Why Most Expats End Up Broke
And How to Avoid It
For a lot of people, there’s a hidden financial trap that happens when moving abroad and trying to live the expat dream. Moving abroad is sold as the ultimate financial hack: lower cost of living, better quality of life, freedom from the soul-sucking office life. Your money is supposed to go firther further, your time is your own etc..
At least, that’s what they tell you.
But after spending enough time in expat-heavy cities, I start to see the same pattern over and over: the guy who showed up with $xxx in savings and now teaches English to pay rent. The crypto dude who had a "passive income stream" until the market tanked. The retiree who moved for cheaper healthcare but underestimated the cost of inflation and currency swings. The kid with a business idea that didn’t pop off.
Most expats don’t go brokequicklyk; they slowly bleed out. Not from one big mistake, but from a thousand small ones: lifestyle creep, bad investments, poor planning, and the belief that living abroad somehow exempts them from adult financial decisions.
I just want to write a quick article about some of the financial pitfalls that lead to expats goinginto poverty and taking the flight back home. More importantly, I want to give some idea on how to avoid it. Some topics I’ve included are lifestyle inflation, passive income, hidden costs, and strategies for building a more bulletproof expat life. Some of these are based on things I’ve seen. Some of these are issues I have had happen to me.
1 Lifestyle Inflation
First, you move to a place where beers are $2, taxis cost $3, and rent is a third of what it was back home. You expect to save money, live comfortably, and maybe invest or launch that business idea you’ve been putting off. But here’s what happens. You start eating out every day because it’s “so cheap.” You upgrade to the fancy apartment with a rooftop pool because, again, it’s “so cheap.” You start flying to the beach every other weekend… because it’s cheap.
But all those little “treats” add up. You’re now spending more per month than you were back home and justifying it because “it’s still cheaper than New York.” That’s lifestyle inflation on steroids. It creeps up slowly, reinforced by the behavior of the other expats around you who also overspend to live like they’re on permanent vacation. It also happens in cities wherethere ares a lot of short-term expats and tourists who don’t care to burn money because they have no long-term intent to stay.
I experienced this for a short while... I move solo into a 3 bedroom apartment that was cheap at the time, but as the peso strengthened, I started asking myself… Do I need all this space? Fortunately, I ate the cost, made more money, and weathered the storm, but I saw a big dip in the expat population for that period of the “Super Peso.
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The problem for a lot of people is that you’re no longer saving. And you’re not investing. You’re just spending differently and sometimes more often. You might even find yourself dipping into savings faster than you anticipated, all because you told yourself that you deserved to “enjoy” your new lifestyle.
I have been fortunate enough to never have to dip into savings, but mostly because this isn’t the first time I’ve been abroad and I didn’t show up already inexperienced with money. But I have countless contacts and clients that talk about dipping into savings assuming they put it back eventually, whether they are abroad or back home.
It’s a constant set-back path where people never get ahead because they never figure out how to deal with what they have.
To avoid this, you need a budget that’s tied to your income and long-term goals, not just your local cost of living. Live beneath your means no matter how low that local cost seems. Don’t let your expenses scale with your surroundings. That beachfront cocktail is still a bad idea if you can’t afford it twice.
2 Passive Income
Everyone wants to live the dream: wake up, check your crypto wallet, reply to a few emails from your hammock, and then spend the rest of your day “building a brand” or “working on your next product.” But for most people, the reality is much different.
What I see is…the majority of expats who claim to live off passive income are either 1) lying, 2) living off savings, or 3) struggling behind the scenes. The drop-shipping empire barely pays for groceries. The affiliate marketing blog hasn’t made a sale in months. The crypto wallet was exciting until the crash, and now it’s a source of anxiety…
Many expats build their entire life abroad around the idea that their income stream will grow. They plan as if they’re going to hit $10K/month “any day now.” But when that day doesn’t come, and the savings run dry, reality hits. Remote work is real, but unless you’re bringing in consistent income from a stable source, you’re playing with fire. I’ve seen a bunch of guys run dry and go back home, then come back 6 months later to try again.
I can admit - I started posting on Twitter and writing this blog purely out of fun. I don’t intend for it to be more than pocket money for me as long as I can help some people out.
