6 tips for managing expat finances 

January 17, 2020

International banking is one of the most challenging elements of day to day expat finance. Especially when you first arrive in a new destination. There are four approaches to take when it comes to day to day finance:

Use your bank account from home: this is the most expensive option as currency exchange rates and money transfer fees may make it expensive.

Opening a local account: opening a local bank account as an expat is a more affordable option. It also means you are diversifying your finances as you are likely to have some money in accounts in your home country as well. 

Cross-border banking: some global banks offer expat specific products that make international banking easier. This may be a good option if you have international assignments in multiple countries.

International banking with Fintech: take advantage of the explosion in financial technology by using a fintech company to manage your money. As most banking will be done online or through an app, moving your money on the go is easy. There may also be less lag time when you transfer money. 

International tax is a complex area. The general rule of thumb is you will have to pay tax in the country your income is earned in. Outside of that, in many countries you have to file taxes even if you are not currently residing there. Some countries have foreign tax treaties to prevent double taxation. The best course of action as an expat is to consult with your employer on the tax implications of working for your organisation in another country.

Most expats live and work overseas successfully and safely, however in some instances expat life can expose you and your family to additional risk. Some of the most common risks in more remote destinations include: 

  • increased prevalence of infectious diseases 
  • limited access to medicine and medical professionals
  • crime like mugging or theft

International health insurance will help you access medical treatment while working in an expat role. International personal protection or effects insurance will help you protect the things that matter if they are lost or stolen. 

If you want your savings to work harder for you while you are abroad consider diversifying your investments. You can do this in two ways:

a.       International diversification: invest some of your savings into developed or emerging economies to balance returns. For example, if your home country is an emerging economy you may consider investing in a more developed economy where risk is lower and your finances are at lower risk. 

b.      Foreign direct investment: you can minimise the risk of having all your investments in one currency by buying shares in a company in another market. Investing in this way may allow you to benefit from companies that are growing rapidly. Seek investment advice and ensure you know where the company is headquartered and any tax implications before you make this kind of investment. 

Taking up an expat assignment may impact your pension. This is an area you must be cautious of because by the time you retire, it may be too late to do anything about any ramifications. Speak to your employer when you are first offered an  international role to understand what, if any, impact working overseas will have on your pension plan. If you have a private pension speak to your financial advisor on the best course of action.

Documentation is essential when it comes to financial records. Ensure you know where important financial documents can be found should you need them including:

  • current tax and financial records
  • insurance policies
  • personal will

These are only a few of the documents you will need when moving abroad but they are vital for managing your finances. 

As expat finances are complex, it is advisable to seek professional advice, tailored to your specific situation.