A study done by the InterNations Personal Finance Index in 2016, a report that examines how well expats fare financially in various countries, found that Mexico landed itself in the top 10 this year, coming in eighth place in the personal finance category while coming in fifth in cost of living.
Why? Well certainly the rise of the value of the dollar and in general other currencies against the peso are contributing to what was already a friendly cost of living expense that one finds in Mexico in general.
The index reported that 22% of expats are earning between $12,000USD and $25,000USD while 21% are earning between $25,000USD and $50,000USD and 16% are earning $50,000USD to $75,000USD.
Over 30% said they were completely satisfied with their financial situation, compared to the world average of 15%, while 76% said that they considered the cost of living the biggest possible benefit of moving to Mexico.
Only 7% found the cost of living to be relatively high and only 8% found the cost of housing to be high compared with global averages of 32% and 36%.
While many expats earning in dollars or other currencies with foreign companies may be satisfied, for those who are earning in pesos, the challenge of taking care of their personal finance remains. With that in mind, we wanted to give you three tips to help stay ahead of the game.
1. Reduce your foreign expenses as much as possible
A well-paying job at a corporate Mexican company can range anywhere from 18,000 MXN (837USD) to 100,000 MXN (4,650USD) per month in general, depending on your experience and skill level. While this range is quite good for a Mexican standard of living, if you have any bills to pay i.e. mortgages, student loans, credit card debt, etc. then it can be a bit tight on your wallet.
With the peso projected to slip even further in 2017 against the dollar, try to renegotiate your payments, consolidate them, or pay them off as soon as possible. If you have a mortgage make sure that you’re renting out your property and have someone who can help with finding new tenants and taking care of current tenants, should the need arise.
2. Utilize a money management platform
Whenever abroad it’s natural to want to maximize your experience by indulging in travel, cultural events, restaurant dining, etc. However, even with the affordable cost of living in Mexico, these things add up. Mexico, in particular, offers a lot of tempting options in terms of great food, beaches, beautiful towns/cities, and festivals, ranking very highly in the categories of leisure options, personal happiness, and travel.
A lot of expats might be used to using a money management platform like Mint, OnTrees, 22Seven, etc. but none of them link to your bank accounts in Mexico.
That’s exactly why we created Finerio, an application designed to link with your Mexican bank account and provide you with an overview of exactly what you’re spending your money on and how much. It allows you to create budgets, categorizes your spending for you automatically, and can let you plan ahead for financial goals. Finerio is still in Beta, so the app is constantly improving. If you feel that your personal finances could use a boost, check it out:
3. Keep saving!
When your purchasing power goes up it’s human nature to start to acclimate to the situation and begin to expect a higher standard of living. Don’t fall into the trap of spending all the money you’re earning! In general, you should follow the 50/20/30 rule. That is to say, you should spend 50% of your budget on essentials i.e. food and rent, 20% on financial goals i.e. savings and investments, and 30% on lifestyle spending i.e. restaurants, vacations, gym membership, etc. If you’re in a good situation financially you should boost your spending on your financial goals, but this serves as a good basic framework otherwise.
Just because you moved to Mexico doesn’t make your savings, investments and retirement any less of a necessity and the power of compound interest is best utilized as early as possible.
Happy trails young expat!