You’ve made the decision.You’re going to live in a new country – a new world. Now you’ve got to plan for your trip. You’re going to be busy in the months, weeks and days leading up to your departure date. Transitioning to a new country – and culture – isn’t easy and planning is paramount. Planning your living situation will take enough time in itself. Some expatriates have little to no time to think about their finances. We’ve compiled a list of 5 things to do to get your finances prepared for your journey abroad.
HAVE A BACKUP PLAN
Living in a new country, you may not have the financial support system you used to have in the US. For this reason, you’ll want a financial backup plan– an emergency fund–readily available in case there is a time of need. This could mean creating a fund in a bank at home that has international support. There’s nothing worse than being stuck in a tough situation in a place that may not speak the same language. So don’t go with a bank unless you’re sure they can assist you while you’re across borders. Take into account time difference in hours of support.
Most countries have their own currency. There’s the dollar and the euro, but there are also dozens of foreign currency. You may have a lot of worth but if you don’t have the local currency, you’re practically nothing. It’s for this reason you’ll want to exchange your dollars for currency in your local community. Were you thinking about going to the foreign exchange shop down the street? Not so fast. Some foreign exchanges are better than others. Shop exchanges and find one that gives you the best value for your currency. You may have to use this exchange multiple times so try and make sure it’s one you have access to and can use multiple times.
WITH A US BANK If you’re moving abroad, you may want to consider transferring your assets to a bank in the local market. This may not benefit you, however. International banks charge hefty fees. If you typically bank in the US, it may make sense to keep your assets at home (ideally having access to them overseas). The fees associated with international banks can sometimes be 250% higher than those at home. So know what you’re getting into before you make the switch.
Before you head off on your trip, it’s good to document all your accounts and be prepared to document new ones in your foreign country. The US requires you to report your international holdings under the FATCA rule. The FATCA rule helps the IRS keep track of bank accounts held by US tax residents. FATCA’s rule is that any bank account valued at $10,000 or greater at any point in the year must be reported to FinCEN. Failure to do so can result in hefty fees, so keep track of your accounts and any new foreign accounts you plan to open.
UNDERSTAND INTERNATIONAL AGREEMENTS
Some expatriates live back and forth between two countries. These people especially need to understand international agreements. Even in a situation where you’re in your new country for most or all of the year, keeping track of your new country’s international agreements in a no brainer. There are agreements that countries have with each other to prevent income-killing double taxation and protect pension benefits, among other things. Each country can have unique agreements that vary on a country-to country basis. When going to a new country, it’s important to understand what agreements you have and what they mean. Speak with your financial advisor to get a break down of your country’s pacts.