Learning how to manage your finances at home is tricky for most people, but when you have to manage your finances both at home and abroad, it can be a lot more difficult. If you don’t consider yourself financially literate, you’re not alone. In fact, about half of European adults also don’t have a solid understanding of basic financial concepts. The good news is that it’s never too late to start.
By understanding the importance of financial literacy before moving abroad, you’ll be better equipped to face the challenges of juggling your finances in two countries. Let’s take a look at some reasons why learning money management for migrants is essential to your success in a new country.
What Is Financial Literacy?
Simply put, financial literacy is the knowledge of how to manage your own finances as well as how general financial systems work. This can mean learning about how to handle debt, pay off credit cards, invest, balance a budget, save money, and more. While everyone’s goal for becoming more financially literate can be different, the main benefit is that it’s essential to take control of your money and gain financial independence.
Why Is Money Management for Migrants Important?
Managing money in a foreign country is just like managing money at home. While you might have different expenses or divide your budget differently, the financial literacy skills you learn in one place can be transferred anywhere. Here are some reasons why learning money management skills can come in handy:
- Avoid racking up unnecessary debt
- Develop healthy purchasing habits
- Learn how to use your credit card properly
- Understand how to put money aside for an emergency
- Save money for your family and your retirement
Tips for Becoming More Financially Literate
There are endless ways to learn more about finances, and it seems as if with every new concept you learn, something else pops up. You don’t need to know everything finance-related to be able to manage your money successfully, but you do need to invest some time into learning the basics. Here are some tips we recommend to get started.
- Before moving abroad, make a plan for how you’re going to save money in a foreign country, such as limiting unnecessary expenses
- Get comfortable with creating a budget at home, and then make another one while living abroad. Our budgeting for migrants series can walk you through all the details you need to know about what goes into a budget and how to create your own
- Talk to others, especially migrants, to get advice or recommendations on financial topics they might be more familiar with in foreign countries
- Avoid debt as much as possible by repaying your bills on time or not spending excessively. Instead of getting a credit card abroad and risking debt and high interest rates, consider a free debit card that functions like a credit card so that you’re only spending money you have
- Find trustworthy resources where you can read up on financial topics relevant to you, such as blogs, webinars, forums, newsletters, finance podcasts, or informational videos
- Use digital money management tools like apps that will help give you an overview of your spending so you have a good understanding of where your money goes and how you can improve your budgeting
- When it comes to saving, investing, and retirement planning, it’s better to start small than not at all. Sending money home might be a priority as a migrant, but it can also be worthwhile to open an account for long-term savings as well
To Wrap Up
Becoming more financially literate won’t happen overnight, but with time, you can learn how to better manage your money as a migrant, both at home and abroad. Begin by choosing one or two avenues where you want to expand your financial knowledge, and then slowly branch out into other areas where it would be beneficial for you to learn more.