💶 Earning abroad, spending in Portugal?

Happy Sunday, friends 😎

And a big welcome to our 182 new subscribers! It’s so awesome to see this community growing. I hope you find something valuable in our Sunday editions, and if there are topics you’d love us to dive deeper into, hit reply and let me know. I’d love to hear from you.

If the Christmas decorations appearing in every shop have you missing home, we’ve got something exciting to share. We’re hosting our first International Christmas Market on Sunday, 13 December, in Alcobaça, and we can’t wait for you to join us!

We’re bringing together international food, independent makers and live music for an evening of shopping, eating and spending time with our international community. More details and tickets will be coming soon, so save the date. Spaces will be limited!

And while I can’t promise you’ll stick to your Christmas shopping budget, Prem Raja from Currencies 4 You is back with some practical advice for your everyday budget. If your pension or salary arrives in another currency, he explains how exchange-rate changes affect the euros you receive, what to look out for in transfer costs and how planning ahead can help you manage those regular transfers.

Let’s dive in, shall we?

Aldeia da Pedralva is a quiet, whitewashed village in the Costa Vicentina that has been lovingly brought back from near-abandonment. Once home to around 100 people, it had dwindled to just nine residents and dozens of ruined houses by 2006; today, its restored lanes and traditional cottages offer a rare chance to stay in a living piece of rural Portugal, with surf beaches, wild Atlantic landscapes, and cycling trails close by.

This week, we’re welcoming back Prem Raja from Currencies 4 You for his second piece in The Expat Hustle. Last time, we looked at costly mistakes when moving money to Portugal. Today, he’s focusing on those regular pension and salary transfers, with practical pointers on planning ahead, understanding the costs and giving your monthly budget a little more certainty.

Over to you, Prem… 👇

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Moving to Portugal comes with plenty of financial considerations, from property and residency costs to banking, taxation and everyday living expenses. However, one area that often receives less attention is how to manage your income when it continues to arrive in a currency other than the euro.

For many expats, particularly those retiring from the U.S. or the U.K., their pensions remain denominated in dollars or pounds. The same applies to remote workers and digital nomads earning overseas while living in Portugal.

While your income might remain relatively consistent in your home currency, your expenses are now largely in euros. This creates an ongoing exposure to exchange-rate movements, which can affect your spending power from one month to the next.

It’s something I’ve discussed with countless clients over the years, and although there isn’t a single approach that works for everybody, there are several ways to make managing your overseas income more predictable and potentially less expensive.

Let’s take an American retiree receiving a pension of $4,000 per month. If the EURUSD exchange rate is at 1.10, that pension is worth approximately 3,636 EUR before conversion costs. However, if the exchange rate moves to 1.20, the same $4,000 would only purchase approximately 3,333 euros. A difference of just over 300 EUR per month, despite the pension itself remaining unchanged. If those respective rates persisted over a full year, the difference would amount to more than 3,600 EUR, pretty much one whole month of pension, eroded due to the exchange rate; this could have a significant impact on someone’s household finances, particularly when rent, utilities, groceries and other expenses remain payable in euros.

Of course, exchange rates move in both directions, and there will be periods when those receiving dollars or sterling benefit from a stronger home currency. The difficulty is that these movements rarely coincide conveniently when you need to pay your bills. It is also worth remembering that currency markets respond to a wide range of economic and political developments. Interest rate decisions, inflation, employment figures and changes in market expectations can all influence the value of your income in euros.

You don’t need to follow these developments closely, but understanding that your spending power is exposed to them is an important starting point.

Most people naturally develop a routine when transferring their pension or salary overseas. Their income arrives, they convert what they need into euros and transfer it to Portugal.

There’s nothing particularly wrong with this approach, especially if you rely on that income to meet your monthly expenses. However, it does mean accepting the exchange rate available whenever the transfer needs to be made.

For somebody with savings or greater flexibility over their finances, it may be worth considering their currency requirements over a longer period.

