Moving abroad to earn more: Is it really worth it?

Leaving your country to earn more: The expat's hidden challenge

Leaving everything behind to start a new life abroad is a dream for many. Success stories of expats who tripled their salaries are inspiring and encouraging for those considering the move. Of course, not everyone dreams of becoming a millionaire. Many simply hope to improve their financial situation.

But is it wise to leave your home country when you're already struggling financially? Advice for would-be expats often emphasizes the importance of having savings before you go, so you have enough to cover your first few months abroad. That said, leaving with a small budget is still possible, especially if you have an adventurous spirit. You just need to be ready to quickly adjust your plans if things don't go as expected.

What gets talked about less is how the dream of improving your finances abroad can cause you to overlook something crucial: your mindset. Understanding why you're really moving is essential to avoid leaving for the wrong reasons. Chasing a higher salary as your sole motivation can lead to poor decisions. On top of that, expats are often in a vulnerable position from the start: finances are tight in those early months, and there's pressure to make things work quickly. But improving your financial situation rarely happens overnight, and that urgency sits uneasily with the goal of earning more.

Moving abroad to earn more: Dream or reality?

Success stories of expats who made their fortune abroad often leave out one important detail: the cost of living in the host country. Generous expat packages loaded with perks have long been reserved for senior-level positions. Most employees on expat contracts receive few benefits, and when they do, those benefits are often limited, designed mainly to offset the cost of relocating. A slightly higher salary, for instance, may simply reflect the higher cost of living in the new city. In the end, the expat isn't actually better off.

Then there's the question of taxes and everyday expenses: rent, utilities, children's schooling, healthcare and more. The United States, Switzerland and Norway are among the countries with the highest healthcare costs. Regarding housing, a global rental crisis is pushing prices up, particularly in popular destinations like Canada, Spain, Portugal and Australia. In Spain, the situation has become so severe that rent can eat up as much as 50% of a monthly salary. Inflation and geopolitical instability are also taking a toll on expat finances. The conflict in the Middle East and the Strait of Hormuz crisis have sent fuel prices soaring, and consumer goods prices have followed suit.

Anyone dreaming of building wealth abroad needs to be clear-eyed about the true cost of expat life. Earning a better salary is possible, but it has to be weighed against the cost of living in your new country and the potential "turbulence" ahead: political shifts, immigration law changes, geopolitical uncertainty and more.

Can you leave your country with debt?

It might make for a gripping thriller if it were pure fiction. But when fiction meets reality, it can shake the very foundations of a state. Who hasn't at least fleetingly imagined escaping their country to leave their debts behind? In the United States, this extreme option has become the only way out for some Americans crushed by student loan debt. People in their thirties and forties drag that debt around like a ball and chain. The amounts often run into the tens of thousands of dollars. In hopes of turning their finances around, some have taken the bold step of "rebooting": moving abroad to start fresh somewhere better.

What does the law say?

But can you actually leave your country with unpaid debts? In principle, no. However, there isn't always clear legislation explicitly prohibiting people from leaving the country because of debt. The United Kingdom is one such example.

Courts have even ruled that banning someone from leaving the country until their debt is repaid can be a disproportionate sanction. A case before the European Court of Human Rights (ECHR), decided on 11 May 2021, illustrates this point. The applicant had been barred from leaving the country for "at least 4 years" due to unpaid debt. The ECHR found that this sanction violated the right to freedom of movement, noting that "a measure restricting a person's freedom of movement, even if justified at the outset, may become disproportionate if it is automatically extended over a long period."

Does moving abroad actually improve your finances?

Or to put it another way: do debts simply disappear when you cross the border? Of course not. Debts don't vanish the moment you leave your home country. In fact, returning home could become even more complicated because of unresolved debt. In the United States, student loans stay with you regardless of where you live: interest keeps accumulating even after you've moved abroad, because the repayment obligation isn't tied to your address. Changing countries doesn't wipe the slate clean.

Debt weighs on more than just your bank account; it weighs on your mind too. While some analysts challenge the idea of leaving a country to escape debt, others see these drastic choices as a sign that the system itself has failed.

Expat life as the path to wealth: dream or reality?

Whether you leave with savings or without, moving abroad is not a guaranteed path to wealth, or even to better finances. The image of the high-earning expat who always negotiates a bigger salary and a generous package paints a misleading picture. In reality, very few foreign workers manage to negotiate that kind of deal. Many expats earn salaries comparable to those of local workers, with some variation depending on the industry and role. Assuming you'll earn more simply because of your status as a foreign resident is a mistake.

How to actually improve your finances abroad

That said, it is possible to improve your standard of living through expatriation. Some workers have found good jobs abroad and carefully calculated how many years they'd need to spend overseas to save enough to reach their goals, whether that means returning home to buy a house, starting a business abroad or at home, or going back to school.

To turn the dream into reality, it helps to rethink your approach and avoid making money the sole purpose of the move. You'll get much more out of your new life abroad by exploring your host city and setting goals beyond the financial. It's one of the best ways to stay motivated. Choosing a city with a lower cost of living than where you came from can also naturally boost your purchasing power. Just watch out for the hidden costs of expat life, and keep an eye on inflation. Building a solid budget will help you get a realistic picture of your future expenses. And above all, give yourself time. On the road to a higher income, patience and perseverance will be an expat's greatest assets.