3 reasons a financial safety net is your ticket to a worry-free life

Moving to a new country is always an exciting adventure, but it comes with its fair share of uncertainties and challenges. Having a financial safety net in place is crucial to ensure that your expatriate life doesn't become a financial misadventure.

Also known as an emergency fund, this is a sum of cash set aside to provide a cushion during difficult times, ensuring a smooth transition when settling elsewhere. Roughly 6 months’ worth of your salary would be an ideal amount. 

And, as we’ll explore, this money can be used for more than just emergencies!

1. A cushion against uncertainty

The expat life brings a mix of adventure and unpredictability. From career shifts to soaring rental prices - life’s twists and turns can test your resilience. Here are some reasons why a robust safety net can serve as your anchor in turbulent times.

• Career changes: No one wants to think about losing their job, but it's a reality that expats should be prepared for. If you find yourself unexpectedly unemployed, your safety net becomes your lifeline – a grace period while you explore new opportunities without the immediate pressure of income loss.

• Rental prices: Imagine this: you've settled into your dream apartment in a foreign city. But suddenly, rental prices start to skyrocket. Now you have to rethink your entire budget, upending your plans. And it isn’t hard to imagine; many global cities are notorious for rental spikes. Take what’s happening in Singapore now, for example. Rental rates for condominiums in Singapore increased 13.9% in September 2023, year-on-year. Without a financial buffer in place, these situations can be stressful.

• Cost of living: All in all, if you’re settling in a global city, chances are the costs of living will be high. Again, take Singapore as an example. It’s tough fighting against inflation, but you can prepare for it by putting your money to work with long-term investments (shoutout to our General Investing Portfolios), and by having your safety net at the ready.

2. A launchpad for new opportunities

When you live in a bustling new city, opportunities can arise at any moment. 

It’s always helpful to have set aside money so you can take advantage of these exciting new adventures. Beyond your safety net (and assuming you have that set aside), there are a world of ways to invest money in your personal and professional growth: 

• Entrepreneurship: Investing in a new business venture abroad becomes less risky when you’re not pouring in your last dime; your money can be a launchpad for this.

• Lifelong learning: You might come across a course that has the potential to boost your personal or professional growth, like learning the local language. Don't miss out on opportunities to invest in yourself due to financial constraints.

3. A plan for life’s milestones

An expat’s journey isn’t just about adapting to a new country; it's about navigating through life's milestones in an unfamiliar environment. A robust financial safety net isn't just a buffer – it's a strategic tool to help manage those key moments confidently, maximising your experience of being an expat in a new country.

• Starting a family: The costs can be significant if you start a family overseas. From prenatal care to delivery and ongoing healthcare, there’s much to consider. A safety net eases these pressures, letting you focus on your growing family. And let's face it, school fees can be a major concern. When saving for your children’s schooling, funds set aside can provide support without disrupting your financial stability.

• Investing in a home: Many expats consider purchasing property in their new country as a long-term investment, or for a more permanent living situation. A safety net gives you the flexibility to make a down payment or cover unexpected expenses.

• Diversifying your career: As mentioned, a safety net can also be your launchpad for new opportunities. Whether you’re reaching a point in your life where you’re considering investing in a business, or if you’re just looking to start a new side hustle, diversifying your income streams can be just as important as diversifying your investments.

Your safety net is key to a successful life abroad

Living as an expatriate abroad is a blend of challenges and opportunities, and there are steps you can take to make the most out of it. A safety net, for one, doesn’t just prepare you for the rainy days, it ensures you’re set to make the most of the sunny ones, too.

Our Simple suite of cash management portfolios can be a place for your money to grow safely and securely in the short to medium term, perfect for an emergency fund. So, start building your safety net today – it could be the most important passport to your expat life.