How I Saved Enough for a Down Payment While Working in China

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When I was first considering teaching abroad after graduating from college, I had many friends and family who were concerned that I'd be setting myself back financially. With the best of intentions, these loved ones told me that I would be making a mistake by moving to Asia and accepting a lower paycheck. How would I ever afford a car or a house if I didn't find a high-paying job in Canada or the U.S. and start saving right away?

Ten years later, I look back and realize that teaching abroad was one of the best financial decisions of my life. During our four years teaching in China, my husband and I saved enough between us for a down payment on our house in Southern California.

Not every job abroad will be a an ideal situation for saving, so if you're considering teaching or working abroad, and want to prioritize saving, here are a few tips for how to save as much as you can.

1. Find Free or Subsidized Housing

Many schools and companies abroad realize that it's hard for foreign employees to pick up and leave their home countries without having a living situation set up in the new country. Therefore, many employment contracts abroad include either a housing allowance, or a free or subsidized apartment that belongs to the company. In our case, the school we worked for owned an apartment block which provided heavily subsidized living quarters for teachers and employees.

Living rent-free or on subsidized rent saves a huge chunk of your income that you can put entirely toward savings. It also saves a tremendous amount of time and stress when your overseas employer helps arrange your living quarters.

It also helps greatly if the living quarters provided by the employer come furnished, which will cut down on the initial costs of moving. Having to purchase furniture and appliances can make it harder for you to start saving right away.

2. Take Advantage of the Lower Cost of Living

Another huge factor that enabled us to save was the lower cost of living in our host country. By choosing to eat at local restaurants and shop at local grocery stores, we saved hundreds of dollars every month on food in a city where the local cost of living was quite a bit lower than at home in the U.S. Of course, it would have been easy to blow our paychecks eating at expat-oriented bars and restaurants (Starbucks was pretty much everywhere in our city), but we saved the pricier international food for weekends and special occasions. A nice side effect of our frugal mentality is that we discovered a whole new world of delicious local dishes that we would never have tried otherwise.

Not all countries will have a lower cost of living than your home country, of course, so it's worth looking into what it typically costs for food, clothing, rent (if you are renting a place yourself), health care, and other necessities before going.

3. Use Public Transportation

We saved the cost of having to maintain a car because our apartment was walking distance to the school where we worked. On weekends, a cheap and efficient subway system was our transportation of choice whenever we wanted to leave the school campus. When looking for a job overseas, be sure to ask questions about how you will get to and from work, and what transportation options exist to take you to the fun part of town. Some jobs (generally not teaching jobs, though) will even provide a company car and driver to make things easier for you.

4. Live Simply

Curbing excess spending is a good financial strategy no matter where you live, but I think it's easier to live simply when you anticipate moving in a year or a few. Because we didn't plan on staying more than a few years, I was less motivated to buy unnecessary stuff, with the mentality that everything needed to fit in a couple suitcases for the trip home. While we did spend money on leisure activities such as traveling during our holidays, for the most part, we just enjoyed meeting new friends and exploring our city, activities that didn't cost much.

We did end up shipping a few souvenirs back home, but because we had to pay to ship them, we were more mindful about purchasing only what we loved.

5. Research Your Tax Exemptions

Although U.S. citizens and residents are required to pay taxes on foreign-earned income, a large chunk of that income (or even all of it depending on how much you make) could be exempt from income taxes. When filing your yearly taxes, be sure to file your foreign-earned income correctly. Of course, you may be taxed in your country of employment, but in our experience the local tax was very low. You will want to research the tax rate in the country you're thinking of working in before you accept a job.

Before accepting a job overseas, be sure also to ask about health benefits and support in case you run into a medical emergency. If your employer does not provide adequate health benefits, you may have to purchase it privately, which you should factor into your savings plan. It also goes without saying that you should do research into typical salaries for the job you will be doing, as they can vary widely depending on the employer.

If you play your cards right, you can certainly turn a few years of adventure working overseas into an opportunity to save and to meet your financial goals.

Have you considered working overseas? What's holding you back?

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