The top 3 expat money challenges
Wouldn’t it be lovely if all you had to worry about when moving overseas was the experience? The opportunity to immerse yourself in a new culture, learn a new language, experience global cuisine and see the wonders of the world? Unfortunately, to make the most of all the wonderful life enhancing experienced on offer to us as expats, we need to consider the best ways to fund them and when you’re moving around, managing your finances can get a little tricky. As the world gets smaller and the opportunities to travel expand, we need to explore the common money challenges that are holding people back.
International Money Transfers
We’ll tackle this one first because at some point we all need to do it. Whether it’s to fund our lifestyle, or to send money back to families, the need to transfer money to and from our home country is frequent and treacherous ground. You might be tempted to complete all transactions through your bank because… well, just because they’re your bank and it’s easy – but that doesn’t always make it the right decision.
Banks often have high transfer fees, slow processing times and fluctuating currency rates, leaving you never quite sure when you’ll receive your money and equally unsure how much of it will be left. There are hidden fees to think about too, almost all banks set their own rates, which can be difficult to decipher and commonly they’re not in favour of the humble expat.
Unlike banks, which offer a broad range of financial services, foreign exchange companies exist purely to solve this growing problem and to provide expertise on expat banking. Many of them base their transfer fee on the amount being transferred rather than having a fixed fee – those can sting if you’re sending frequent small amounts. They often promise no hidden costs and offer forward contracts which allows you to fix your exchange rate for a set period rather than negotiating fluctuations. They’re faster than banks too and many offer same day transfers, which is a significant advantage over a bank’s 3-5 working day processing time. Check out the expat financial services available on The Expat Directory.
Loans and credit cards
Moving to a new country essentially means starting all over again – and this means having no credit record. You may have had an excellent credit record in your home country and found it no problem to take out a credit card, a mortgage or a loan but now you’re back to basics and you must find ways to prove that you are a reliable investment.
In some places the only option is to start again and work hard to build a new credit record from scratch – but that’s not easy and inevitably delays your plans to buy or renovate your property. Here are some steps you can take to try to influence this process…
- Bring proof of your UK credit rating
- Open a savings account
- Take out store cards
- Get references from employers
- Have utility bills from your property at ‘home’ sent to you so that you can prove you make regular payments.
None of these measures are 100% reliable so you’ll need to shop around to find an investor willing to take a change (and expect to pay higher interest rates for the privilege).
Even if you’re not travelling the world, reporting your income for tax purposes can be a lengthy and troublesome process, so when you add in the uncertainty of living and working abroad, you’ve got the potential for a serious headache. You need to learn the local legislation on taxes in your country of residence, as well as understanding the impact of any income you have in your home country and whether you are still liable for taxes there too.
The best advice we can give you when it comes to this tricky topic, is not to try and negotiate it alone. Approach your foreign exchange agency for advice or hire yourself a good accountant or financial adviser.
In our experience, professional help is invaluable and can help you to unravel some of the most common problems.