Ok, so we have been away for a few months now and it is time to see where we are with the budget. A huge part of this trip was planning our budget. What can we afford? What kind of lifestyle can we have and for what price? With countless hours of research, and the help of a few tax calculators prior to departing, we found so many people willing to share their information. This is what helped us plan our Budget for Living Abroad. As our way to “pay it forward” to another family/person looking to do something similar. We are going to be somewhat transparent with you, so be prepared, be nice and feel free to ask questions. I will review the groupings of expenditures and how we define them, our original budget and then how we are tracking against that budget. Please keep in mind this is OUR budget based on the comforts and lifestyle we are choosing to live. I am certain it could be done for less and more. It all depends on what you want and what YOU are willing to live with or without.
The main areas of consideration for this American family living in Spain were:
- We planned to rent a furnished apartment/town home and wanted to be sure the kids had their own space, so went for a 3 bedroom. We wanted sea views, open living space, outdoor space, parking, walk to town etc. There are plenty of options cheaper than ours and loads that cost more.
- Of course there would be electricity, water and gas bills.
- We rented a mobile/wifi hot spot (TEP) for the first 6 weeks. This would ensure we had internet prior to obtaining phones and service in our apartment.
- We determined we would want mobile phones. Not only for contact with each other and the local community, but also as means for navigation and mobile internet as well.
- Phone and Internet access at the apartment. (We didn’t really want the phone, it just comes with it. Actually we only have a number and no phone.)
- Car rental – the first month or so in Spain, we knew we would need to rent a car until we were settled. This ended up being about 6 weeks, so a little longer than we anticipated.
- Fuel – We are a “Car” family. We determined we wanted to buy a car and then sell upon our departure. We compared prices with public transit travel for the 4 of us and we felt in the long run, we were better off with our own car. Fuel costs are very high here, around 1€40 / liter (about $8 a gallon), but we like our freedom. So, it was a must to factor this into our budget. We love to just “get lost” and go down a road to see where it goes. With public transit, we are on their schedule. We know of another family doing a long term car rental and others that are only using public transit.
- We sold our cars in the U.S. and had a certain amount of money in our pockets from those sales. This is almost “funny money” as it is really “car money”. This is what we used to buy a car here. When we sell our car in Spain, the money that returns to our pocket will be used to buy the next car (where ever that may be).
- Food, Household Supplies, Clothes
- This is a bit of a catch-all because so many stores now carry a variety of items. We can buy clothing, cleaning supplies, electronics and food all in one place (Target or Wal-Mart type shopping). Thus, it is difficult to break it all out into detail and we didn’t see the need to. It is much easier to just group this together.
- Eating out is of course included in this as well. We don’t eat our often as that is a huge money gobbler. If we do, it is best to go for lunch and order a “menu of the day”. These are complete meals with drink and desert and are a set price, usually very reasonable. Often we can order 2 “menu of the day” meals and share between the 4 of us. This is a real bargain at the local Chinese restaurants. Maybe 13€ (~$17) for the 4 of us (Including 4 spring rolls, 2 main dishes, 2 side dishes, 2 deserts and a large bottle of water).
- Insurance – both are one time annual fees that may make a given month appear to be off-balance. We factored this into our overall annual budget, but prefer to live by our monthly budget. If there are any extra fees in this area, we would just put them in the Misc area.
- This is our travel insurance – medical etc and is part of the overall annual budget and not the monthly budget.
- Auto insurance is a must if we own a car. This needed to be something inclusive of driving all over Europe as well. This is part of our budget in the month of October only.
- We wanted to be sure while in Europe we were able to see as much as possible. So we have built into our monthly budget a bit of a travel fund. If we go “over” in any other area, this fund is impacted to make up the difference. (This is for accommodations, hotel and extra cushion for food as we will be eating out more.) We typically try and rent an apartment when we travel, even for just one night. This is usually far more cost effective, provides more space and allows us to cook some of our own meals.
- Also if we decide to take a “big” trip, we may not use much of our fund in one month allowing for more the next month.
- If any advance booking, a deposit or prepayment is involved, sometimes the travel for a given month will appear inflated. (Example: purchase of airfare in October for travel in December)
- This is just a catch-all for everything that doesn’t fit in a category above. Also if we use cash, we don’t tend to track exactly what it was for. We look at statement at end of month and see how much Cash was removed and how much we have remaining and put what was used into this category. (School supplies, small things around the apartment, activities, kids sports, books, web hosting, Spanish classes, clothing, gifts, after school care, etc…)
- Schooling – The kids are attending Spanish Public School, so there is virtually no cost to us for this. We do need to spend some money on school supplies now and then. I think it was about 100€ to 150€ for each child at the beginning of the year (backpack, books, paper, supplies, markers, glue, notebooks etc.) We have purchased a few misc items like pens, pencils, notebooks since.
Do we use $ or € for the budget?
