How to Manage Your Funds If You Move Abroad
People move abroad for a variety of reasons. Perhaps you have landed or want a dream job with an international corporation to do a doctorate without drowning in student loan debt for a lifetime. Many Americans choose the emigration option when they suffer from chronic health issues and a sought-after career or spouse with such a role — they can often get far better health care abroad for a lot less.
Whatever your reasons, you will have many sound financial decisions to make during your transition. The wrong ones can frustrate you and leave you without access to the necessary funds and credit. What should you know before you go? How to manage your money when moving abroad.
Save a hefty sum
A lot can happen when you move abroad, and most of it costs money to solve or fix. You will incur costs long before you leave. Building a comfortable life abroad can take a significant sum of money, and you need to prepare for eventualities.
How much should you save? Many experts recommend between $5,000 and $8,000, but these numbers may not be high enough to support your lifestyle. The best advice is to have several months of living expenses in the bank before you leave. This includes money for housing and utilities, daily expenses like food and transportation – you may not have a car to begin with – college tuition, and the inevitable gifts for folks back home.
will you work Then find out more about your banking options in the coming weeks. However, you may need more savings if you have already done so have gone through the offboarding process or plan to do so soon after arrival. Her ultimate nightmare is being stranded abroad with no job and no cash.
What costs can you expect? Here are some requirements that some expats overlook to their dismay.
1. Passport and Visa Fees
You need a passport to travel abroad. It currently costs $160 for map and book set to. Although both are less expensive on their own, ordering both is imperative if you are planning to move abroad. You cannot use the card alone for international air to travel.
Work and residency visa fees vary depending on the country you call home. However, you can expect to pay anywhere from several hundred to a little over $1,000 at a time.
2. Fees for sending money home
It’s not free to send money home. However, you do have some affordable options – another reason to overcome your tech phobia. More on that in a moment. Fortunately, technology is making it easier to find the most cost-effective ways to send money home.
3. Shipping Costs
Planning to ship your car or home furnishings? If so, prepare for sticker shock. It can cost up to $5,000 for standard sea transportation of your vehicle and up to $40,000 to fly it to your destination.
Combined, your setup probably weighs more than your vehicle. Ready to add more to your tab? If not, it might be more cost-effective to sell or donate your wares here and slowly rebuild your collection once you reach your goal.
You need insurance for any property you ship and for your trip. You must also inquire about the requirements for cover for the house and car if you move.
Luckily, you can find health care cheaper than in the United States almost anywhere you go. However, you should consider transitional insurance to ensure you are aware if unexpected events occur while you await your residency visa and expatriate protection to take effect.
5. Cost of living adjustment
Inflation has ravaged the globe, but has not impacted prices equally across the globe. Hope for the best, but prepare for potentially higher grocery or restaurant expenses. Wear a little more to smooth the transition as you settle down.
6. An Overseas Contingency Fund
Food isn’t the only reason you might get into trouble before you’re fully established abroad. You’ll want to make sure you have enough left over in a liquidity account — or secret cash stash — to cover things like vehicle breakdowns or acute illnesses.
7. A Back Home Contingency Fund
You never know what the future may bring. You may have to return to the States at some point – and you’ll need money when you get back to shore. Hold several thousand in a liquid savings account that you can’t access online. This way you have no option to spend the money abroad and it will be waiting for your return.
Open a local bank account
You need a local bank account at your chosen destination. Otherwise, you will struggle to make deposits and withdrawals and accumulate a small fortune in ATM fees. You’ll also need it for direct deposit if you’re working and don’t want to fully retire.
You will require the following documents to open a bank account in many countries:
- Two bank letters of credit. A credit card can work if you only have a domestic bank account.
- At least one professional reference. Your foreign employer is a good choice if you are relocating for professional reasons. Otherwise, the person in charge of assisting with the visa process can agree.
- Two forms of photo ID. Usually your driving license and passport.
- proof of address. Most banks prefer a utility bill in your name.
In addition to setting up utility services at your new place of residence, many countries require you to apply for a work or residency visa to open a bank account. You will also need an initial deposit – requirements can go as high as $500.
Another option is to use an international bank where you already have an established account. However, research carefully. Is there more than one branch near your destination? Things can change, and you don’t want to be bothered with setting up a different account if your location closes down.
Keep your account at home
Once you’ve set up a foreign bank account, you might be tempted to sever your account at home. Resist the temptation even if you left the States as an angry expat. Why? here are a few good reasons You should do this:
- Maintain your credit: It can be difficult – if not impossible – to recover your balance if you ever decide to return home but have all accounts closed. This can take years during which your financial options are limited. You may not get a home or car loan.
- Paying American Bills: It’s much easier to pay off any outstanding debt you have in the US with American currency rather than paying conversion fees.
- Benefit from shopping: When the original iTunes Store for iPods premiered, it was initially only available in America. Other countries could not benefit from this, but American emigrants with an established account here could.
- Do you have a failover: You might not want to imagine it, but scams do happen. You don’t want to be stranded in Bulgaria with no penny in your local bank account, no cash and no purchasing power.
Today’s connected world makes it a breeze to manage your banking and investment accounts from anywhere. To do this, however, you have to overcome your phobia of technology. You might be able to do without such conveniences if you have a local branch just down the road whose staff speak perfect English. Attempting to conduct financial transactions when neither party speaks the language of the other well is interesting, to say the least.
If you have not yet set up online banking for your checking, savings and investment accounts, do so before you leave. Schedule an appointment to sit down with your banker and go through all the features to make sure you can access your financial information from a phone or computer.
Now is also the time to get acquainted with all the money transfer apps that you use. Moneygram and Western Union used to be the only options, but now you can Opt for services like PayPalWayXoom and OFX.
Take care of your investments
According to Morningstar, the US is the best place to invest regarding regulations, disclosures, fees and expenses. In many cases, you’ll also enjoy excellent customer service from representatives in the United States.
So it’s probably wise to leave your investments as they are – assuming you’ve set up online access. While you don’t necessarily need a foreign investment advisor in addition to your American one, you may want to keep one to help you navigate tricky tax and retirement planning issues.
Talk to a financial advisor about retirement accounts
This is where this foreign or internationally trained financial adviser can come in handy. First off, you should probably leave your money where it is if you haven’t hit 59.5 yet. Otherwise, you risk a hefty tax penalty for the early withdrawal.
In many cases, your money is better left where it is because of US investment advantages. However, you could prevail by rolling it into a foreign account. It all depends on the country, so consult a qualified professional.
Submit your taxes
Thought you could escape the IRS by moving abroad? Unfortunately it’s not that simple. In the United States, you must pay income taxes regardless of where you live unless you renounce your citizenship. You have to paying a hefty fee of $2,350 and forgo the benefits of dual citizenship.
However, your due date will change. You must submit by June 15 to comply with the regulations. You must also follow the rules of the country you are emigrating to.
Keep track of your money after moving abroad
Moving abroad is one of life’s most exciting adventures, but it can also be daunting from a financial perspective. Follow the above guidelines for managing your funds when moving abroad. You’ll enjoy a much smoother transition with enough money to grease your wheels.
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