People move overseas for various reasons. Maybe you landed a dream job with an international corporation or want to study for your doctorate without drowning in student loan debt for a lifetime. Many Americans choose the emigration option if they have chronic health conditions and an in-demand career or spouse with such a role—they can often obtain far better health care abroad for much less.
Whatever your reasons, you have to make many sound financial decisions as you transition. The wrong ones can frustrate you, leaving you without access to necessary funds and credit. What should you know about before you go? Here’s how to manage your funds if you move abroad.
Save Up a Hefty Sum
A lot can happen when you move abroad and most of it costs money to resolve or fix. You’ll begin incurring expenses long before you depart. Establishing a comfortable life overseas can take a considerable sum and you must prepare for contingencies.How much should you save? Many experts recommend between $5,000 and $8,000, but those figures 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 depart. That includes money for lodging and utilities, daily costs like food and rides—you might not have a car at first—tuition fees and the inevitable gifts for the folks back home.
Will you be working? If so, you’ll learn more about your banking options in the coming weeks. However, you might need more savings if you have already gone through the off-boarding process or plan to do so soon after arrival. Your ultimate nightmare is finding yourself stranded abroad with no work and no cash.
What expenses can you expect? Here are some requirements some emigrants overlook to their dismay.
1. Passport and Visa Fees
You’ll need a passport to travel overseas. It currently costs $160 for the card and book set. Although either alone is less expensive, ordering both is imperative if you plan to move abroad. You can’t use the card alone for international air travel.Work and residency visa fees vary depending on the country you choose to call home. However, you can expect to pay several hundred to slightly over $1,000 each.
2. Fees for Sending Money Home
It isn’t free to send money back home. However, you have some affordable options—yet another reason to get over your technophobia. More on that in a bit. Fortunately, technology makes finding the least expensive ways to send money back home easier.3. Shipping Fees
Are you planning on shipping your car or household furnishings? If so, prepare for sticker shock. It can cost up to $5,000 for standard ocean transport of your vehicle and as much as $40,000 to fly it to your destination.Your furnishings probably weigh more than your vehicle when combined. Are you prepared to add more to your tab? If not, it might be more cost-effective to sell or donate your goods here and slowly rebuild your collection once you reach your destination.
4. Insurance
You’ll need insurance for any property you ship and to cover your travel. You’ll also need to inquire about the coverage requirements for home and auto when you move.Fortunately, you’ll find health care more affordable just about anywhere you move than in the United States. However, you should consider an interim policy to ensure you’re in the clear if the unexpected strikes while you’re waiting for your residency visa and foreign coverage to go into effect.
5. Cost-of-Living Adjustments
Inflation has stricken the globe but hasn’t impacted prices evenly everywhere. Hope for the best but prepare for potentially higher costs at the grocery store or eatery. Carry a bit extra to smooth the transition while you settle.6. An Overseas Emergency Fund
Food isn’t the only reason you might run into trouble before you get fully established overseas. You should ensure you have enough extra in a liquid account—or a secret stash of cash—for covering things like vehicle breakdowns or acute illnesses.7. A Back-Home Emergency Fund
You never know what the future may hold. You may need to return stateside at some date—and you’ll need money when you arrive back on shore. Keep several thousand in a liquid savings account you can’t access online. That way, you have no options to spend the money while overseas and it will await your return.Open a Local Bank Account
You need a local bank account in your chosen destination. Otherwise, you’ll struggle to make deposits and withdrawals and rack up a small fortune in ATM fees. You’ll also require it for direct deposit if you intend to work and not fully retire.You’ll need the following documentation to open a bank account in many nations:
- Two banking credit letters.A credit card may work if you only have one domestic bank account.
- At least one professional reference.Your foreign employer is a good choice if moving for work. Otherwise, the individual responsible for helping you through the visa process may agree.
- Two forms of photo identification.Typically, your driver’s license and passport.
- Proof of address.Most banks prefer you to have a utility bill in your name.
One other option is using an international bank where you already have an established account. However, do your research carefully. Is there more than one branch near your destination? Things can change and you don’t want to scramble to set up a different account if your nearby location closes.
Keep Your Account Back Home
Once you establish a foreign bank account, you might feel tempted to cut the cord on your account back home. Resist the temptation to do so, even if you left the states as an angry ex-pat. Why? Here are a few good reasons you should do so:- Maintain your credit:It can be difficult—if not impossible—to reestablish your credit if you ever decide to return home but have closed every account. Doing so can take years, during which your financial options will be limited. You may not be able to get a home or car loan.
- Pay American bills:It’s much simpler to pay any outstanding debts you have stateside with American currency versus paying conversion fees.
- Take advantage of shopping: When the initial iTunes store premiered for iPods, it was initially only available in America. Other countries couldn’t take advantage, but American emigrants with an established account here could.
- Have a failsafe: You might not want to imagine it, but scams do happen. You don’t want to find yourself stranded in Bulgaria without a dime in your local account, no cash and zero purchasing power.
Get Over Technophobia
Today’s connected world makes it a snap to manage your banking and investment accounts from anywhere. However, you have to get over your technophobia to do so. You might be able to scrape by without such conveniences when you have a local branch right down the street whose employees speak perfect English. Trying to conduct financial transactions when neither party speaks the other’s language well is interesting, to say the least.If you haven’t set up online banking for your checking, savings, and investment accounts, do so before you depart. Schedule a time to sit down with your banker and review all the functions so you feel confident accessing your financial information from a phone or computer.
Now is also the time to get cozy with any money transfer apps you may use. Moneygram and Western Union were once the only choices, but you can now opt for services like PayPal, Wise, Xoom， and OFX.
Maintain Your Investments
According to Morningstar, the United States is the best place to invest regarding regulations, disclosures, fees, and expenses. In many cases, you’ll also enjoy superior customer service from representatives located stateside.Therefore, it’s probably wise to keep your investments as they are—assuming you’ve established online access. While you won’t necessarily need a foreign investment advisor in addition to your American one, you might wish to retain one to help you navigate tricky tax and retirement planning issues.
Talk to a Financial Advisor About Retirement Accounts
Here’s 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’ll incur a hefty tax penalty for the early withdrawal.In many cases, your money is better off remaining where it is because of the U.S. investment benefits. However, you could come out ahead by rolling it into a foreign account. It all depends on the country, so check with a qualified professional.
File Your Taxes
Did you think you could escape the IRS by moving abroad? Sadly, it isn’t that easy. The United States requires you to pay income taxes regardless of where you live unless you renounce your citizenship. To do so, you’ll have to pay a hefty $2,350 fee and give up the advantages dual citizenship offers.Your due date changes, though. You’ll need to file by June 15 to remain in compliance. You’ll also have to follow 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 perspective. Follow the above guidelines for managing your funds if you move abroad. You’ll enjoy a much smoother transition with enough cash to grease your wheels.By Devin Partida
The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
