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🐧 How to automate your money as an expat
PLUS: Singapore expat follow-up, HK Top Talent Pass Scheme, Portuguese housing bubble
Dexter Zhuang
January 14, 2023 • Estimated Reading Time: 11 minutes
👋 Hey expats, this is Dexter. Welcome to a new edition of Money Abroad, my weekly newsletter. Each week, I dive below the surface to bring you fresh tips on building wealth while living abroad. Send me your questions and in return, I’ll do my best to offer actionable, no-BS tips.
What you'll find in today's edition:
👷🏻♀️ How to automate your expat money system
🇸🇬 Singapore expats follow-up: challenges by financial literacy
⛰️ Share your experiences & get a fresh investing report
🧠 Hong Kong's Top Talent Pass Scheme, the great deleveraging, Portuguese housing bubble
Vámonos!
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👷🏻♀️How to Automate Your Expat Money System
“Oh shit not again!”
Pangs of anxiety hit my stomach as I realize I forgot to transfer enough funds yet again from Singapore to my US bank account to pay off my outstanding American credit card balances. Classic rookie move.
When I first moved to Singapore, I hated manually managing my money as an expat. Not only did it feel like a giant waste of time, but I would get headaches from making silly errors like inputting the wrong amount and fret about if I was saving enough.
That’s why I’m a huge believer in “set and forget” money systems.
Most expats I know are like me — busy with work, travel, and family. They’d rather spend their weekends enjoying the sunset from their Bali beach villa instead of wrangling with their bank’s buggy user interface in an attempt to execute routine transfers.
I’m psyched to share with you how I automate my expat personal finances. But before we get into the nuts and bolts, here’s why I love putting my money on cruise control:
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🤔 Why “Set and Forget” Your Personal Finances
Reduce decision overload: Psychology research suggests that as humans, we have finite willpower. Each time you decide how much to spend, save, or invest, you're depleting willpower. Once your willpower is gone, it gets harder to resist urges to buy, make impulse purchases, and spend more on each purchase.
Avoid a cycle of guilt: Temptations sing their siren songs. With your defenses down, it's hard not to give in, which potentially triggers feelings of guilt and shame, leading to a vicious cycle.
Save more without relying on self-control: By scheduling recurring money transfers, you won’t need to think about how much to save for each paycheck or worry about making a rash decision. One behavioral economics study found that by asking people to commit upfront a portion of their future salary increases toward retirement savings, their average saving rates increased nearly ~4x over 40 months.
Easy to get started: You don’t need to be a tech whiz. No fancy tools required. Setting up my system just takes simple math and 1-2 hours of your time over the weekend.
Once you pop, you can’t stop: After your money system is setup to work quietly in the background, it requires minimal upkeep. You can live your life more stress-free.
⚖️ Create Your Spending Rules
In order to setup your money system properly, you will need spending rules. These rules tell you how much money you commit to allocating from your salary to your expenses, savings, and investments.
(feel free to skip to the next section if you already have rules)
The 50/30/20 rule is a popular starting point. It provides a simple guideline for breaking down your monthly spending into three buckets:
Spending categories
50% needs: spending on expenses you need to survive like rent, mortgage, car, groceries, utilities
30% wants: spending on things you don’t need to survive but enjoy as part of your expat lifestyle like travel, gourmet meals, and new toys
20% savings: preparing for the future by adding money to your savings, emergency funds, investments
How to use:
Map your bank, investment, and credit card accounts to each of the 3 main categories
Calculate the amount you plan to allocate from your salary to each account, using the above guidelines
That’s it — now you have your foundational rules 🙌
🤖 Setup Your Automated Expat Money System
It's time to setup your system! To illustrate each step, I share examples from my own personal finances:
1. Setup local accounts like your bank, investment, and credit card accounts based on your needs.
Link these accounts together using transfer, payment, and/or account linking features typically found in their web or mobile apps.
My Setup: I live in Singapore where I mainly have bank accounts. DBS is my bank of choice here due to its responsive customer service, smooth UX, and acceptance of US citizens.
I setup 3 DBS accounts for different purposes:
• Joint Checking Account → shared expenses with my partner like rent, utilities, groceries
• Personal Checking Account → personal expenses, paycheck deposit
• Personal Savings Account → personal savings, tax withholding
2. Setup home accounts: Do the same thing for your home country accounts.
My Setup: I’m originally from the US, where I maintain the rest of my bank, investment, and credit card accounts. For bank account, I use a checking account and debit card that doesn't charge foreign transaction fees.
3. Setup a cross-border account & link your bank accounts: Sign up for an online money transfer app with transfer scheduling functionality like Wise.
Link your local and home country bank accounts to your cross-border account.
My Setup: I use Wise for my cross-border money transfers due to its low fees, easy-to-use UX, and automation functionality. Revolut is another popular alternative (although I personally haven’t tried scheduling transfers, the feature exists).