Moving overseas can be the most exciting thing you’ve done up until now, and there’s a whole new world ahead of you waiting. But as much as most of us don’t like to burden ourselves with the money talk, balancing finances abroad properly will ensure a successful stay.
Dreaming about living in another country is nothing unusual. Many Americans become expats, and there are various reasons to move behind this decision. Most people, around 13%, work to fulfill their lifelong wish to live in another part of the world, so they find a job on their own. Some (approximately 11%) move to another country because they were internationally recruited. But no matter what reasons drive you to make this big decision, it’s essential to learn how to handle finances while living abroad and leave no room for mistakes.
The Best Initial Advice Is to Recognize All the Monthly Expenses
When moving abroad, initially, it’s essential to consider the funds required to pay for the relocation. You will need to pay for international moving services such as overseas shipping or storage service you’ll require to store your possessions while you’re away. You are also required to prepare some funds needed for the documents needed to travel overseas, such as the passport, visas, or any other important document. But keep in mind that once you’ve settled after the overseas moving company helps you move, you will have similar monthly expenses to the ones you’ve had at home.
Project Your Budget Like a Pro Before You Pack Up and Go
Before you pay for an international moving company to help you relocate, leave your home, and take a leap of faith toward an unknown country, set aside some time to think through the budget thoroughly. You will need to cover the following expenses:
- The cost of housing is probably the first thing on your list of figuring out how to live overseas. As you probably don’t know what the housing market in a foreign country is like, nor their rules and regulations about buying property, perhaps it’s best to rent first. Or you’re maybe in luck, and your employer has got you covered. Be sure you list housing among the relocation questions to ask the employer if you’re relocating for a job.
- Check a site like Numbeo to see how much you are expected to pay for utilities on a monthly basis. It will show you the price of basic utilities for a 915 square ft apartment.
- What are the prices of groceries in your destination country? Although it’s a minor expense compared to the housing or rent, it’s important to know how much you’ll need for your food.
- Additional expenses should also be of interest to you. Mind the cost of public transportation, education (whether you’re relocating to learn a language overseas or you have kids,) and entertainment. Also, check whether the country has universal healthcare and whether you are eligible for it. If not, check with your employer about the cost of insurance.
The projected budget and its balance will greatly rely on your future income. If you are moving to another country for love, perhaps you haven’t looked for a job yet. But if you have managed to find work before your relocation, it will be easier to figure out your financial situation.
Start Saving at Once to Ensure You Have a Good Financial Starting Point
The moment you’ve decided to move overseas is the exact moment when you should start saving up and ensuring your financial situation is stable. That’s why the best idea is to make a savings account in a bank as soon as you begin thinking about living somewhere else than your current home. Any expat should look ahead and plan the unthinkable – including the costs of repatriation. But even if you are given the opportunity to move overseas at once, before reaching your financial goal on your savings account, don’t fret. You should at least have enough money to cover the initial expenses and all the other costs of settling there, such as health insurance.
To Balance Your Finances Properly, It’s Best to Understand All the Taxes You Should Be Paying
Before you start preparing to move, you shouldn’t forget to put taxes on your moving overseas checklist. The US requires its citizens to pay taxes and file returns, no matter how many miles away you are, although there are some exclusions to this rule, and it doesn’t necessarily mean double-taxing. Under the Foreign Earned Income Exclusion, there are some cases in which your income is not subject to US taxes, though you are still obligated to file a return. The US has also made tax treaties with a number of foreign countries, and under these treaties, expats are taxed at a reduced rate or are exempt from domestic taxes.
The following video offers advice on learning how to save money in the best possible way.
Compare Different Financial Institutions Before You Choose Your Bank
Depending on your career or current life goals and situation, you may want to move overseas to a nation that has a less developed system of banks. This is why it’s crucial to research the banks before you move to make sure your account is accessible from the place you’ll be living in after moving across the world. It’s essential to check whether a bank issues credit cards with the MasterCard or Visa brands. Its international clearing network is also important, as well as the information that shows whether the bank participates in a shared ATM or payment clearance network. At last, check if the bank deposits are guaranteed by that country’s government, but also take the stability of the said government into consideration.
Before You Make Any Money, Set Up an Account
As much as it is vital to obtain some tips for learning a new language before you start packing, it’s essential to start an application process to open a banking account before you move overseas. If it’s not possible to do so before leaving the US soil, you should gather all the necessary documents and papers in advance. Having a local account will spare you from unnecessary financial stress because without a good credit score overseas, you won’t be able to obtain a cellphone or a credit card, let alone find housing.
Before You Pack Your Bags, Consider What You’ll Carry in Your Wallet
Perhaps it’s true that a fair amount of moving stress is unavoidable, and it may even help us focus. But nonetheless, we should keep it in check and to a minimum as much as we can. That’s why you need to make sure you double-check what you’re going to carry inside your wallet. It’s better to let the culture shock be the only shock that’s going to impact you.
Although your credit cards may be eligible for use in a foreign nation, you may be charged foreign fees for using them. This may end up with negative financial implications. Before you decide what to pack when moving overseas, research whether you should obtain some new cards for your travels. Which one is the right one for you will mostly depend on your personal preferences, but you should also consider whether a card can earn you some travel points. Additionally, it may offer some other perks too, such as hotels and discounts at restaurants. Most of all, look for the ones without foreign transaction fees.
Manage Your Loans and Keep the Credit Score in Check
Before you pay for the packing service, sit on the plane and start living overseas, you shouldn’t forget that your domestic finance balance will affect your overall credit score. If you fail to keep it in check, you will have issues later on when you plan to return. Many expats plan investments or buy a house and a car upon their return. That’s why it’s crucial to manage finances at home when living abroad. It’s easy to take care of it – just keep in mind that you should use your US credit card from time to time. Also, make sure you pay your domestic debt on time.
Keep Your Domestic Accounts in Check, Too
There are many key preparatory steps before you start your journey to life overseas, and one of them is to consider overseas vehicle shipping for your car and vehicle insurance once you get there. But when it comes to finances, one of the vital things to do before moving internationally is that you’ll need access to your funds. An ideal situation would be for you to own an account in a bank that has branches in the US and your future living place. Also, many banks have partnerships with financial institutions in other countries, so in case you’re wondering how to document finances when living abroad, this could solve your problems and help you move efficiently.
Use the Time Abroad to Save Up for Your Retirement
We all know that an essential part of boxing up all your belongings is to prevent things from breaking so they can survive and reach their destination unscathed. Preparatory steps can be overwhelming because relocating and shipping overseas are complex processes. But nonetheless, you should squeeze in a moment in your schedule to figure out in what way you can save up to ensure carefree retirement.
After your move with an overseas shipping company, besides taking care of your insurance plans and figuring out how to keep in touch with friends, you should check with your employer about the retirement plan. If their policy excludes expats, perhaps you can ask if it can be allowed. The other possibility is that if you’re excluded from being double-taxed, establish an investment or a savings account meant for retirement.
Balancing Finances Abroad Can Be Done Without Breaking a Sweat
Getting your finances in order and making a thorough plan about keeping everything in check once you’ve moved should be done long before the moving day preparation approaches. Handling everything on time will ensure you have a smooth transition when moving overseas alone so that you can make the most out of life in another part of the world. Being well organized and skeptical about spending money overseas will help you keep your funds balanced and leave no room for mistakes. Being financially stable in a foreign place gives you security and allows you to be prepared even if something goes unplanned. And as Benjamin Franklin once said – “By failing to prepare, you are preparing to fail.” And in this case, it means that once you’ve prepared yourself in terms of finance, you will have the required freedom to enjoy your stay.