There are many enticing reasons why people move abroad. For instance, relocating to another country can open their doors to advantageous employment and educational opportunities.
More developed countries also typically offer a better standard of living. It’s no wonder then why international migrants made up 3.6% of the global population last year.
However, despite the undeniable benefits of moving overseas, it can also be incredibly costly. Thus, such a significant transition must be carefully planned to prevent financial troubles in the future.
To add, despite the availability of high-paying jobs, the cost of living can be more expensive. Hence, it can be tricky to save money while maintaining a comfortable lifestyle.
Below, we’ll discuss some helpful tips on how to prepare financially for an international move. We’ll also outline how you can effectively manage your wealth while living abroad.
Before Moving Abroad
1. Save Rigorously
One great way to ensure financial security is to build an emergency fund. While this is important for everyone, it’s even more crucial for those planning to move abroad. An emergency fund can cover any unexpected expenses that may arise during the relocation. It can also give you peace of mind during this completely life-changing and sometimes unpredictable milestone.
Here are some money-saving suggestions worth trying:
No Expense is Too Little
When trying to cut down costs, people often focus on their biggest expenses. While this is not exactly wrong, it’s also important to consider your smaller spendings as these can quickly pile up into huge sums.
Making minor changes like changing your phone plan, terminating your cable TV, or unsubscribing to streaming services, if you’re underutilizing them anyway, can make a significant difference.
It’s also best to keep your purchases in check. For example, if you’re planning to buy a costly gadget such as a brand-new MacBook, consider buying a refurbished MacBook instead. It’s helpful to track your traveling, grooming, and transportation expenses as well. Remember, even the smallest adjustments can go a long way when it comes to saving.
Spend Less Money on Food
Find ways to cut your food allowance without jeopardizing your health. Buy only enough food that you can realistically consume. Keep in mind that you will be relocating soon, so it’s not sensible to stock up on many months’ worth of groceries.
Meal sharing services such as Food Rescue US, Food for All, and goMkt can help you get discounts or even free food items. Take advantage of any available discounts and exclusive offers in your local stores as well.
Sell Anything That You No Longer Need
Even if you only get a few bucks for them, it’s still better to sell things you don’t intend to use anymore. It’s also important to be realistic with the items you can keep since moving large or fragile shipments like furniture and china can cost more.
Plus, apart from the money you’ll make from selling, you’ll have fewer items to ship, which can further lower your moving expenses.
2. Do Research on Taxes and Other Legal Costs
One thing that’s constant wherever you go is your obligation to pay taxes. Therefore, before you begin packing, it’s best to do substantial research on the tax laws of the country you’re moving to.
According to IRS regulations, every American citizen living overseas must continue filing taxes. It makes no difference where you live in the world—your income will still be liable to income tax.
The good news is you can use Foreign Tax Credit and various other exclusions for expats to offset some of your tax payments. A wide range of comprehensive resources breaks down tax reporting requirements and deductions you may be eligible for. To add, it’s vital to know the specific tax forms that you need to accomplish as an expat.
Moreover, do additional research to determine whether the country you’re relocating to has any tax requirements or prohibitions that apply to foreign people.
Look up charges that you are mandated to pay for your relocation. Check if you need to provide notarized copies of specific documents. Remember to investigate visa and residence requirements as well, since local governments may look for them. If you are moving for employment, you should seek assistance through your company or embassy.
3. Establish a Budget for Living Expenses
As stated previously, you should have enough money in your emergency fund to cover several months of rent and living expenses. To know how much you need to set aside, make an approximate budget.
Consider the rent for your new living space. Note your expenses like groceries by checking out marketplaces online, reading blogs, and conversing with expats on social media. This way, you’ll have a more concrete idea of how much money you’ll need to spend on necessities.
Additionally, don’t forget to look up any fees that you may be required to pay. For instance, if you plan on studying overseas, you may have to spend more just because you’re not a resident of the country.
1. Speak with Other Expats
While it’s important to start speaking with expats even before you make the move, be sure to stay in contact with them when you finally arrive. People who are already living in the country you relocated to are the most reliable source of information.
Also, if the area you move into doesn’t have an expat community, there are numerous online discussion boards to which you can turn. Ask where you can buy affordable groceries, which providers offer the most cost-effective internet plans, or which restaurants are the cheapest. The best part is you will also get to meet new people and widen your network.
2. Stay Away from Touristy Establishments
To be clear, there’s nothing wrong with visiting tourist attractions. However, when exploring your new country, it’s ideal to steer clear of stores and other enterprises that target tourists. These places usually charge more for their services and goods. It’s smarter to just ask the locals for recommendations since they know more about where to get the best deals.
3. Learn the Local Language
It’s certainly not easy to achieve fluency within a short period. However, being at least conversational in the language can pay off significantly. For instance, you won’t be as susceptible to fraudulent tactics since scammers usually target foreign tourists and newcomers. You’ll also be able to haggle in markets or negotiate agreeable payment plans with service providers and contractors.
Also, locals will take you more seriously if you speak their language, which is extremely beneficial when drawing up financial contracts like lease or employment agreements. Therefore, it’s good to invest in language learning classes and supplemental materials.
4. Create a New Bank Account
When you move to a new country, it is essential to open a new bank account. Accordingly, in many countries, foreigners must open an account and maintain a certain minimum balance. This helps prove that they can support themselves financially while in that foreign land.
Before moving, be sure to know whether such regulations exist in your country of destination. Furthermore, if you are relocating for work, find out how your company is required by law to pay you.
You should also investigate what you should do with your former bank account. You may need to close it depending on your circumstances. For example, this may be necessary if you are changing citizenship but may not be required if you are only migrating for a job.
5. Look for an Affordable Money Transfer Service
Even the United Nations recognizes that sending money from one country to another is often complicated and expensive. Payments via bank wire transfers and private services can take several days to process. They also charge roughly 3% of the transfer amount in fees. Currency exchange rates may cause you to lose even more money.
Fortunately, there are now web-based money transfer companies that provide services at a lower cost. Using them will allow you to reduce your overall expenses by roughly 1%. However, because they are essentially third-party firms, ensure that the organization is trustworthy and the transactions are secure.
The online money transfer sector is fiercely competitive. When looking for a platform, start with the industry leaders because they have the largest capital and most advanced technologies. Thus, they can provide higher-quality services at great rates.
For instance, TransferWise is valued at $3.5 billion, making it the largest firm in the market and a fantastic option. WorldFirst, which Alibaba recently acquired, comes in second.
Feeling motivated to save money can be more challenging when you’re moving to another country since dealing with the technicalities can take most of your time. Not to mention, the many unavoidable changes in your lifestyle can deplete your energy.
However, this does not mean that you should lose sight of your savings. Begin by creating and following detailed budget plans. You can also try using investment apps to grow your money through micro-investments. There are even user-friendly financial management applications that you can utilize daily.
Moreover, automating your savings can help you build a nest egg efficiently and conveniently. Remember, with the right tools and adequate research, you can successfully manage your wealth wherever you are in the world. Thus, be sure to stay informed and updated about all the know-hows of living as an expat.