The pandemic has forced everyone to re-examine their lifestyle. After months spent in lockdown and working from home, many people are longing for a change of scenery and wanting to relocate abroad to look for a truly new start.
As exciting as it is, many people tend to forget about or put off the less fun tasks associated with overseas relocation, such as the hassle of dealing with your finances. It’s crucial that you also have a financial plan in place before your move, to make sure you’re prepared and protected.
There are so many things you need to consider when arranging your money for an overseas relocation that the process can be complicated and overwhelming, which is why we’ve put together this list for you to plan and hopefully save you time and possibly even money.
There are a number of things to consider when it comes to banking. Fortunately, most of the required steps can be ticked off before you depart. With the multitude of things you will be dealing with upon arrival in your new destination, getting a handle on their banking beforehand will certainly save you time and a whole lot of stress.
a. Don’t Close your bank account back home
If you’re leaving for the long term, you may want to close the bank account in your home country, particularly if you’re paying high bank charges.
However, if you have bills that still need to be paid after you leave, make sure the account is kept open and active.
Your home country bank account can also be a useful place to keep some emergency cash or funds for when you visit, as you will be able to avoid losing money to exchange rates. Be especially mindful of where you keep your emergency funds, because of fees associated with currency exchange when accessing your cash. Experts recommended doing some research prior to leaving for your new home.
b. Setup a local bank account once you arrive
As soon as you’re able to, you should open a local bank account. While some countries allow you to set up a new account from outside the country, many counties require you to apply in person or once you have sorted your accommodation first, as some banks need proof of local address when setting up an account.
c. Use a reliable transfer service to move money between oversea accounts
Once you’ve set up your local bank account, you may want to have access to the money in your home account. As this will involve transferring money abroad, financial experts recommend using an independent transfer service as, apart from the hefty fees banks charge for the same service, the exchange rates they use are generally not desirable. These are the things you’ll need to consider when picking a transfer service, as well as the reviews and ratings of the company.
One downside to moving abroad is the increased complexity of filing taxes. It may not be the most thrilling part of your planning, but it’s important to do your research about your new home country’s tax requirements before you leave.
a. Expat tax requirements
You must abide by the tax regulations of your new country and former residence. While doing your own research is crucial, it may be worthwhile to seek the advice of a trusted tax expert when it comes to your taxes to avoid incurring costly penalties. Plus, a tax expert can help you determine where you qualify for tax relief.
There are countries that will expect you to pay tax while living abroad, meaning pay tax in both countries even if you’re earning in the one. However, some countries like Singapore, it has signed Double Taxation Agreements with more than 100 countries to avoid taxation on the same income twice.
Researching and organizing your pension plan is essential. Every country will have their own pension schemes when it comes to expats.
a. Retiring abroad
If you're retired and planning on moving to a foreign country or planning to retire abroad, you will only be able to enjoy your experience with your finance in order. Because you won't be earning income in the traditional sense, you will likely be relying on retirement pensions.
On top of this, you will have to work out how your new home country’s tax system will impact your pension. You could end up losing quite a bit of money if you don’t plan this carefully, and it may therefore be well worth enlisting the services of a retirement consultant.
b. Home country pension
If you will still be working when you relocate, you should look into how you can continue to pay into your pension plan, and whether it’s in your interests to move to an overseas plan. If you will have a new overseas employer, they may already have a pension plan in place, so you should look into this and find out the details. Make sure to understand how moving abroad will affect your regular income distribution in retirement.
Moving your finances abroad can be tedious at any point in the process. You might find yourself steering your mind away from the stressful parts of the planning, in favor of the more fun bits of moving abroad.
Even if you are well organized, you may need to speak to a professional to get advice that is specific to your needs. In addition, make sure that the adviser you are speaking to is regulated in the country of your destination.