Many people are considering leaving the country to take advantage of more lucrative job markets, reduced living expenses, or simply because they have fallen in love with another culture.
However, before making the leap, there are a few things you need to take care of, such as obtaining the necessary visas, arranging for employment and housing, and perhaps even learning a new language. Most importantly, you’ll need to secure your current resources and be financially prepared.
Here are some important financial steps you should take before moving overseas.
Save Up Before The Move
This is a no-brainer, but it’s crucial to have enough savings before moving abroad. The first few months before you move and when you arrive will be pretty expensive. How much you need to save depends on whether you have a job offer, if you’re relocating with family, and whether you already have a place to live.
It’s vital to find out the cost of living in the country and city you’re moving to. Be sure to research the costs of utilities, grocery and restaurant rates in the locality, and transportation costs.
In any case, you may want to put aside a few months’ worth of living expenses in addition to emergency cash and a reserve in case unforeseen expenses arise. Having a reserve is especially important because many unexpected fees can arise while looking for accommodations. These could include car rentals, childcare for your kids, shipping fees, legal fees, and storage charges.
To ensure you are constantly protected, we recommend saving more money than you might believe you need.
Making a Budget
Below is a snapshot of a monthly budget template I put together. These costs will change depending on the locality and the lifestyle you choose to live while you’re abroad. Your best bet is to either talk to someone in your company who has made this move before OR talk to a local. I couldn’t imagine you couldn’t find a Facebook group geared to such events.
Creating an excel spreadsheet like this is quite simple. Any word or number you see above is easily interchangeable in efforts to conform with your specific lifestyle needs. This will come in handy when forecasting what you can and can’t afford.
Choose Your Bank Before You Move
For long-term stays abroad, opening a bank account in the host country is a must. Knowing which bank to visit to pay your taxes, exchange money, deposit money, or withdraw money is important even if you’re just there for a few months or years.
As an expat, you may consider the following banking options:
Keep Your Existing Bank Account
If you’re moving abroad but still want access to certain assets back home, it’s a good idea to keep your existing bank account open. It’s even more beneficial if you’re only moving temporarily.
Maintaining your existing bank account allows you to conveniently handle any financial commitments in your home country. It also lets you re-open your account if and when you return, transfer funds to family, maintain your credit history, and minimize transaction fees for any bills you pay back home.
Also, certain banks may waive expenses associated with exchanging currencies and using international ATMs. Make sure to contact your bank to learn what unique services are offered to you in light of your upcoming relocation.
Open An International Bank Account
Many international bank accounts offer expats benefits like holding and exchanging money in multiple currencies, spending like a local, earning interest and rewards, and more.
Requirements will vary across banks, but typically, you’ll need to supply your name, proof of identification, and a postal address. Some will also require proof of address.
The best thing about this option will probably be the convenience it provides. An international bank account eliminates the need for multiple accounts and makes it easier to send money overseas.
Many also provide excellent customer service, making sure you can always access your money. When you’re far from home and residing in a country where the language is unknown, having a bank you can trust in financial matters is useful.
Create A Foreign Currency Account Online
While they are not technically banks, they offer an alternative way to send and receive funds without the high fees and costs associated with traditional banking institutions.
Check with your employer or pension provider to see whether they will accept this method of payment before using it.
Open An Offshore Bank Account
An offshore bank account is advantageous for expats since it offers convenience, security, and stability. It can shield your savings from the political and economic instability in your home country or the nation you are relocating to. In the event of political chaos, your assets will not be frozen or seized, as opposed to if you use a domestic account.
Offshore banks are also located in stable countries like Switzerland, Luxembourg, and Singapore, which are less vulnerable to government intervention or political risk.
Additionally, by letting you keep money and send and receive payments in several currencies, it makes managing your finances internationally easier.
Open A Local Bank Account
If you are relocating permanently and do not have any language barriers in your new home country, opening a local bank account can be a smart move. One benefit is that it would help you establish local credit and improve your chances of securing loans in the future.
Opening a local bank account also shows that you are serious about leaving your native country for good.
A Combination Of Different Banks
Opening multiple bank accounts is a common practice among expats who like to have options.
When making a choice, it’s important to consider things like how simple it will be for you to manage your money and make withdrawals and deposits. Additionally, find out if the financial establishment has a sizable network of ATMs and can issue Visa or MasterCard credit cards.
Opening a bank account can be easy or difficult depending on where you relocate. Some could demand you to have a permanent residence address, while others won’t let you open an account until you’ve actually arrived.
In my research for this article, I’ve found a couple of reputable relocation consulting firms that may be of use to you. If it all just seems too overwhelming, it would be wise to ask your company to fund a consultation with a company like this.
- Graebel – Whether is move planning, space planning, or furniture planning, Graebel began in the 1950s as a small local moving company. They have a team of experienced planners that are carefully paired with the involved parties. As they note on their website, they’ll compile realistic plans and budgets, as needed. They can work with your team or take a leadership role if needed.
- Cartus – Another firm dedication to global relocation services. In their own words, they are committed to eliminating the element of surprise. That is their “pride and passion.” Currently, they have 128 teams that they are managing globally. Per their website, they are averaging a 14-year tenure for their top 100 clients. Additionally, they have an average 20 years with their top 25. There’s something to say when customer loyalty is healthy.
Research And Understand Expat Taxes
When you’re moving to another country, it’s important to understand how the tax laws apply to you. If you don’t file your taxes correctly and on time, you could be subject to penalties and interest fees.
Understanding expat taxes can be complicated. For instance, if you are a US citizen who resides abroad, you would still be compelled to pay income tax to the US. In rare cases, you may be subject to double taxation if both countries have the legal right to tax your income. Fortunately, this can be avoided if the country you relocate to has a double tax treaty with your home country.
The laws in your home country will also determine how you submit your taxes, although in general, it will be done electronically or by mail.
Location Specific Challenges
Local rules can make certain expat hubs problematic. For example, take the United Arab Emirates and its inheritance laws. There are certain provisions in the law for non-Muslim foreigners. As described in a recently published law article, things can get messy.
While the laws of your home country typically apply to inheritance, they need to be approved by the courts.
As noted in the article, “there are a number of cases decided by the courts applying Shariah and United Arab Emirate law to wills made by foreigners disposing of their assets here”. That being said there are are also cases decided in favour of the home country.
China and Singapore are also very popular relocation spots. Typically these salaries are adequate as they have large financial hubs. Both have very strict laws and are notorious for little tolerance, which makes it even more important to know what you are getting into.
Sort Out Your Pension
If you want to retire overseas, it’s important to research the eligibility requirements for collecting your pension in that country. Make sure to talk to your pension provider before moving abroad to see how it can be transferred to your new overseas bank account.
You may find that some people have had problems transferring their pensions overseas because they hadn’t done their research before they moved abroad. For example, some pension providers only accept transfers from banks opened in the home country. Some companies may only permit transfers into accounts held in specific countries.
Sort Out Your Healthcare
Healthcare is among the most difficult aspects of moving abroad. You might discover expensive or inaccessible medical care in certain countries. Receiving necessary medical care can be challenging if you don’t have health insurance or live in a country with universal healthcare coverage.
Check out the country’s healthcare options for expats and the procedure involved. Sometimes, private medical treatment is preferable to what the state’s healthcare system has to offer.
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