Most of us go abroad to teach English for a chance to travel and have a bit of an adventure. But, money is important too and it often plays a big part in the decision of which job to take and even which country or part of the world to go to. It really is possible to use your time abroad to set yourself up for financial success in the future – whether that involves going to grad school, doing volunteer work, going on an around the world trip, or retiring early and sipping mojitos on a beach in Thailand.
I’ve been teaching at South Korean universities for the past ten years and I have been able to save money and put myself in a better financial situation. It is not always easy to do so, but with the right mentality, work ethic, patience, and discipline, you can also improve your financial situation by teaching English abroad. I am not saying you are going to get rich teaching English overseas, but it can be a lucrative endeavor. Below are my 5 steps to financial success for English Teachers that are simple enough for just about anyone to follow.
1. Choose your job wisely
When you are looking to teach abroad, there are a variety of factors to consider beyond just the basic salary including overtime opportunities, whether or not you own your working visa, airfare, housing, taxes, healthcare, number of teaching hours, sick days, and vacation.
For example, Job A might have the highest salary of any other offers, but you could be stuck at school for more than 40 hours per week, with 30-35 teaching hours, which will leave you exhausted and burnt out in no time. Job B might have one of the lowest salaries, but it has a low number of working hours as well as lots of vacation. If there are plenty of legal overtime opportunities, it could actually be a better deal than Job A. Or, Job C might have a low salary and a high amount of teaching hours, but it could be an excellent move for your career and a company in which you can advance in, in which case you should consider turning down a higher salary or low teaching hours job that has no opportunity for promotion.
The decision is a complicated one and is not something that should be taken lightly. There are some areas of the world that offer better money-savings potential for teaching English than others and if paying off debt, or saving up for the future is your goal, consider Korea, Japan, Vietnam, or the Middle East instead of Thailand, Eastern Europe or Central/South America.
2. Build a small emergency fund
Once you make a wise decision about where to teach English and which job to take, it’s time to build a small emergency fund. Ideally, you would have done this before you moved because it is always good to have a plane ticket and a couple months’ expenses socked away in case things go bad with your new country or place of employment.
However, if you don’t have this, it’s time to save up your first $2,000, which you will hopefully be able to do within the first couple months of teaching abroad. I chose $2,000 because for $1,000, you should be able to get a plane ticket home or to another destination and then you will have another $1,000 to tide you over until you find another job.
Keep the money in a place that is easily accessible and by easily accessible, I mean available immediately in case of emergency, preferably in a separate bank account in your adopted country. Keeping it in your home country, but easily accessible with a debit or credit card is an option as well. Don’t worry about earning lots of interest on this money because that is not its purpose.
Reasons to dip into the emergency fund would include emergency medical or dental care, or needing to go back home in case of a family member’s serious illness or death. This does not include things like: going on vacation, buying food, drinks, and home furnishings, replacing a broken computer or cell-phone, and everyday medical and dental expenses. Once you’ve paid off all your debts, you should build up a bigger emergency fund of around 6 months of living expenses.
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3. Live frugally and pay off debts
After you have built up your small emergency fund of $2,000, it is time to turn all your attention towards paying off debt, including credit cards and student loans. If you do not have any debt, count your lucky stars and congratulate yourself on your good sense! However, if you are like most people heading overseas to teach for the first time, you will have student loans and perhaps some other types of debt like a car loan, credit cards, or health expenses.
The key to getting your financial future off to a healthy start is by paying off these debts as quickly as possible because of the power of compound interest, which can either work for you or against you. The key is to have it work for you by having money in the bank, or investments instead of against you like when you have debt. You can pay off debt even more quickly by increasing your income or reducing your expenses by frugal living. The best plans almost always involve a combination of these two things.
4. Save up money and research investment options
Once you’ve paid off most of your debts, it’s time to learn about investment options and how to get started with that. This information below is simply a brief overview of options to consider and you should do your own research, especially as it relates to your country of origin because things like taxes vary from country to country. Also be aware that I am not a certified financial advisor so take my advice (and even that of certified financial advisors), mix it up with a good dose of common sense, plenty of your own research, and then come to your own investment decision.
Personally, before I ever invested a single dollar in the stock market, I probably spent at least five hundred hours researching and figuring out what strategy I would employ and I recommend that you do the same.
If you are new to investing, the best places to start your research are:
- Investopedia (www.investopedia.com)- This website is an excellent resource because it contains easy to understand definitions of common financial terms as well as educational articles.
- Andrew Hallam – The Global Expatriate’s Guide to Investing, available on Amazon in Kindle and physical book formats. This is a MUST READ for any expat who lives and works abroad and has some money to invest. He gives some excellent country-specific advice on things like taxes, and brokerage and portfolio recommendations. It is a bit technical, especially for the beginning investor but his book is the best you are going to find out there for expats.
- Jackie Bolen- The Wealthy English Teacher, Available on Amazon is the first and only book about personal finance specifically for English teachers. It’s ideal for the beginner and will get you started down the path towards financial freedom. Check out the Wealthy English Teacher’s website.
5. Invest your money and reap the rewards
After you’ve done extensive research and figured out your investing strategy, it’s time to invest. You do this by opening up a stock brokerage account – The Wealthy English Teacher and The Global Expatriate’s Guide to Investing both have recommendations for good expat ones. Then, keep researching, investing more money, collecting dividends, and reinvesting them.
Doing this consistently, for your entire working life will ensure that you’re well on the way to financial success. I can say with certainty that looking after your financial future while teaching English Abroad is something that you’re never going to regret.