When you move abroad some of the biggest considerations are the financial side of things, but this is one of the aspects that often gets overlooked. The problem with this is that you can easily make mistakes when it comes to managing your finances when you move to another country and find that you have lost money (as a result).
Let’s take a look at some of the essentials that should be set right before leaving for a new country.
It is generally a good idea not to close your bank account in the country you are leaving. You are likely to need it for accessing currency in that country. You may have outstanding loans or credit cards to pay, a mortgage, or you might even receive rental income from the property you are leaving. Having a bank account in the currency of your home country will make your life easy when it comes to paying these kinds of bills.
Open an account in the country you are moving to as soon as you can. It is also wise to deposit a few months savings in the account as there are bound to be costs that you haven’t expected or times when you will need to access cash fast.
Choose a bank that has a good presence throughout the country you are moving to. It is true that most banks have good online services, but if you are moving to a country in which you aren’t familiar with the language, trying to work out how to use online banking might be quite challenging.
Going into a branch and dealing with a real person can often help you to save your valuable time, so it would be preferable to choose a bank with the presence in the area you are going to be living.
Major credit cards are accepted almost everywhere today which gives you access to emergency funds whenever you need them. Try to take out two credit cards, one for each country. Having two cards lowers your risk of being affected by currency fluctuations between the different currencies. If you have one card in the country you are moving to, and one in your home country, you will be able to spend in each country without incurring any foreign exchange fees or being exposed to the risks of currency fluctuation.
You will need to plan this before you go because it’s unlikely that you will be able to take out a credit card in your original country without an address there.
Before you make the decision to move abroad, think about whether you can actually afford to do it. There are lots of costs involved, think of estate agents fees, removal fees, do you have pets to transport? Will you need to buy a new car? Will you need to furnish a new home? Depending on your condition few or all of these factors might apply to you.
Look at whether the country you are moving to have a higher cost of living than your native country. Calculate this into your sums when you are budgeting for your life abroad.
You may have extra costs that you didn’t have in your home country such as health insurance. Most countries won’t provide health care for non citizens, so in order to make sure you don’t pay expensive medical fees you are likely to need health insurance.
Use a financial advisor
An advisor who knows about the complexities of managing money between different countries is almost essential, especially if you have a number of different investments. Using an advisor who has the experience and understands the best way to manage your money, investments and currency can help you make sure you don’t suffer losses because you have made the wrong financial decisions.
It is important to use an advisor you trust or who has been recommended by someone you trust, not just the first one you find that says they are experts in managing the finances. It is quite a specialised skill and requires different expertise than managing money in one country.
Tax can be an issue that people worry about when they are moving abroad because it is important but also can be complex. You are unlikely to know the ins and outs of the tax regimes of your home and host country because they are often only really understood by professionals.
The best method to solve this is by speaking to a tax advisor who is a specialist in cross border tax. Some countries have tax agreements with each other, whereas others don’t. You will need to find out which countries you need to pay tax in for certain assets and investments.
If you have a Will, you should make sure that this is correctly set up for the tax laws of the two countries. Without making arrangements for this, you could find that a large chunk of money you pass on will be taken by tax.
If you have bought a property in your new country, you need to be aware of the tax arrangements that come with owning that property, especially as you may not be a citizen of the country.
Think about where you should keep your investments
Again a financial advisor and tax specialist will be able to advise you where is best to hold your investments. If you are thinking about retiring in your host country, an advisor may tell you that it is best to transfer your assets to that country to negate any currency risk. If you are planning on moving back then, you may want to have a mix of assets in different countries. However consult a specialist financial advisor about what is best for your situation.
Author: Patrick Martin writes from Interglobal an international health insurance provider.