But if you want to avoid ending up broke, you need to treat your income seriously. Lock in something stable before you even get on the plane. Diversify if you can. Don’t rely on one platform, one client, or one gimmick. Secondly… Save. I see a lot of people get their business wiped out by some random competition, change to the algo, or something wild like Amazon just changing a random term and condition. Then those people who have been making a lot but spending everything end up dead broke for a while till they get back on their feet.
3 Hidden Costs
Being abroad feels cheaper until it suddenly isn’t. Most people don’t factor in the hidden costs that sneak up on you over time. Visa renewals, residency lawyers, private healthcare, and last-minute flights home for emergencies all add up, and often at the worst possible time. I make a portion of my income from real estate, and theirs been plenty of months when a tenant has messaged me with some issue. Paid 5k to replace a water tank and some infrastructure. Another couple of grand to replace some windows. I account for that random cost, but it still isn’t fun to spend that.
Visas and legal status can be one of the most overlooked drains for a lot of people, I notice. Sure, you can do border runs for a while. But eventually, you’ll want to get legal. That means paperwork, government fees, and often hiring someone to walk you through a process that seems designed to confuse. And none of that is free. Even the border runs add up.
Healthcare is another blind spot. Just because a country has “affordable” private clinics doesn’t mean you’re covered. If you break your leg surfing, you’re on the hook for surgery, rehab, and possibly evacuation. International health insurance isn’t glamorous, but it *can save you and your bank account when things go wrong.
Then there’s currency risk. Your rent is in pesos, your income is in dollars. If the local currency strengthens, your rent just got more expensive. And when inflation hits, which it will, those cheap tacos and taxis suddenly cost more, even if your paycheck stays the same. A lot of expats fled Mexico when the peso went from 21:1 to 16:1.
These are the things you need to budget for before they happen. If you skip that step, you’re not financially free; you’re just playing roulette.
4 Financial Illiteracy
Frankly…Most people are financially illiterate. They can be adventurous, cultured, even entrepreneurial…but they when it comes to savings, budging, managing.. they are retarded. Expats aren’t immune to this. I think most businesses fail in the first rounds simply because people have no idea how to account for the finance aspect and run themselves into the red before they realize their pricing and budget structure is off.
There’s some belief that escaping the U.S. or Europe also means escaping the need for long-term financial planning. But nothing could be further from the truth. If anything, the uncertainty of living abroad means you need to be even more prepared. Lots of retirees hit this same problem where they are on low fixed incomes and still mismanage it. There are a lot of broke old people living abroad who would probably be dead if they were back home. For a brief period, I worked in the fitness industry, and the hardest part about the program was getting people into it. So many people were both aging and out of shape due to lifestyle choices, which typically also make them broke. I felt bad for them…But I realized some of them were trying just going to die because there was no way you get to your late 40s and have zero savings and expect to coast..
Retirement still exists. Emergencies still happen. Taxes still matter. But too many expats live like it’s always Friday night. They don’t save. They don’t invest. They avoid financial responsibility and burn out..
The solution? Get serious. Track spending. Build a real budget. Know your tax obligation, especially if you're American and still liable for U.S. taxes no matter where you live. Start investing. The cost of ignorance is your freedom.
5 What the Smart Expats Know
What I’ve noticed in my time about is that the expats who make it long-term aren’t the flashiest. They’re not the ones popping bottles in rooftop bars all the timeThat'sts not to say they were boring. Most of them partied hard for a period but then leveled off. They still go out occasionally, but they’ve matured and realized there’s no point in doing it all the time. No one cares about your IG stories… much..
They’re the ones living a little bit below their means, investing regularly, and building connections around the city. More like an upper-class local
They learn the language. They integrate a little bit. They don’t need to show off because they’re not trying to impress tourists.
Conclusion: The Expat Fantasy Only Works With a Plan
To sum it up, they have aplana, aat leastsomewhat. While being abroad does make your money go further, it often also amplifies your habits, good or bad. If you were reckless at home, you’ll be reckless in paradise.
The dream is real. But only if you stop treating it like a permanent vacation.