Mastering Finances Abroad: Lessons from Berlin

Embracing a New Financial Reality Abroad

When my husband and I made the bold decision to leave our lives in Colorado behind and start anew in Berlin, Germany, we knew it wouldn’t be without its challenges. Over a year has passed, and I’ve come to realize that managing my finances in Berlin is vastly different from my experiences in the US. While some adjustments have been tough, many have been positively transformative.

The Pay Cut Reality

One of the biggest hurdles we faced was accepting lower salaries in Europe. The cost of living is indeed lower, but it was still a shock to our system. However, this adjustment has forced us to be more mindful of our spending habits and prioritize our expenses.

A New Pay Cycle

In Europe, it’s common to receive a monthly paycheck, which can be a significant change for those accustomed to bi-weekly paychecks. Initially, I was concerned about overspending early in the month, but this new rhythm has actually led to more disciplined budgeting. With only one payday, I’m more intentional about tracking my monthly bills and avoiding unnecessary purchases.

Managing Student Debt from Afar

As a graduate with substantial student loans, I knew our move would impact my repayment strategy. While we’re earning in euros, my student loans are tied to my US account. This requires careful management of my US bank accounts and regular transfers to ensure timely payments. Although my progress has slowed, I’m still committed to making extra payments whenever possible.

The Silver Lining: Lower Living Costs

The lower cost of living in Berlin has been a welcome offset to our reduced salaries. Rent, transportation, and dining out are significantly more affordable, allowing us to explore our new city without breaking the bank.

A Shift in Consumerism

Living in Berlin has instilled in me a greater appreciation for quality over quantity. I’ve adopted a more mindful approach to consumption, opting for fewer, higher-quality purchases and reusing items more frequently. This mindset has also encouraged me to think twice about buying unnecessary items, especially given the limitations of small European apartments.

Cash-Based Living

In Germany, cash is still king, and I’ve grown accustomed to carrying some with me at all times. While many places accept cards, it’s not uncommon to encounter cash-only establishments. This shift has forced me to be more present in my spending habits and avoid relying solely on credit.

Debit over Credit

Using debit cards instead of credit cards has been a significant change for me. While I still use credit cards for larger purchases, debit has become my go-to for everyday expenses. The instant notifications from my bank, N26, have helped me stay on top of my spending and avoid overspending.

A New Perspective

Living in Berlin has taught me that what was once deemed necessary in the US is now viewed as a luxury. I’ve learned to prioritize my goals and align my spending habits accordingly. By adopting this mindset, I’m confident that I’ll be able to make more intentional financial decisions when we eventually return to the US.

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