So, you’re moving abroad… That’s great!
Being an expat for 15 years, I can tell you that it’s been a rewarding journey. New cultures, food, people and way of doing things – It’s a different world out there.
Like most of you, I had a hard time to get financially set up while working/living abroad. Back then, I couldn’t find any valuable resources how to move money around countries, pay little in exchange commission or how to send money from/to home. In a few words; It was frustrating!
However, a lot has changed in recent years, from internet banking that let you manage multiple currencies accounts to cheap money transfer companies. All in the name of avoiding fees and minimizing costs.
The truth is, what used to be so easy in your home country no longer proves to be quite as simple abroad. No matter where you go, things just won’t be the same as they are back home.
Today, I’m going to share with you the same valuable tips that I learned by managing my money as an expat so you can move abroad with confidence and enjoy your time without financial stress.
Ready? Let’s go!
1# ARRANGE AT HOME FIRST
Before leaving, put all the pieces in place with your home finances.
For example, some bank required token or other security future to make payments online. Do you get text messages with a code whenever using online banking?
Well, you’ll change your phone number abroad for a local, cheaper option, so you need to find an alternative way to use online banking in your home country.
Contact your bank explaining that you are moving abroad, and ask for alternative arrangments. Also, tell them to unblock your ATM and credit cards to be used aborad.
Whenever I use online banking in the UAE, I get an email with the token. Very convenient, indeed.
Also, plan how to pay your bills, taxes, mortgage and so on before moving abroad. You don’t want to fly back home to pay the bills, right?
The best way is to set up “automatic bill payment” to pay:
- credit card bills
- utility bills
- car payment
- house payment and more.
Transfers between your accounts can also be automated. Some banks will offer more automation features than others, so you should check directly at your bank’s website to see what can you automate.
And if I wasn’t clear till now, the best way to manage your bank account is to use “online banking”. Don’t have online banking? Change bank before departing.
2# THE WIRING NIGHTMARE
The biggest money-related challenge is to wire money across international borders. Most banks required your physical presence in the branch.
However, a good number of bank allow you to initiate the transfer by phone or internet banking, but there is a catch. Usually, they allow only a small amounts every day, like US$3,000 – US$5,000.
Not only you waste a considerable amount of time to initiate these transfers, but you get charged heavily for each transaction.
Imagine what it took to transfer US$30,000. Besides calling the bank every day for 2 weeks period, it cost me a whopping US$350 in fees.
That wasn’t fun 🙁
Do yourself a favor, open a bank account that let you transfer a “considerable amount of money” without restriction and with a mouse click.
3# CASH IS KING
I noticed that people freaking out traveling with cash. That is a pity because carrying cash with you is the cheapest and best option to start settling your finances in a new country.
The common question I get asked is “Should I change money in my home country or at the destination?” If your currency is one of the following, change at destination:
- American dollar
- Australian dollar
- Pound sterling
- Euro
- Japanese Yen
Most countries in the world are craving for those major currencies. You’ll get a sweet deal on your exchange rate. I only carry American dollars because is the most accepted currency in the world. so the exchange fees are very low.
Regarding how much you can take with you, usually is $US 10,000 per person. Check with your home country and destination custom policies to find out how much you can bring.
So, don’t be afraid to carry money, no one is going to point a gun at you. Keep your money in different pockets of your trousers, jacket and shorts, so you don’t risk to lose the full amount.
4# OPEN A LOCAL BANK ACCOUNT
Now you’re settling in the new country but at one point, your cash will run out. You might be tempted to use your home ATM card to withdraw some cash. Don’t!
You get charged by your bank, as well as the local bank. And one more thing, the secret that your bank doesn’t want you to know; the hidden conversion fee.
They will not mention “conversion fee”, instead is expressed as a higher-than-market rate (the bank pockets the difference). That isn’t smart. What is the smart way then?
Open a local bank account and transfer money directly there. It’s cheap and easy.
You pay the same fix charges for any amount, either you transfer US$100 or US$100,000, so it’s smart to transfer only one time the amount necessary for your living costs.
The second smart move is to open an account denominated in US dollar (for Americans) or Euro (for European). Doing so, you can hold money in your new account without risking to lose money if the local currency is WEAK. Also, converting money locally is cheaper than let the big banks convert for you during the International transfer.
If you’re a US citizen, check out Jeremy’ s tips about opening an account with Charles Schwab to avoid ATM fees.
5# APPLY FOR ONLINE BANKING
Just as you would back home (I hope), sign up for online banking, especially if you’re in a country where you don’t speak the native language. The teller, not always speaks English and that can be frustrating.
In Asia, online banking work very well. In fact, the last time I visited my bank was one year ago. Hey, online banking is really convenient, sometimes too convenient.
6# OPEN AN ACCOUNT WITH AN INTERNATIONAL BANK
If you consider being a permanent expat, open an account with an International bank with a strong presence around the globe. The most widespread retailer bank is definitely HSBC with 7,500 offices in over 80 countries, but there are other options.
7# HAVE AN OVERVIEW OF YOUR ENTIRE FINANCIAL PICTURE
Knowing where your money are not only it’s important but crucial. In the past, I had a hard time to move money quickly when needed. By keeping a simple spreadsheet in Excel updated every month, you’ll have a better understanding of your financial picture, so you can plan accordingly.
After 15 years of expat life, having worked in 4 countries and collected 5 bank accounts, 2 brokerage accounts, and a physical gold deposit, things can get messy fast.
I have a gift for you. You can download a sample of my spreadsheet below to keep in check your net worth:
8# CONSIDER HEALTHCARE
This is a tough one. In foreign countries, you need a private healthcare insurance if you want access to quality health care.
As you might know, private hospitals are expensive and accept you only if you have an insurance or a credit card as collateral.
Last year, I gave a lot of thoughts about renewing my medical health insurance. I can’t decide for you as your needs and situation are totally different than mine, but I hope my thinking process is helpful to assist you in making the SMART move.
Alright, my friend, time to pack your luggage and be confident to start your new life abroad (I know you can!).
Got a question? Something to add? Feel free to share your experience.
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