As expats make plans to leave their home countries and move abroad, they are prone to making some common financial mistakes that leave them out of pocket and can impact on their enjoyment of their new life. If you are about to become an expat or are in the process of becoming one, try to avoid the following:
Financial errors expats should try to avoid:
Underestimating moving costs
Expat moving costs can quickly spiral out of control if you haven’t set a budget and are resolved not to go outside it. Remember to plan for the legal and administrative costs involved in renting or buying in your new home. Plan for interim costs including staying in hotels or furnished apartments and ensure all your goods are fully insured against theft or loss.
Underestimating living costs
Many expats look at the cost of food in their new country’s stores and immediately make living cost assumptions based on the price of bread. Unfortunately, they soon discover that other costs can quickly blow their budget out the water. If you have children it’s important to consider the cost of education. How expensive is it to eat out? What are the local taxes like? The cost of fuel? If you are being paid a different currency to the local currency, is the exchange rate in your favour? All these factors need to be considered when drawing up a comprehensive budget.
Underestimating the tax situation
As mentioned in the previous point, tax is something all expats need to consider. Some countries have unusual taxes in place and some may even tax expats on their worldwide wealth. What is your home country’s situation on tax, will you have to pay tax on your investments there and on your new salary abroad? Your home country may demand that you still file a tax return even if you are living abroad.
Underestimating health care
It can often be an unpleasant surprise for expats to discover, on arriving in a country, that they are not eligible to receive care under the country’s national health system. If you are an EU citizen and are moving to an EU country, things are relatively simple. However non-EU citizens may discover they need to have health insurance in place to cover their treatment in their new country’s hospitals.
Expats close to retirement can often wake up too late when it comes to how far their retirement savings will go in their new countries – particularly if they are still invested back in their home country. If you are in the fortunate position of working in a country where you are earning a substantial salary, ensure you put away enough to cover your retirement and don’t get too caught up enjoying your new lifestyle. There are many sad stories about champagne lifestyles before retirement, only to be replaced by sardines on toast once the retirement years have set in.
If you’re busy planning on immigrating abroad and need advice about your financial migration, contact us today and we’ll help you on the path to financial freedom in your new home.
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