This was so confusing for me at first. Of course I automatically did everything in USD because, well that is what our money is. But I quickly found that converting all of the time and forgetting others was really a problem. It was much easier to just start “thinking” in Euros and then use an “average” exchange rate to convert to $. On a daily basis we “think” in Euros, but for this posting we will publish in USD $. The exchange rates shown on the web aren’t the same as what the banks or credit card companies use. When we wire money from US to Spain, it is usually $1.35 or so to the Euro. Even though the bank say they use the daily rate there is something else built-in. I can look on-line and see the rate for the day a $1.30 and the bank will be $1.36. So our budget is flexible up or down about 10%. We are lucky enough to have 2 free wire transfers a month, so we avoid any of the $35 charges per wire. That would just be money wasted, so we made sure we qualified for the free transactions. We also hunted down a credit card with no foreign transaction fees. This way we don’t have the extras tacked on there. The credit card seems to use a better exchange rate than the bank so we us it for as much as we can. Of course we pay it off at the end of every month to avoid any finance fees, as we have for 16 years! We are earning miles as well, so that is an extra bonus.
I know, I know enough talk. Show me the budget already!
Budget for Living Abroad & Reality for our first 4 months
Our budget for a family of 4 is about $100/day.Yep, that is not a typo. This includes our planned travel and the items listed above. Yes, I have done all of the math and have some crazy spreadsheets to keep track of everything for our needs in great detail. For you, I am providing the general buckets and how we are tracking to goal. Sometimes when we are over, it is just a bit and averages out because we were under in another area. We are getting good with that juggle now. I am sure over time, we could be even more efficient, but we don’t want to miss out on travel and seeing things while we are here. Remember, we are not on vacation we are living abroad. Actual Spend for our first 4 months - total budget of $100/day
Assessment of our first 4 months:
September and October were way above budget, but that was known going in. I estimated it would be about 1.5 of our standard monthly budget, but it was higher for the first 2 months. I would say, if you are planning something like this for yourself, plan on double for the first 2-3 months to get settled. This was the “getting settled in” period. Below are some explanations of where we deviated from budget and why.
- Housing -
- We had a few weeks of hotels and daily, weekly apartment rentals, while searching for out long-term rental. When renting for short periods it is extremely high. It was about a month of our long-term rent for just 1 week, in some cases. We arrived at the tail end of tourist season, so it was still considered “high”. I assumed after Sept 1st it would be mid or shoulder season. We moved into our place in mid September.
- When we did find out long-term rental, we needed to pay 2 months rent for deposit up front plus our 1st months rent. This should be returned to us when we depart, so more like “savings” in the end. This was expected, so did not impact us being over the budget. It was mainly the short-term rentals.
- Food was very expensive the first couple of months, as we ate out many meals. When eating out, the menu prices appear to look the same as in the U.S. , but once converted to $ it was very expensive by our standards. Here again is when it is easier for us to live by our Euro monthly budget. If we convert every meal it drives you nuts. There aren’t many fast food or cheap options for eating out. While this is healthier, it is a bit more expensive.
- Groceries – Groceries and supplies at the store are a bit more expensive than anticipated in some areas and not so much in others.
- Auto -
- We rented a car from Aug 26th – October 4th. (this was about 2 weeks longer than we planned. It took us longer to purchase a car than anticipated, because we had to wait for our NIE (Resident Identity Cards) to process before we were allowed to purchase.
- Fuel was also a factor as our first 2 weeks in Spain, we “vacationed” and drove from Barcelona down to Almuñécar.
- Communications – this is mainly the purchase of our cell phones, establishing a contract with the mobile carrier as well as internet connection fees for the apartment. We also needed to buy a printer, ink etc. It was high the first month getting established and is on track with budget going forward.
- Misc -
- Upon moving into our apartment, there were somethings that we needed to convert this “holiday rental” into a long-term and livable for a family of 4. There was a fridge that was perhaps up to my shoulder. The freezer could hold an ice-cube tray and perhaps a frozen bag of peas. We needed to purchase a larger yet compact fridge/freezer. There were a few other misc things like kitchen supplies and pillows, throw rugs etc.
- We did some travel in December and used more cash than anticipated, thus a bit over budget in this area for that month. The kids were off school for nearly 3 weeks, so we took little trips around. We can average it out by saving in the next month.
In hind sight, I would budget double for the first 2-3 months for getting settled. There are usually costs you could not possibly anticipate in advance. Overall, I am pleased with how we are tracking and it feels good to be leveling out! We were not able to live off of this budget in North Carolina in our temporary apartment and certainly not when we owned our wonderful home (due to our lifestyle choices). Rent is much cheaper here for a furnished apartment, which is the biggest savings. Our short-term unfurnished apartment in North Carolina was just about double what we are paying for a furnished apartment with utilities. Owing a home is great, but it comes at a cost far more than the mortgage. We had a tendency to fill up each space in the house with “things” and it grew and grew. Not to mention repairs, upgrades etc. We are also living very simple lives in Spain, with very few material possessions. We each brought 1 suit case and 1 carry on (inclusive of laptops). We have only purchased a few clothing items for the kids, because Spain is making them grow like weeds! I hope I am not forgetting something. Feel free to ask questions and I can either reply via comments, update the post or email you privately about our budget for living abroad. Our budget and spend Months 5-7
- How Much Did It Cost To Live In Spain For 1 Year? (2013 including exact $ amounts)