On the same computer that I am using to write these words, I also maintain a spreadsheet. It is the initial Philippine budget I created a couple years ago, based on data/info I searched for on the internet. My initial budget was based on other Philippine expat budgets since I was still living in the United States. That initial budget has matched up well with the money actually spent after moving to Cebu. That means that you can closely figure out how much your budget should be even before coming to live here. You just need to do the research. It’s not difficult.
When I did my budget research, I didn’t base it on the typical Manila expat budget because I knew I would never live in Manila, which is probably the most expensive place to live in the Philippines. (If the cost of living is one of your primary concerns, I don’t really see much point in moving from a first world country to live in Manila, but I’m sure a couple people reading this could offer an opposing viewpoint.) When you do your budget research, try to find expat budgets that resemble your situation. Some expats will live with relatives, or already have a home, so they don’t need to worry about rent. Some expats have a spouse and children coming with them. Others are single. All these variables must be considered when reviewing other expat budgets and then estimating your own.
I’ve never shared the details of my budget online because I include several items other expats omit, therefore my budgets seem high by comparison. For example, my spreadsheet includes a significant amount for travel and a moderate amount for the replacement (or upgrade) of appliances/electronics, such as my computer. In other words, things break or simply get old, and I believe a budget should include this reality.
Another budget item omitted by many expats is gifts/charity. My hunch is that expats consider this an inconsistent, minor item which is why it’s omitted. In actuality, once you find yourself living here, you may find that helping others is one of the things that gives you the greatest joy and it becomes one of your higher priorities.
For me, the toughest item to budget for is health care. It’s more of a guess than an estimate. If you stay healthy, you will likely find yourself way under budget. If you have a major health incident, you will probably be way over budget. (It’s also that way in the United States.)
Having said all of the above, I’ll give you a few numbers based on my budget. Please keep in mind that this is for a couple that owns a home (no rent) in a small town with a helper/student. If you are a single guy planning to rent in a big city like Angeles, these numbers should be meaningless to you.
Basic, unrealistic budget that includes only groceries, public transportation, restaurants, electric, phones, internet, entertainment: 50,000 pesos.
Better, a somewhat realistic budget that includes the above plus home maintenance, appliance/electronics replacement, gifts/charity, auto-related expenses: 75,000 pesos.
Best, realistic budget that includes the above plus travel and health care: 100,000+ pesos.
To those of you that think my numbers are way off, you are welcome to comment, but I assure you my numbers are based on my actual experience. I realize there are some expats with families on YouTube living on less than 50,000 pesos, however, I wouldn’t want to live like them. I also realize there are expats spending considerably more than 100,000 pesos a month. Remember, there are 2 components of a budget, income, and expenditures. Those spending considerable more than 100,000 pesos may have priorities different than mine and/or their income may be considerably higher.
Can you think of a budget item missing from what I’ve already mentioned? How about savings? I chose not to mention it as I believe savings are something that doesn’t belong in an expat budget. Anyone considering being an expat should already have adequate savings prior to the move. (Of course, there is nothing wrong with enhancing savings if your income exceeds your expenditures.) If however you only have minimal savings and are determined to live in the Philippines, then you better make sure saving is included in your budget. Minimal savers should be aware that borrowing (loans) may be more expensive in the Philippines than in your home country. Philippine interest rates tend to be higher than the United States. In the past when I wrote about the need for savings, I had a comment from someone that seemed almost proud that he didn’t worry about it. I foresee much pain in his future. Maybe he will reach out to fellow expats when his finances can’t support him. Can you guess what my answer will be?
Another item that should be included in some peoples expat budget is taxes. I’m not referring to Philippine taxes but to your home countries taxes. If you are earning money while living in the Philippines, that money may be taxable by your home country. If you are withdrawing pretax money from a savings plan such as a 401K or a non-Roth IRA, that is likely to be taxed. My point is that you can’t forget about obligations you still have to your home country (or their greed). Add accordingly based on your situation to the numbers above.
Do I need to mention the obvious… that there will be one-time initial costs for most expats? Good, I didn’t think so.
I’m not going to focus on it here, but don’t ignore the income portion of the budget. Pensions, social security, and investments all carry some degree of risk. Make sure you understand the risks and have a plan to adjust expenditures accordingly.
So there it is …. my final words on expat budgeting. Good luck creating your budget. I won’t write about this subject anymore because it gets boring for those already living in the Philippines. Also, keep in mind this article was written near the beginning of 2018. Philippine inflation is estimated to be about 4% this year, and the current trend is upward. Adjust the above numbers accordingly based on the year you are reading this article.
FYI: All expenditures related to our support of a teenage band were excluded from the above numbers as I doubt anyone else reading this will be supporting a band, and therefore need not budget for it.