For example, if your household expenses average 3,000 EUR per month, you know you’ll need approximately 18,000 EUR over the next 6 months. Rather than approaching each month as a completely separate transaction, you could consider whether converting some of that requirement in advance would be appropriate.

Some people prefer to maintain a reserve of euros to cover several months of essential expenses, while others choose to exchange larger amounts periodically when the rate is favourable relative to their budget.

Neither approach guarantees a better outcome; exchanging money in advance could prove less advantageous if your home currency subsequently strengthens, just as waiting could prove expensive if it weakens. The decision should really come down to your financial circumstances, the level of certainty you require and how much flexibility you have over the timing of your transfers.

One approach I often discuss with clients is to work backwards from what they actually need to spend in euros. If your essential living expenses in Portugal are 2,500 EUR per month, that’s 30,000 EUR annually. That requirement remains broadly the same regardless of what happens in the currency markets.

Once you establish that figure, you can begin to understand how different exchange rates affect your budget and what level of movement you can comfortably absorb. For example, somebody receiving a pension in sterling might find their finances perfectly comfortable when GBPEUR is trading at 1.18, but considerably tighter if the rate falls to 1.12. Knowing this in advance can help determine whether it makes sense to convert some funds early, maintain a larger euro reserve or simply exchange money as required.

There are also financial instruments available to manage future currency requirements. A forward contract, for example, allows clients to agree an exchange for a future transaction, using only a small deposit, which can provide certainty over the cost of a known euro requirement. Many clients will secure the exchange rate for their whole requirements over 12 months so they have a locked-in exchange rate and have 100% certainty over their spending power. However, forward contracts are not suitable for everyone; they involve contractual commitments, deposits and can become less favourable than the prevailing market rate if currencies don’t move in your favour, so it is best to seek advice before committing to using a financial instrument like this.

Exchange rate fluctuations are only part of the picture; the cost of actually converting your money can also make a difference, particularly when you’re making transfers every month.

Let’s assume you’re transferring £3,000 into EUR each month. If your bank/fx provider applies a 1% exchange rate markup, that’s £30 per transaction, and a cost of £360 over the year. If they also have a £10 transfer fee, that also will add up to £120 per year, just on fees. These costs can be easy to overlook because they’re often incorporated into the exchange rate rather than appearing as a separate charge. This is why I always encourage clients to look beyond whether a provider advertises free transfers. What matters is the exchange rate you’re actually receiving, and how many euros ultimately arrive in your account.

Ultimately, there isn’t a single approach that works for everyone. Someone receiving a fixed monthly pension may value the certainty of having several months of expenses covered in euros, while a remote worker with irregular income might prefer greater flexibility when they exchange.

Having worked in foreign exchange for more than 15 years, I’ve seen people spend weeks chasing a slightly better rate, while others transfer substantial amounts without considering what they’re actually paying. Neither approach is ideal.

My advice is to review how much you need in euros, understand the costs of your transfers and consider how exchange rate movements could affect your budget. A little planning can go a long way in managing your overseas income.

If you’re unsure whether your current arrangements are working for you, I’m always happy to have a conversation and help you explore your options.

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A big thank you to Prem Raja from Currencies 4 You for collaborating with The Expat Hustle on today’s article.

How do Portuguese people say “no” without actually saying “não”?

In European Portuguese, expressions like “Vamos ver…”, “Talvez mais tarde…” and “Depois combinamos…” can sometimes be an indirect way of saying no.

Understanding expressions like these can help you follow natural, everyday Portuguese conversations and understand what Portuguese people really mean.

🗣 Want to learn more phrases like this? Check out Mia’s free Portuguese course “Kickstart Your Portuguese - The Basics”.

💡 Mia from Mia Esmeriz Academy is a Portuguese teacher from Porto with more than 15 years of experience teaching foreigners. She helps expats become fluent in Portuguese in a clear and practical way. Alongside her courses, she also shares free content on Instagram, Facebook, and TikTok.

Thanks for reading! 💌

Hustle on!

Angelique

PS — got an expat friend who's one bureaucratic form away from booking a flight home? Forward this newsletter their way. We're all just trying to figure it out together.