When moving abroad, it's easy to become swept up in the romance of the idea of living in a foreign country that you might not remember to think of the mundane aspects of the international move - like your finances.
If you're moving with your entire family there are also a host of other things you may have already planned and had to consider so your financial lives may have just fallen to the bottom of your to-do list, which can become a costly mistake.
Keep these tips in mind when planning your move abroad:
Establish Two Bank Accounts
You'll need two bank accounts; one in your home country and the other in your host country. The account in your home country will be used to access cash in your home currency for any left over financial obligations you may have back home like a mortgage, loan, tax payments or any other recurring bills you have.
You may also need to open another account in your home country to accept payments in your home currency like Social Security payments, rental income, etc. If you want to open a secondary account like this separate from the first account mentioned, then do so before you leave since it will be harder to do once you've left for you host country.
The account in your host country will be for managing your every day cash needs. It's recommended to start that account with at least three to six month's worth of living expenses. With a few months' worth of expenses saved up you'll live with a little less stress and you'll be able to cover any unforeseen events.
For both accounts be sure to choose a large, reputable bank. Big banks usually have more experience converting currencies when needed and can transact larger wire transfers quickly and efficiently.
Some of the largest banks in the world include HSBC Holdings (UK), Deutsche Bank (Germany), Credit Agricole Group (France), BNP Paribas (France), Mitsubishi UFL Financial Group (Japan), Barclays (UK), J.P. Morgan Chase & Co. (USA) and China Construction Bank Corp. (China). These banks should be considered for one of your accounts.
Find a Financial Adviser with Cross-Border Experience
Managing currencies, international taxes and your investments will be difficult if you don't have experience. Ahead of your move abroad, locate a professional advisor who can help you manage your money when you're living in your host country.
Expats live a unique lifestyle, so it's imperative to find someone who is familiar with every aspect of it to manage your money if you're not well-versed in it yourself.
When choosing your adviser, be on the look out for one that only charges a fee for their service rather than a commission. Be wary of those who are motivated by a commission rather than your best interests.
Consult a Tax Adviser or Legal Professional
If you're going to be working overseas for a company in your home country chances are you'll still have to pay taxes to your home country in addition to any taxes you'll have to pay in your host country.
Dual-country financial arrangements are complex and should not be taken lightly. Have conversations with your tax adviser about:
- Taxation and Tax Planning - Find out if you'll owe taxes to both countries, and have them help you become familiar with the host country's tax process so that you aren't caught off-guard.
- Estate Planning - Consider the estate tax laws of multiple countries and arrange your estate plans accordingly. A failure to plan could leave your heirs with tax burdens.
- Real Estate - Owning property around the world creates tax obligations around the world. Knowing the laws and considerations will be your best ally.
Consider your Investments
Seek advice about your investments before you move. Will keeping your investments in your home country be the most beneficial to you? There may be advantages to holding them overseas or offshore so contacting a financial adviser who is proficient in investments and pensions for expats.