The Do’s and Dont’s of Expat Finances
by Beacon Financial Education
Moving to a new country can be an exhilarating time in your life. But it can also be daunting. Moving somewhere foreign comes with a long list of tasks and necessities such as finding housing, adjusting to a new daily routine, and navigating an entirely new culture. With that being said, you may not have time to keep your finances front and center while navigating the already complex situation. This overview gives a short list of Do’s and Dont’s to keep in mind for your expat finances.
Do – Know Your Tax Status
When you become an expat, there are two tax fundamentals you will want to understand. How your expatriate status affects your tax requirements at home and what your tax status is in your new country– given the terms of your stay. It’s imperative to keep in mind that tax status differs on a country by country basis. By understanding your domestic and foreign country’s tax rules, you will be well on your way to having your finances in order from a government standpoint.
Don’t – Plan without Researching
People are often surprised at the variance of cost of livings between foreign countries. Each community comes with different costs. This could include, rent, public transportation, food, and miscellaneous items. As an example, rent for a 900sq ft accommodation in Berlin, Germany is $1,000. Compare that to $2,100 for the same accommodation in Boston, Massachusetts! To keep your finances in order, you’ll want to research your area before budgeting. And be specific! Look at the city or your ideal part of town on websites like AirBnB or to get an idea of the costs. Looking at the country or general area alone is too broad to get a good idea of what you’ll actually be paying in living expenses per month.
Do – Cancel Hometown Payments
A good way to save extra money is to cancel unused domestic expenses. Magazine subscriptions, utility bills, and other fees can add up substantially so make a list of expenses you will not utilize in your new country and put them on hold.
Don’t – Go with your First Currency Exchange Rate
As an expat, it’s very possible you will be exchanging currency quite often. Do not go with the first rate you are given! Shop around! Compare banks and speak with a currency expert so you can get the most out of your exchanges.
Do – Find an Affordable Wireless Plan
Many wireless companies offer “international packages”. However, these plans can be laden with fees sometimes 10x higher than your normal rate. Ask the specifics before opting in a plan or research new wireless companies altogether. Sometimes it makes sense to get a foreign sim card and use apps like WhatsApp or Messenger to communicate back home.
Don’t – Close your Hometown Bank Accounts
While it may not make much sense, closing hometown bank and credit accounts can adversely affect your credit score. Your best solution may be to talk with your bank about your options if you plan to not utilize your hometown bank account and pay off your credit balances so you don’t accrue any interest while abroad.
Your best bet when planning a trip abroad is to speak with your financial advisor about best practices managing your money in your specific country. Getting an idea of what your countries tax laws and finances look like will make you confident in your finances on your international journey.
Beacon Financial Education does not provide financial, tax or legal advice.
None of this information should be considered financial, tax or legal advice.
You should consult your financial, tax or legal advisers for information concerning your own specific tax/legal situation.