Whether it is for seeking better academic and career opportunities, retirement, or simply the desire to experience a different culture, living abroad will always be an adventure that comes with its risks and rewards.
Amidst the thrill and excitement of getting your visa approved and planning itineraries, duly conducting research and planning before your move is a must. Planning a successful move abroad entails not only coordinating where you’ll stay and where you’ll work but most importantly also how you’re going to manage your finances while living in a new country.
Here are the top 5 things you need to know before moving abroad as an expat, and tips to make sure your finances remain in good shape and maximize them to live your best expat life.
- Determine costs and living expenses beforehand.
A hassle-free move abroad involves a lot of careful planning. Besides completing paperwork, determining living expenses in the country you’ll be migrating to is crucial to avoiding or at least minimizing financial setbacks. Furthermore, living in a new country can make it difficult for you to rely on friends or family in case of financial troubles. Financial security and precaution are a must.
Ideally, you should be mapping out your travel expenses 3-6 months before your trip. You should also set aside a budget for your rent, bills, and other living expenses for the next 6-12 months in your destination country.
Set aside a budget for every expense, such as flight tickets, rentals, tuition fees, and immigration fees. Double-check bills and receipts so that you don’t miss anything or run into problems later. Coordinate with your hotel to make sure everything is settled before you move in.
Don’t forget to bring extra funds with you in case of unforeseen emergencies. However, avoid the temptation of overspending your miscellaneous funds. Your miscellaneous funds should function as an emergency fund that should always be set aside and ideally not spent for other purposes besides an unforeseen emergency. Resist the urge to use it for shopping, sightseeing, or activities that come with the excitement of visiting a new country.
- Make sure you have insurance.
Insurance is a non-negotiable when traveling abroad. This includes insurance for yourself and/or your family and assets that will be left in your original country.
First, you need to comply with the travel insurance costs of your destination country. Although travel insurance can function as a miscellaneous fund, it’s better to set aside a separate budget for miscellaneous expenses.
Ideally, you should get international health insurance that covers both your originating country and the new country of destination. However, you may also check out health insurance companies in your destination country that provide insurance for foreigners which may be cheaper than international plans. If your budget allows, then you may also purchase global life insurance.
Purchasing insurance for your family members or valuable assets in your originating country is also beneficial, if you haven’t already. If you have a house, cars, and other valuable assets back home in your original country, then you can ask your insurance company for housing, automobile, or property insurance plans that you can monitor while living abroad.
- Keep your bank accounts open and flexible.
As an expat, having a bank account that you can readily access when traveling or living abroad can be a make-or-break situation. Nothing is more troubling than losing access to your bank account abroad.
The easiest way to avoid this problem is to obtain a credit or debit card from a bank in your original country that has an international merchant option, such as Visa or Mastercard. However, withdrawing and checking balances from your local bank abroad via this option may have higher fees and lower transaction limits. Thus, you should open a bank account in your destination country as soon as possible to minimize bank fees and increase transaction limits.
The best option is to open a multi-currency or expat bank account, which allows you to send, receive, and withdraw money using various supported currencies, plus the benefits of a bigger transaction limit and lower bank fees. HSBC and Citibank are the most popular banks that offer international multi-currency accounts.
- Make sure you file your taxes – both local and international.
The most overlooked blunder expats make when moving abroad is forgetting to pay taxes. Delayed taxes may incur penalties, thus make sure to keep track of the taxes you need to pay in your original country. You may also need to pay taxes in your destination country, so coordinate with your employer or embassy to make sure all taxes are paid on time.
Additionally, you might need to keep an eye on your tax obligations if you own businesses or real estate in both your originating and destination nations.
- Develop an asset management plan suitable for your cross-border situation.
Managing your finances as an expat requires skill and awareness of multiple currencies, conversion rates, and the discipline to keep track of your assets in various international locations. It also entails being aware of your financial goals and needs: do you plan retirement in your original country or a new country? Do you plan to transfer all your assets to your new location? Will you bring your family members over eventually? Are you planning to open a business in the new country? These are questions you should consider carefully.
Living overseas also opens rare benefits and opportunities, such as tax havens and multi-currency investing, that, when used wisely, can help you increase your wealth.
As an expat, you will need the assistance of a financial advisor to build a financial management strategy. Consult one of our financial professionals on Dalton Hogarth Tokyo Japan for a free consultation for experienced guidance on maintaining your money and growing your wealth while living overseas.