How can you budget and track expenses in different currencies?

1 Set a base currency

The first step to budget and track expenses in different currencies is to choose a base currency that you will use as a reference point. This could be your home currency, the currency of your main income source, or the currency of your primary destination. The base currency will help you compare the value of different currencies and plan your spending and saving accordingly. You can use online converters, apps, or websites to check the exchange rates and convert any amount to your base currency.

2 Use a multicurrency bank account

A multicurrency bank account is a type of account that allows you to hold, send, and receive money in multiple currencies without paying high fees or conversion rates. This can be a convenient and cost-effective way to budget and track expenses in different currencies, as you can access your funds in the local currency of the country you are in, or transfer money to other currencies as needed. Some examples of multicurrency bank accounts are TransferWise, Revolut, and N26.

3 Track your expenses with an app

Another tip to budget and track expenses in different currencies is to use an app that can automatically record and categorize your transactions in different currencies and show you the equivalent amount in your base currency. This can help you monitor your spending habits, set and follow a budget, and analyze your cash flow across different countries and currencies. Some examples of apps that can do this are Trail Wallet, Spendee, and You Need A Budget.

4 Adjust your budget for cost of living

When you budget and track expenses in different currencies, you also need to consider the cost of living in each country you visit or work in. The cost of living is the amount of money you need to cover your basic needs and expenses, such as food, housing, transportation, health care, and entertainment. The cost of living can vary significantly from one country to another, depending on factors such as inflation, taxes, wages, and demand and supply. You can use online calculators, indexes, or websites to compare the cost of living in different countries and adjust your budget accordingly.

5 Save for emergencies and fluctuations

Finally, a good practice to budget and track expenses in different currencies is to save for emergencies and fluctuations. Emergencies are unexpected events that can disrupt your income or increase your expenses, such as illness, injury, theft, or natural disaster. Fluctuations are changes in the exchange rates that can affect the value of your money in different currencies. To prepare for emergencies and fluctuations, you should have a separate savings account in your base currency that can cover at least three to six months of your essential expenses. You should also check the exchange rates regularly and avoid converting money when they are unfavorable.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?