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!
👷🏻♀️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:
🤔 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).
4. Automate local transfers: Schedule recurring transfers to execute after your paycheck hits your local checking account.
My Setup: I implemented an on-going DBS Standing Instruction so that after my paycheck hits my DBS Personal Checking Account, a couple days later, the bank transfers money from my Personal Checking to Joint Checking & Personal Savings Accounts.
5. Automate cross-border transfers: Schedule recurring transfers (a) from your local checking account to your cross-border account and (b) from your cross-border account to your home checking account.
⚠️This step is crucial for expats. Without setting up recurring cross-border transfers, you won't be able to automate your bill payments, savings, and investing back home!
My Setup: I schedule a monthly remittance via Wise from my Singapore checking account to my US Checking Account to fund my US-based emergency savings, investments, and bill payments.
6. Automate credit card payments: Use your credit card issuer’s web app to schedule monthly credit card bill payments on a day of the month after you know fresh funds will hit your account.
My Setup: I maintain a few US credit cards like my AMEX Platinum to maintain my credit history, accumulate miles, and access perks. I leave a day or two of buffer between the transfer and bill payment date to account for possible delayed settlement.
7. Automate investments: Use your investment service provider’s web app to schedule a monthly direct debit from your local and/or home checking accounts to your investment accounts.
My Setup: I keep most of my investments in the US. I setup recurring direct debits to pull funds each month from my US Checking Account to my US investment accounts.
8. Voila! You can kick back and enjoy watching your system pay bills, save, and invest for you.
📅 Monthly Schedule
In summary, here's my monthly schedule of recurring transfers:
- 25th of the month: Paycheck hits my DBS Personal Checking Account
- 27th of the month: DBS Personal Checking Account splits up my paycheck and transfers to my DBS Joint Checking & Personal Savings Accounts
- 28th of the month: DBS Personal Checking Account transfers to my Wise Account
- 29th of the month: Wise Account makes a cross-border transfer to my US Checking Account
- 5th of next month: Credit card payments are debited from my US Checking Account
- 7th of next month: Investment contributions are debited from my US Checking Account
🇸🇬 Singapore Expats Follow-up
In response to last week’s SG Expat Money Report, readers asked: “How do expat challenges differ based on level of financial literacy?"
Excellent question! I felt intrigued, so I dug into the data. What I discovered is shown in the previously unpublished chart below (caveat: small sample size).
Top 3 challenges by financial literacy level:
- Beginners: (1) Managing expenses (2) Increasing savings (3) Financial planning / education
- Intermediate: (1) Investing / asset allocation (2) Access / eligibility (3) Tie between “market volatility” and “financial planning / education”
- Expert: (1) Market volatility (2) Tie between “growing Income”, “taxes”, “access / eligibility”, and “increasing savings”
⛰️Share Your Experiences
Two popular questions asked by readers:
1. “Do other expats open up a brokerage in their new market or keeping investing in assets in their home market?"
2. "How do expats approach investing in retirement accounts across countries when they’re changing countries throughout their career?”
When my readers talk, I listen. That's why I am crowdsourcing insights on how real expats approach asset allocation across their home country, new country, and other countries. 🌎
Submit a response to the 5-minute survey in the next 48 hours — and you’ll get early access to a report on how expats decide how to allocate their assets across different countries.
If you’d like to receive the report, complete the quick survey: 💪
Submit your response
🧠 Inspiring Bites
📕 Read: Hong Kong launched a new Top Talent Pass Scheme last month to fill the gap left by high-caliber talent fleeing the city-state during covid. The scheme grants two-year visas for high-earning professionals (>$320k USD per year) and top 100 university graduates with 3+ years of work experience. It has already approved 1,400 applications.
🎧 Listen: The first half of Onward podcast’s Great Deleveraging episode had the clearest explanation I’ve heard so far about how high interest rates lead to potential financial crises. Root cause: the practice of using loans as the asset for generating new loans. When one loan in the chain comes due and refinancing is impossible, you get a massive domino effect.
📺 Watch: If you’ve been eyeing a gorgeous new home in Portugal, watch this video first on the potential housing bubble (written version). Lisbon and Porto housing prices have exploded due to high foreigner demand & “limited supply.” In reality, many units are still not listed on the market. Rising interest rates in 2023 could risk leading to a credit crunch, supply flooding the market, and prices collapsing. (hm sounds familiar?)
