Managing your money from a new country or while travelling can be a pain, especially if you don’t know what you need to do. For those that are looking to move away in the near future, you’ve joined us at the right time. For those that have already moved, you’re a little late to the party, but we can still help you.
The below five tips should help you to manage your finances wherever you are in the world, so take note.
1. Make a realistic weekly budget
Notice the word ‘realistic’ here? It can be easy to underestimate how much things cost in your new country and, if the answer is expensive, you don’t want to find out too late. Do some research on the exchange rate with your currency and plan out a budget before you get there.
New online tools make this a relatively easy job. For instance, Expatistan.com has realistic cost-of-living data on cities around the world, along with a handy comparison tool to help you with put these costs into perspective with your current or country.
Make sure your budget includes accommodation, food, fuel, energy, travel and general living and social costs. Once you arrive in your destination, it’s always worth tracking how much you’re actually spending each week, so you can adjust your budget with your experience. Create a spreadsheet and keep it up-to-date. You won’t regret it!
2. Factor in big expenses
Moving abroad or going travelling for a long period will likely involve some larger expenses – especially to begin with – that you’ll need to add into your initial budget.
Firstly, make sure you take into consideration the cost of travelling. Yes, an obvious one. However, if you want to come home throughout the year, or have plans to move around, you should probably incorporate this into your plans.
Secondly, whether you’re moving for six months on a work assignment, or making a fresh start in a new country, you will need to move some belongings. If you have bulky bits that can’t be brought with you, an international moving company is the easiest way to shift them. Make sure to do your research on which company to use, as there are loads out there. Prices vary depending on the means of travel they use.
Lastly, factor in your insurance costs. Have you bought travel insurance for your journey? If you’re planning to live away from home for longer than a year, you’ll also need to buy health insurance, as healthcare around the world can be extremely expensive. The cost of not having a health plan in most parts of the world is too big to risk. Click here to read about what to look for in a health insurance plan.
3. Open a new bank account
You can save a lot of time and money by setting up an overseas bank account before your move. Using a foreign bank account overseas will leave you exposed to paying both huge fees and a poor exchange rate on any purchases you make.
You have a few options here. Some people opt to open a bank account with a local provider. This is definitely a good idea if you re-settling and working for a local company, as you won’t pay any additional charges on withdrawals or deposits. Have a look online and find a trusted local bank.
Lots of banks are international these days, so there’s a good chance your current bank has a physical presence in your new location, if you don’t want to open a new account. If they do, head into your local branch and see if there’s anything you need to do to use your account abroad, before moving.
Lastly, you could open an account with a nomad-friendly bank, which is best if you’re not planning on settling in one place. In fact, this is a good idea for anyone that spends more than a couple of weeks of the year overseas. Nomad banks don’t have monthly charges, foreign transaction fees, currency charges, or withdrawn fees. Check out this page on Nomad Gate to see the best options.
4. Maintain your credit score
Often people will find that their credit score falls off a cliff once they move away, as credit history can’t be transferred to a new country1. In fact, you’ll create a new record completely for every new country you live in.
To keep a strong credit score at home, try keeping an active credit card. Using it a few times a year for purchases should keep your score relatively stable. If you have any ongoing bills from home that need paying on a regular basis, clearing these on time will also help.
If you’ve re-settled somewhere new, you could start building your credit score there. In the long term, you’ll need a good score to purchase anything on finance, so it’s worth it if you intend to hire a car or get a mortgage at some point. A good place to start might be getting a mobile phone contract, once you’ve settled.
Beware, if you’re in debt at home, your creditors can follow you overseas, so try and pay off any loans or debts you have before moving – where possible. Any overdue bills or unpaid fines at home will hit your credit score hard2.
5. Keep on top of tax
Moving abroad makes paying taxes even more complicated. Depending on your what country you’re in, your visa, and your living status, you might need to pay tax both at home and in your new residence.
You need to notify the relevant tax authority in your home country that you are leaving. Doing this will mean you won’t pay additional taxes that you’re exempt from while living away.
For US citizens living abroad, you could qualify for either the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit. UK citizens that live abroad permanently are classified as ‘non-domiciled’ residents, meaning they might not need to pay tax on income earned.
If you’re a freelancer, or own a business, living abroad may also change the way you declare your income, so learn the law of your homeland and stick to your requirements. You don’t want to overpay on your tax. Or worse, receive a huge unexpected bill in the future.