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When moving overseas for an international role, one of the most difficult areas to navigate is expat finance. The financial implications of living overseas are complex and far reaching. Without clear understanding and careful financial planning, they can impact you long after you return home. Read on for tips about managing expat finances, such as expat banking and expat tax.
1. Expat Banking
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 as an expat:
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 expat 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.
Financial security is important when it comes to expat banking, and it is something that needs to be considered. Should you choose to open a local account, choosing a reputable bank is priority. The bank you choose must comply with international regulations, so ensure you do the correct research and, if possible, speak to someone with experience in expat finances, before making a financial decision.
2. Expat Tax
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 to ensure your expat tax is set up correctly.
3. Expat Insurance
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.
4. Expat Investment
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.
5. Expat Pensions
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.
6. Expat Documents
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 expat finances.
As expat finances are complex, it is advisable to seek professional advice, tailored to your specific situation.
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Meet the author
Allianz
At Allianz Partners, Health, our blog is crafted by a team of experts dedicated to providing valuable insights and guidance on global health and insurance topics. With a focus on expatriates, international businesses, and individuals navigating healthcare abroad, our authors bring a wealth of knowledge and experience to every article.
We aim to deliver practical advice, industry updates, and actionable tips to help you make informed decisions, whether you're exploring international health insurance, managing employee health plans, or staying informed about the latest healthcare trends. Trust our blog to be your go-to resource for navigating the world of global health and insurance.
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