As a new year begins we all hope for a prosperous twelve months. An interesting aspect of January in the UK is that traditionally it's the month where the most people investigate the possibility of moving abroad and starting a new life as an expatriate.
This is unsurprising, as many people suffer from 'the January blues', especially as the current state UK is not exactly at its most uplifting.
But apart from picking a destination, what are the key factors to take care of when planning a move abroad? Let's take a look at the areas you will need to cover when moving abroad.
Working out a pre-move budget
Starting a new life abroad can make wholesale changes to your personal financial situation. Moving itself could prove to be a costly procedure, and you may have to make certain payments in advance, or upon your direct arrival, such as accommodation deposits and rent. It will also pay (literally) to do a bit of research on the cost of living in your new country, as this can differ greatly from destination to destination.
Another thing to consider when moving to a new country is holding a sum of cash, for emergency purposes. Being in a new country may offer confusing scenarios in times of emergency so to be safe it is wise to have perhaps more cash set aside than you would have at home.
Completing an accurate and detailed budget will go a long way towards helping you plan your finances efficiently.
Once you’ve sorted out your budget and reached your new country it will be time to decide on the best method for managing your money whilst abroad. As an expatriate you may have a host of new requirements that you need from a bank, you may still have bills to pay back home, you may need to utilise more than one currency, and you may have to operate through more than one account. You may also be interested in investing and wealth preservation, especially if your new job abroad comes with a more attractive salary, as is often the case.
So taking this into consideration you will have three main options for controlling your finances:
By sticking with your existing account at home you will effectively be using money like a tourist, using credit cards, cash and travellers cheques. However you will find that you may encounter some problems along the way. Depending on where you are living you may be paid in a completely different currency, and your bills may also have to be paid in this different currency, leaving you money in accounts back home will thus lead to foreign exchange costs.
Another issue with this method is the fact that a number of international banks often require payments to be made in person, so when it comes to rent- time you might encounter difficulties if your money is nestling in an account back home.
Don’t forget time differences can also play an annoying factor, your new time zone may be vastly different to your previous one, which in turn may make it difficult to contact your bank at convenient times.
These points are all fairly negative and whilst it makes sense to keep at least a bit of money in an account back home there are better options for the expatriate.
You could always just open a simple local account in your new country, this will give you somewhere to have your wages paid into, and a place that gives you easy access to your cash for daily needs.
Before doing this it’s important to scope out the political and economic standing of your new country, in today’s uncertain climate many places are experiencing fiscal problems, so to be sure that your money is safe you should do a bit of investigating beforehand.
You should also be aware that it can often be more difficult than you think to open up a local account. To open a local account you will often need an available credit history and also an address of residence, the issue that comes into play is that to gain accommodation you may need a bank account first!
Luckily some high street banks have branches all over the world, so check with your existing bank to see if they can give you a seamless account transfer.
However there is still another option, an option that is very popular amongst expats, opening an offshore account.
An offshore account will give you an easy way to manage your funds in numerous countries and currencies, both at home and abroad. Offshore banks account for foreign customers so they are usually easily accessible at all times, via telephone or internet, ensuring that your money is readily available at any time without the hassle of having to venture to a branch.
Offshore bank accounts may also allow you to receive tax benefits, a big plus point for wealth preservation, which leads into our next section.
Your new tax scenario
Wherever your new destination is it will probably have a different tax regime to the country you originally come from, not only that but by moving abroad you may also change your tax status back home. You may find that you are liable for less tax payments on your income and investments.
If you are interested in offshore accounts then we advise that you begin the procedure long before you actually reach your new destination. We can assist you with finding the right jurisdiction in the right area.
To help make things clearer for you it is advised that you talk to an independent financial adviser. You can outline your plans, what you hope to achieve, where you want to travel and more. The adviser will work with you in drawing out a firm plan to help you realise these goals.
For more information that could be of use consult our City Guides which offer detailed information on all the popular expatriate destinations. In these guides you will find guidance on a host of important topics such as: work/visa requirements, settling in, culture shock, healthcare, entertainment, accommodation, education and more.