People move abroad for various reasons. Maybe you have found a dream job at an international company or do you want to? studying for your doctorate without drowning in it student debt lifetime. Many Americans choose the emigration option if they have chronic health problems and a high-demand career or spouse with such a role — they can often get much better health care abroad for much less.
Whatever your reasons, you need to make many sound financial decisions during your transition. The wrong ones can frustrate you, preventing you from accessing the money and credit you need. What do you need to know before you go? Here’s how to manage your money when you move abroad.
Save a lot of money
A lot can happen when you move abroad and most of it costs money to fix or fix. You start incurring costs long before you leave. Setting up a comfortable life abroad can cost a significant amount and you need to prepare for unforeseen circumstances.
How much should you save? Many experts recommend between $5,000 and $8,000, but those numbers may not be high enough to support your lifestyle. The best advice is to have living expenses in the bank for several months before you leave. That includes money for lodging and utilities, everyday expenses like food and rides—you may not have a car at first—tuition fees, and the inevitable gifts for the folks back home.
Are you going to work? Then you will read more about your banking options in the coming weeks. However, you may need more savings if you have already done so go through the off-boarding process or plan to do so soon after arrival. Your ultimate nightmare is being stranded abroad with no job and no money.
What costs can you expect? Here are some requirements that some emigrants overlook to their dismay.
1. Passport and Visa Fees
To travel abroad you need a passport. It currently costs $160 for the map and book set. While either one is cheaper on its own, it’s necessary to order both if you’re planning to move abroad. You can’t use the card alone for international air trip.
Work and residence visa fees vary depending on the country you choose to call home. However, you can expect to pay a few hundred to just over $1,000 each.
2. Cost of sending money home
It’s not free to send money home. However, you have some affordable options – another reason to get over your technophobia. More on that later. Fortunately, technology makes it easier to find the cheapest ways to send money home.
3. Shipping costs:
Are you planning to ship your car or household effects? If this is the case, prepare for a sticker shock. It can be up to $5,000 for standard ocean transportation of your vehicle and a whopping $40,000 to fly it to your destination.
Your equipment in combination probably weighs more than your vehicle. Are you willing to add more to your tab? If not, it may be more beneficial to sell or donate your goods here and slowly rebuild your collection once you reach your destination.
You will need insurance for any property you ship and to cover your trip. You should also inquire about home and car coverage requirements when you move.
Fortunately, everywhere you move, you’ll find healthcare more affordable than in the United States. However, you should consider an interim policy to make sure you are clear if the unexpected strikes while you wait for your residency and foreign coverage to take effect.
5. Cost of Living Adjustments
Inflation has hit the world, but has not had an even impact on prices everywhere. Hope for the best, but be prepared for potentially higher costs at the grocery store or eatery. Carry a little extra to make the transition smooth as you settle in.
6. A foreign emergency fund
Food isn’t the only reason you can get into trouble before completely settling abroad. You need to make sure you have enough extra in a liquid account – or a secret stash of money – to cover things like car breakdown or acute illness.
7. An emergency fund for home use
You never know what the future holds. You may have to return to the United States at some point — and you’ll need money when you get back to land. Keep several thousand in a liquid savings account that you cannot access online. That way you have no options to spend the money abroad and it waits 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 make a small fortune from ATMs. You also need it for direct deposit if you plan to work and not fully retire.
you will require the following documentation: to open a bank account in many countries:
- Two bank credit letters. A credit card can work if you only have one domestic bank account.
- At least one professional reference. Your foreign employer is a good choice if you are going to work. Otherwise, the person in charge of helping you through the visa process can agree.
- Two forms of photo ID. Usually your driver’s license and passport.
- Proof of address. Most banks prefer that you have a utility bill in your name.
In addition to setting up utilities in your new residence, many countries require you to obtain a work or residency visa to open a bank account. You also need an initial deposit – the requirements can be up to $500.
Another option is to use an international bank where you already have an existing account. However, do your research carefully. Is there more than one location near your destination? Things can change and you don’t want to scramble to set up another account if your nearby location closes.
Keep your account at home
Once you’ve set up a foreign bank account, you may be tempted to cut the cord of your account at home. Resist the temptation to do this, even if you left the states as an angry expat. Why? Here are some good reasons you need to do this:
- Keep your credit: It can be difficult – if not impossible – to restore your credit if you ever decide to return home but have closed every account. This can take years and your financial options are limited. You may not be able to get a home or car loan.
- Paying US Bills: It’s much easier to pay any outstanding debts you have to the state with US currency instead of paying conversion fees.
- Take advantage of shopping: When the original iTunes Store for iPods premiered, it was initially only available in America. Other countries couldn’t take advantage of it, but American emigrants with an established account here could.
- Provide a fail safe: You may not want to imagine it, but scams do happen. You don’t want to be stranded in Bulgaria without a dime in your local account, no cash and no purchasing power.
Today’s connected world makes it a breeze to manage your banking and investment accounts from anywhere. However, you have to get over your technophobia to do this. You might pass without such conveniences if you have a local branch down the street whose employees speak perfect English. It is interesting to say the least to conduct financial transactions when neither side speaks the other’s language well.
If you haven’t set up internet banking for your checking, savings and investment accounts, do so before you leave. Schedule a time 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.
This is also the time to get cozy with all the money transfer apps you may be using. Moneygram and Western Union were once the only choices, but now you can opt for services such as PayPalsensibleXoom and OFX.
Maintain your investments
According to Morningstar, the US is the best place to invest regarding regulations, disclosures, fees and expenses. In many cases, you will also benefit from superior customer service from representatives in the United States.
Therefore, it is probably wise to leave your investments as they are, assuming you have accessed them online. While you don’t necessarily need a foreign investment advisor in addition to your American, you may want to keep one to help you with tricky tax and retirement planning issues.
Talk to a financial advisor about retirement accounts
This is where that foreign or internationally trained financial advisor can come in handy. First of all, you should probably leave your money where it is if you haven’t reached 59 and a half yet. Otherwise you will receive a hefty tax penalty for the early withdrawal.
In many cases, your money is better left where it is because of the US investment benefits. However, you can get ahead by rolling it to a foreign account. It all depends on the country, so contact a qualified professional.
File your taxes
Did you think you could escape the IRS by moving abroad? Unfortunately it is not that simple. The United States requires you to pay income tax regardless of where you live unless you renounce your citizenship. To do this, you have pay a hefty $2,350 fee and give up the benefits that dual citizenship offers.
However, your due date will change. You must submit an application before June 15 to continue to comply with the rules. You must also abide by the rules of the country where you emigrate.
Keeping 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 standpoint. Follow the above guidelines for managing your money when moving abroad. You will enjoy a much smoother transition with enough cash to lubricate your wheels.
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- 1 Save a lot of money
- 2 Open a local bank account
- 3 Keep your account at home
- 4 Beyond Technophobia
- 5 Maintain your investments
- 6 Talk to a financial advisor about retirement accounts
- 7 File your taxes
- 8 Keeping track of your money after moving abroad