The decision to live and work in a new country commonly plays out in a practical scenario that is both daunting and complex. This is largely due to the fact that life as a ‘newbie expat’ is always associated with its fair share of financial conditions and considerations.
Here are 10 essential finance tips for new expatriates
1. Keep an eye on conversion rates
One of the first points of difference you’ll notice when it comes to your finances is the need to ‘get a handle on’ conversion rates. To make it all a bit easier we’ve spoken to CBA, who have provided their cba exchange rates online.
To break it down, these figures reflect how much value your new foreign currency holds in comparison with the currency of your home country. It is essential to check constant fluctuations before making purchases so that you can assess the ‘real value’ of foreign goods and services.
2. Have multiple accounts
It is crucial to cover all bases when you are operating as an expatriate — and, there are specific international bank accounts that come recommended. Also, it will greatly assist you to open an account at a local branch in your new country (or countries) of residence, whilst still keeping one or two accounts active back at home.
This means you will be able to easily access your money and avoid punishing foreign exchange fees. At the same time, your original accounts will keep stock of your affairs for taxation purposes and also provide a solid emergency fund.
3. Assess your best living arrangement
There are a lot of factors to consider when it comes to your accommodation/s. You may be able to come to an arrangement with your employer — this will remove all the potential red tape associated with finding, securing and paying for your own.
Alternatively, short-term (and possibly longer-term as you settle in) rentals may be an option. There are always pros and cons associated with an international mortgage — always make sure you look at every possible angle before taking the plunge!
4. Research inheritance laws
Realise that some countries have some pretty odd (and restrictive) inheritance laws. This pertains especially to those contained within the Middle East, with governments that operate under Sharia Law. In this case, a spouse will not receive an inheritance, rather it will be passed on to the closest male relative.
Also, in the U.S. the threat of double taxation on inheritance is very real! Although you may hope for the best, the consequences are pretty severe should you neglect to do your research and take steps accordingly — the most common form of recourse is to protect assets via offshore accounts.
5. Meet your tax obligations
Take note that that as an expat you are still required to file a tax return back home. Although you are unlikely to be ‘double taxed’ the formalities still need to be followed and this is usually best placed in the hands of a suitably qualified professional.
6. Plan your pensions
Not only is taxation more complicated as an expat, so too are pensions. This is because ‘pension pots’ in disparate countries aren’t always ‘indexed linked’ — meaning these funds lose value over time.
It’s really important to plan what is happening with your pension. Plus, you will need to understand the rules about what you can save and when you can access these funds, ie. the ‘retirement age’ in your new host country (or countries).
7. Make sure your insurance is valid
The plot thickens even further when applied to the validity of your insurance. Just because you have health or life insurance back home does not mean you are covered overseas! Ensure that you check all your existing policies (seeking out new ones if need be) to make certain that you have international coverage.
8. Employ a financial planner
If you are feeling like the sum of all your ‘financial stuff’ looms too large as an expat, perhaps it is time to call in the experts? It can be a good idea to delegate these responsibilities, as you will have more time to focus on daily business (and also hopefully have time for a life)!
9. Invest for your future
Don’t just let the money you earn as an expat ‘collect dust’ in everyday bank accounts — make sure you ‘put it to work’. Relatively safe channels like fixed deposits, government bonds and mutual funds are well worth looking into when investing in your future!
10. Decide when it’s time to return home
One of the biggest financial (and general life questions) you will have to answer after becoming an expat concern when to return home. Going in with a plan is always a good idea — that way you won’t have to grapple with all the complexities of this conundrum. Knowing ‘when to get in and when to get out’ is half the battle!
We hope you have found value in the above 10 pointers. They are by no means comprehensive. There are many monetary aspects that must be managed in making the jump to relocate and work overseas. Planning and research is key to making this the move (or moves) of a lifetime!