Tired of feeling like your paycheck disappears in a flash? Discover 7 strategies to save money, boost income, and live life on your terms through geoarbitrage.
Does it ever feel like all of your hard-earned money just disappears? That can be hard, but it doesn’t always have to be this way! There may be a way out; it doesn’t have to involve some get-rich-quick scheme.
In this post, we’re looking at the world of geoarbitrage. This fancy term simply means using location differences in prices, salaries, taxes, and more to boost your savings or income.
In this issue:
- 7 Geoarbitrage Strategies: From moving to a different country to finding remote talent, discover strategies for every lifestyle.
- Real-life examples: See how others use geoarbitrage to achieve their financial goals.
Let’s check it out.
Geoarbitrage Defined
Geoarbitrage is taking advantage of geographic differences in costs or prices to improve your financial situation. It involves strategically relocating or utilizing locations to maximize income and minimize expenses. There are two main types:
- Lifestyle Geoarbitrage: Moving to a location with a lower cost of living while maintaining the same income. This allows you to stretch your money further, save more, and enjoy a higher standard of living.
- Business Geoarbitrage: Outsourcing work or services to countries with lower labor costs, reducing operational expenses and increasing profit margins.
How It Works
Geoarbitrage works because prices of goods, services, labor, and living standards vary across different countries and regions. Here’s an example:
A software developer in San Francisco earns a high salary but faces exorbitant housing costs. By relocating to a more affordable location (domestically or abroad) while working remotely for the same company, they can maintain their income while significantly reducing their cost of living.
Plus-Sides of Geoarbitrage
- Increased disposable income: Living in a place with a lower cost of living means more of your money goes directly to you for savings, investments, or leisure.
- Improved quality of life: Lower costs allow you to afford better housing, food, and experiences while having more financial breathing room.
- Early retirement: Geoarbitrage can accelerate your journey to financial independence by increasing your savings potential.
- Business growth: Businesses can utilize geoarbitrage to become more competitive and improve profitability.
Sold on this idea? We thought so. But how do you put it into action? We’ve got 7 strategies to get you started, with actionable insights from someone who’s actually done them: Dexter Zhuang, the Founder of Money Abroad.
Strategy #1: Relocating to Low-Cost Living Countries
Imagine slashing your monthly expenses by relocating from a high-cost city to a more budget-friendly destination. Notion’s founders once moved from SF to Kyoto to code in peace and cut costs. What if you could save big without compromising on quality of life?
Dexter himself moved from the US to Singapore, and even though he earned less in Singapore, he ended up with a more net positive income thanks to the lower taxes and cost of living. Taking a second move to Vietnam, Dexter and his family’s housing costs were cut down by a whopping 60%. By making such a move, you could enjoy a higher standard of living, even at a lower expense.
Strategy #2: Local Moves for Big Savings
Not everyone will be able to move countries, but even small-scale relocations within a city or state can result in significant cost savings.
Consider this: a family strategically shifting within a city or state can save thousands monthly (Lagos to Ibadan. Winchester to Gosport/Southampton/Portsmouth. Or Spring Valley to Jefferson Park [both Houston neighborhoods]). It works because it’s a move nonetheless for better opportunities, but it’s not particularly disruptive.
Case in point: The founder of Financial Samurai, Sam Dogen, saved roughly $4,200 monthly by moving his family just three miles west within San Fransisco. These local moves can profoundly affect financial well-being and overall stress levels. Small moves, big impact – it’s closer than you think!
Strategy #3: Securing a Role With A Global Employer
For high-caliber professionals in emerging markets, landing a position with a global company can be a game-changer. Witness salary variations based on where you’re hired– by doing this, you can advocate and ensure you get fair compensation based on global market benchmarks. Your talents deserve recognition—it’s time to level the playing field. If you work in an emerging market as a top performer, look out for organizations that globally benchmark their salaries.
Strategy #4: Offshore Business Operations
In today’s interconnected business environment, tapping into low-tax jurisdictions is a lucrative move. The great thing about this is you don’t need to live in a country to incorporate your business there. Dubai, Hong Kong, and Singapore offer some pretty good terms for foreign entrepreneurs. For instance, compare Singapore’s flat corporate tax rate of 17% to the United States’ 21%-31%, and well, you can see the appeal.
Not to mention, there are some neat kickbacks for newly incorporated companies in some of these countries, too!
So, set up shop strategically, reap tax benefits, and leverage a global market presence. The world is your oyster— are you ready to expand your opportunities and enhance your financial outcomes significantly?
Strategy #5: Accessing Global Talent Pool
Talent is truly global, and your business can reap the benefits! Find exceptional individuals worldwide at a fraction of local costs. This is a great option if you’re a small business owner, entrepreneur, or a growing startup looking to expand your team cost-effectively. You can find amazing, skilled individuals who will add value to your business for much less.
The best part is there’s an entire market of tools to help you facilitate this process. With resources like Deel, Slack or OnTop, remote collaboration has never been more seamless— so empowering your team for success is basically a walk in the park!
Strategy #6: Securing Residency in Low-Tax Havens
The appeal: for high net-worth individuals, entrepreneurs searching for tax havens or anyone just looking to diversify their global footprint*, this is an opportunity to gain some advantage. Depending on the country, you can:
- Minimize taxes,
- Gain travel flexibility and
- Potentially open doors to new business or investment opportunities through residency programs.
For instance, a successful entrepreneur establishes residency in Portugal to take advantage of the country’s Non-Habitual Resident (NHR) program, which offers significant tax benefits for foreign income.
*(Note: US citizens have limited options here due to US tax laws.)
Strategy #7: Smart Shopping in Affordable Markets
Traveling the world can be amazing, not just as a means to explore but also to seize shopping opportunities in regions with lower prices or favorable exchange rates. Your next trip could be more rewarding than you imagine!
While you may not be ready for a complete life transformation, geoarbitrage can work wonders on your travel budget. Monitor currency exchange rates and regional price variations to become a savvy shopper wherever you roam. Imagine snagging that dream designer bag at a fraction of the cost in Italy or indulging in delicious local delicacies in Thailand without breaking the bank. It’s important to remember that responsible travel is key, so be mindful of not contributing to exploitative practices in your bargain-hunting endeavors.
In a Nutshell,
The world is full of opportunities, and geoarbitrage can be a powerful tool to unlock your financial potential and explore new horizons. Whether you dream of financial independence, exploring the world, or building a thriving business, geoarbitrage can help you reach your goals faster.
Remember, thorough research and a responsible approach are crucial to success. So, take the first step, explore your options, and let geoarbitrage empower you to build the life you deserve. Happy saving, and happy exploring!
The SimplVest Team 🚀
