The coronavirus pandemic has caused the global economy to sink into the “worst recession since World War II”, and though some industries are faring better than others, it’s fair to say that we’re all going to be affected by the aftershocks of lockdown. As an expat, finding ways to cut back and hold onto more of your cash can be tough, especially if you live in a country with high levels of inflation, but bracing yourself for the years ahead is a sensible decision.
Below, we’ve rounded up some tips to save money during the upcoming recession…
One of the simplest ways to cut back on your household bills is to use a utilities switching service. From your gas and electricity to your television license, broadband, and home insurance, it’s easy to pay over-the-odds for basic services, especially if you’re brand loyal.
Platforms like Look After My Bills allow you to input your current providers, monthly fees, and they’ll find a cheaper deal you can switch to. Of course, you’ll need to be in a flexible contract in order to switch from one provider to another, or you could face a hefty fee, so do your research and lock yourself into cheap tariffs when they become available to save big.
Another money-saving tip for expats is to sign up for a cashback credit or debit card, where your lender will offer you anywhere from 0.5% to 5% cashback whenever you spend money.
This cashback can quickly add up - if you spend $5,000 per month and have a 5% cashback card, that’s $250 back in rewards which you can put away into a rainy day fund. As always, we recommend shopping around and looking out for the cards that offer the best perks and rewards; to maximise potential earnings, you might need to switch from one bank to another.
How much are you paying for your mobile phone contract? Cheap SIM-only deals are now available around the world, and some networks specialise in international calls and data packages so you can save when you’re catching up with friends and family back in the United Kingdom. Shop around and look for a package under £10/$10/€10 - many low-cost providers offer at least 6GB of data as well as unlimited phone calls and texts for this price.
One activity that you should tick off your list as soon as possible is performing an audit on your monthly expenses and identifying “nice-to-haves” that you can temporarily cut back on.
Pausing your monthly direct debits on things like magazine subscriptions, gym memberships and streaming services can help you build up an emergency fund. Some financial experts say that you should spend no more than 30% of your income on discretionary items, so try to stick to this figure and consider setting aside an amount that you can use to treat yourself.
During a recession, banks often cut interest rates to encourage borrowing and spending.
The same is happening right now in the United Kingdom, with interest rates at a record low of 0.1%. That’s great news if you’re carrying a high level of debt, meaning you can pay off more of what you owe with less interest. If you’ve got a fixed-rate loan or credit card, you could consider using a balance transfer card with a very low rate of interest. In some parts of the world, including in the UK, some banks and building societies offer 0% interest cards.
Being in debt during a recession can be risky, as a slight change in circumstances could affect your ability to repay. Whether interest rates rise or you lose your job, would you still be able to repay your loans? Pay down debts where possible by budgeting and aggressively paying off loans. That means no luxury items and no savings - get your debts paid off first!
Don’t put all of your eggs in one basket. Relying on one source of income has always been a risk, but during a recession, it could spell disaster for your finances. Where possible, adding an additional revenue stream is a sensible option. If you lost your job, you’d still have some monthly income and could meet your financial obligations until you got yourself back on your feet. The good news is that you don’t necessarily have to take on a second job: you could rent out your spare bedroom as an expat, invest in a buy-to-let property, or launch a blog and monetise it through affiliate marketing and ebook sales. Being creative always helps.
Freelancing is becoming increasingly popular around the world, and for expats, it affords you a sense of freedom and flexibility that you wouldn’t get with other types of employment. More people than ever are offering their skills to businesses on the side. Determine sellable skills you could market, and put yourself on a freelancer website such as Fiverr, Upwork, or Guru.
According to the International Labour Organization, the coronavirus pandemic will result in more than 300 million permanent job losses. So why on earth would you choose to quit your job during a recession? If you have a savings safety blanket, cutting ties with your employer could be the best way to increase your income and cut costs. Self-employment might not be for everyone, but you don’t have to pay to commute to work, park, eat out, organise daycare, or keep up with dry cleaning. Research shows that, on average, self-employed people in the UK generate annual revenues of £32,623 (£5,000 more than the average salary), and work on average ten fewer hours per week. Granted, everyone’s situation is different, but if you’re able to take the leap and start a business, you could use the recession to your advantage.
Recessions have spawned some of the world’s greatest businesses. That’s because savvy entrepreneurs find answers to new problems (face masks and hand sanitiser, for instance), there’s more room for competition and price-cutting, materials and supplies are cheaper, you can access better lines of credit, and take advantage of investment funds and government grants. You’ll also face less competition when entering the market, and you’ll set yourself up for long-term success. If you thrive in tough times, your firm has a strong chance of survival.
Finally, consider cancelling your plans to return home to see friends and family and instead settle on a Zoom call. Many expats save up to pay for flights and accommodation in their home country to catch up with loved ones, but with travel restrictions ongoing and the cost of flying increasing due to enhanced safety protocols, it makes sense to call this year’s trip off.
We get it: FaceTime calls aren’t as intimate as meeting loved ones face-to-face, but they’re cheaper and reduce your chances of contracting COVID-19. You can put the money you’d spend on your 2020 flights and accommodation into a savings account and use it next year for a bigger, better visit when the world hopefully returns to a more normal state of affairs.
There’s no denying that there are challenges ahead, and as an expat, you might be worried about how you’re going to pay the bills. Cutting back now and building a pot of money to cover unexpected expenses is a sensible idea; join our community to share your top tips.
Share this article:
For better web experience, please use the website in portrait mode