your goals no matter how far-fetched they may seem. Start out by writing down the top five savings goals that you have. After you have done this prioritize them using a few different metrics. First look at how important each one is to you. If building your own business is more important while you are younger than buying a house then you need to rank that higher. Second, look at the time frame for each one. For example, if you want to go on an awesome around the world trip or have a blowout vacation to in mind this is a more temporary goal then building a business. Separate these two into a short-term and long-term savings goal so that you have them segmented and they are easier to manage. Third, take a look at which one will be more important in the long term. Owning your own house, for example, is a good thing but if your goal is to open your own business and become your own boss then this is something that is going to let you accomplish that goal and later on save for a house or other long-term goals.
After you have your top five (or however many you have if you don’t have five) savings goals listed then you need to take the money that you decided in the previous step to set aside for saving and apply it to these goals. Take the first entry in your long-term saving goal and the first entry in your short-term savings goal and set how much you want to contribute each month to each.
How do I automate the process of saving money?
Finally, you are going to need to automate all of these things to the best of your abilities. There are many ways to do this but the easiest will be by setting up automatic deductions through your bank. If your bank allows it then you need to first set up for at least five percent of your money to be removed from your account each month and put into savings. I have yet to use a bank that allows me to remove based on percentages so you are going to need to calculate this number based on your total monthly earnings and then enter in the number you come up with. By doing this you are not even giving yourself a chance to think about this money and you can put it aside for investment, something I will discuss in a later article. After this initial savings automation is set up then you can set up automated savings for the various goals that you created. Make sure since you are going to be entering in fixed numbers here that you update this automatic savings goal now and then if you decided to put a certain percentage into each goal. By setting up a process to automatically save money each month you are removing the possibility of forgetting to save money or that you will get lazy or tempted to spend that money and decide to double up on savings the next month. Trust me you won’t.
Putting it into practice
These are five actionable steps that if you follow are going to guarantee that you are able to save money each month. Saving money as an expat ESL teacher is imperative as you never know what could happen. ESL jobs are never guaranteed and there is always a chance that you could lose your job or that your company might not renew your contract the next year and you will need money to get you by until you find a new school to work for. Aside from this, most ESL jobs aren’t considered high earning positions so making the most out of your income will help you to create the life you desire and to live with less stress over financial matters. Remember that financial planning for teachers doesn’t have to be a stressful or particularly challenging endeavor but it is one that must be taken if you want to make the most of working as an expat ESL teacher.
I want to help you find an awesome job in the ESL industry and then excel at it. I’m a TESOL certified teacher with over two years of experience working both online and offline. I have worked with students ranging from young learners to advanced level university speakers and have worked in recruiting and hiring, teacher training, and content creation. I’ve seen the good and bad of the ESL industry and I’m here to tell you about it.