The Income Gap Calculator
What Actually Happens to Your Money on Day 1 Abroad
Whenever I talk to people planning an international move, I tend to see two distinct groups. The first group moves for work—military deployments or corporate transfers. They arrive with a safety net, employer support, and a pre-funded transition. But the second group moves for love, adventure, or the dream of a simpler life. For them, romance and mystery often cloud the financial realities of daily life.
The mistakes that have been made by those who are saying “it’s just too hard” and those who are giving up before they even launch the idea often come from the same root: they do not sit down to do the actual math before the fantasy gets too far ahead of the plan.
When Joe and I packed up five pieces of luggage nine years ago and landed in Italy, we had credit cards that didn’t work immediately and a lot of enthusiasm. But the one thing we didn’t have to panic about was how to fund our new daily life. Why? Because we had already stress-tested our income structure before our feet ever left North American soil. We knew that income would be the least of our worries while building a new life in Italy.
In my opinion, before you pack a single box or sign a lease on that apartment overlooking the market, you need to run your finances through what I call The Income Gap Calculator.
The Income Gap Calculator starts by researching your actual expenses (I discuss some of that here), and then looking at your real income calculated from Day 1 in your new home. I’ve divided the income into four general buckets. You need to compare your real situation with these income categories.
Bucket 1: The income that is tied to your existence in North America
Bucket 1 is tied to your physical location. This holds true whether you move from California to Tennessee, or from Calgary to Toronto. If you are not “transferring” to a new job, this income disappears on Day 1 (usually even before).
Your local job or in-person clients.
Local consulting or service work that relies on you walking into a room.
Any side hustle that requires local inventory, shipping, or physical meeting space.
The tough truth here is that on Day 1 in your new home abroad, that income drops to zero.
Bucket 2: The income that continues, but has strings attached
This category of income is the most dangerous in my opinion, because it gives people a false sense of security. The general types of income here are:
“My boss said I can work remotely.”
Doing freelance work for North American clients.
North American corporate consulting.
That first scenario, “my boss said I can work remotely” is rarely true portable income. Employer policies change, managers get replaced, and tax laws often prohibit working for a foreign entity without local compliance. Furthermore, working a 9-to-5 North American schedule from Europe turns your dream life into a permanent night shift. Relying on Bucket 2 as a long-term solution is a risky gamble.
Bucket 3: The income that isn’t available yet
This is the money you are banking on for the future. Joe and I moved to Italy before we were retired. We might have planned for what we might do “five to ten years from now” when we had access to retirement income, but we couldn’t bank on that for our “move”. These types of income include:
Social security or government pensions when you are not yet of retirement age.
401(k) or private retirement accounts with age penalties.
Proceeds from selling property back home if the transaction hasn’t closed yet.
When I look at Bucket 3, I see many people who are relying on hope rather than formulating a strategy. If Social Security is three years away, you have a 36-month financial bridge that needs building.
Bucket 4: Income That is Genuinely Portable
This is your holy grail! This income passes the ultimate test of working on Day 1 in a country where you don’t speak the language fluently, don’t have local contacts, and probably have a ton of bureaucratic hoops that will occupy your early days. This income type includes:
Income from a job where you already have a contract in hand (military deployment, corporate transfer, work that you’ve received an offer for before you move).
Truly available retirement income.
Digital products with existing audience.
Passive investment yields.
Culture-independent, location-independent recurring income models
Income streams that don’t care what time zone you sleep in, or whether anyone sees your face for 2 years.
Doing Your Own Math
The goal of calculating your Income Gap isn't to crush your dream—it's to protect it. Financial strain is the single biggest reason expats turn tail and head home prematurely.
Grab a piece of paper, or open up a spreadsheet and do the calculations. The income baseline is the simple part. Buckets 1 and 3 aren’t available at all. Bucket 2 might be something to “tide you over” until you can settle in, but should be viewed with some skepticism. So what’s left in bucket 4? Take that and figure out your expenses. Over the past 9 years, we’ve done budgets many times: when we first moved here; when Joe started receiving his Social Security; when one of my business models changed (we have multiple streams of income, but that’s a topic for another day); or when a loved one needed financial assistance, etc. Each time we recalculated our “get by” income and our “preferred lifestyle” income, so that we could be certain that the “get by” income was met, while looking to have enough for the “preferred lifestyle” as well.
If there’s a gap between what you have in your Bucket 4 income and your “get by” or “preferred lifestyle” expenses, that’s your Income Gap. The time to solve that gap is before you get on the plane, not during your first six months when your life is taken up by language fatigue, cultural missteps, a new healthcare system, and the bureaucracy of “change”.
Before you spend another hour browsing real estate listings in Tuscany or reading conflicting visa advice on Facebook, figure out your Income Gap, and let me know in the comments if this helps!
