How to prepare financially when moving abroad
How to prepare financially to move abroad.
When you’re planning to move to another country your finances are probably a top item on your to-do list. You will be facing a different environment and a different cost of living, expenses and dealing with exchange rates if you’re planning on transferring funds and income from your home country.
In this article, I will talk about how to prepare financially to move abroad and reduce the uncertainty related to financial issues.
But before we start, it’s important to take stock of all your expenses and income streams in your home country. A lot of the decisions about expenses are related to lifestyle choices. Also, expect expenses to be higher in the first months. Not only because of the obvious moving expenses but also because it will take you a while to learn the best places to shop and find out where and how to make better financial choices, so be sure to allow a lot of wiggle room for some excess expenses in the first few months until you get used to your new country.
What’s the cost of living in a new country?
That’s a really hard question to answer. Realistically, you can buy a t-shirt at the supermarket for US$ 5 and then spend US$ 200 to get a designer t-shirt. Thinking about the cost of living depends a lot on your lifestyle choices and can only be answered when you know and you have clarity on what are you moving for. Are you looking for a more relaxed life, with less consumption or are you eager to try out all the restaurants in your new city? Are you moving alone or are you taking a family and children with you? Will you rent a place, or will you purchase real estate? Will you need a car, or will public transportation be your main way of getting around town?
You can find a lot of resources on social media, talking to other people who have made the move. Beware however that your values and lifestyle are your own, and only you know what’s important in your life. So, while asking other people’s experience is a great source of information, take it all with a pinch of salt.
What will be your main source of income?
As far as financial planning goes, one of the most important pieces to the puzzle is to know, with some degree of certainty, how much influx of resources you will have. When you’re relocating through a corporation, chances are the company will provide you with the information and maybe you’ll even receive extra benefits such as schooling for your children or extra compensation for relocation expenses.
If you are self-employed or will live from income such as a pension, make sure to consider issues such as exchange rates and transfer charges. Since you can’t control exchange rates, be sure to give your budget room to adapt to sudden changes in exchange rates. Transfer charges can also be tricky since they might not even seem that high, but when you add up multiple transfers throughout the year they can add up. Check with your bank the best way to make transfers and explore your options before you leave since you might have to fill out and sign forms.
Focus on the big issues.
Keep it simple. It’s easy to get overwhelmed with all the items in your budget and then comparing them to the cost of living in the new country. So, the best is to keep it simple and focus on the largest items. Look at your current monthly and yearly budget and figure out which are the expenses that take up 80% of the total. Then focus on these categories and research what these expenses will possibly be in your new country. For example, health insurance, rent, education, transportation and food might be some top categories in your current budget and you can focus your research on these big-ticket items. It saves you time and then you can venture out into other nonessential items.
Factor in culture differences
When you move to a new country, you will be faced with cultural differences in more ways than you expect. In some countries, cleaning services and house care is quite affordable and it’s common to have maids and housekeepers. In other countries, these services are extremely expensive. Find out how the new culture is different from your own and prepare to make changes accordingly. When you’re used to having help with your housework and you’re going to a country where that service is expensive, think about having a transition period where you can have a cleaning service sometimes, at least in the beginning so you can ease into the new way of doing things.
If you are going with your kids, it’s important to look into childcare and education. Do you want your children to go to a local school or an international school? Will childcare be needed, and if so, will you communicate in a new (and different) language?
Thinking about these issues before you move is crucial to prepare financially and create a plan so you can accommodate and prioritize the expenses that are meaningful to you.
Research, review and repeat.
The financial preparation process does not end when you move. Once you’re at your destination you will test if your assumptions were correct and you’ll make changes accordingly. It’s crucial to review your plans frequently and see what needs to change. With time, you’ll understand how the new city works, where are the best places to go shopping and your priorities might shift.
Be open to making changes and adjustments until you feel you’ve got a thorough understanding of the new financial reality. It can be tedious to do all this planning and controlling, but it will ultimately give you a better sense of control over your new financial reality and make your cultural transition a lot smoother.
If you are planning a move and know that it's not all rainbows and unicorns, check out this FREE Pre-Move Emotional Checklist and be prepared emotionally for the challenges of an international move!
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This blog was written by Deborah Dahab: Guest blogger.
