If you’re about to make your big move overseas, this guest post by Mint Mocha Musings’ partner OFX hits the nail on the head! In fact, I wish we’d had it before our first expat gig in Hong Kong.
These are easy expat mistakes to make, but there are also easy solutions to help you avoid unnecessary headaches while you’re away and when you eventually return home! (Um, let’s not mention the time we packed Small Person’s birth certificate with the storage and had to traipse around China to get a new one!)
1. Banking Blunders
Not retaining an address in your home country. If you don’t have a residential address in your home country, it could be hard to maintain your bank account and difficult to re-establish your credit once you make your way home again. Many people change their on-file banking address so correspondence goes to a parent’s house or another relative. This allows you to keep one foot in your home country, even if you get most banking notifications via email.
Closing a credit card account in good standing. According to the experts, closing a credit card in good standing could damage your overall credit score. While you don’t have to keep each and every one of your accounts open while you’re living away from home, you should be careful about which ones you decide to close. It’s also helpful to have credit cards in your home currency for domestic purchases, even if you have to pay $75 a year to keep to keep it open, it’s worth the fee.
When you do close multiple accounts, do so one at a time over a period of time. The more accounts you close at once, the more damage you’ll do to your credit score, and the harder it will be to undo that damage. And for the cards that you do decide to keep open? Let your credit card issuers know about your move in advance. This will prevent them thinking suspicious activity is occurring once you start using the cards overseas and abruptly putting a stop on it. (Which trust me, happens a lot!)
2. Health Insurance Hazards
Failing to have the appropriate health coverage. Heading overseas, some people end up with too much health coverage and some with too little. Limited health coverage could end up costing you a lot of money because you’ll have to pay for all of your medical expenses out-of-pocket. Too much health insurance and you’ll be paying twice for coverage that a government-funded medical system may already provide.
Check what kind of coverage your visa or residency status offers and adjust your investment appropriately. You may be covered under yours or your spouses’ new job, so check the policy and make sure it covers all family members.
Before moving to another country, do your research into expat health insurance plans because foreign nationals often aren’t entitled to subsidised or free health care. Bear in mind that cheaper plans may not always give you the coverage that you need and you may need extra, especially if you’re planning on travelling to developing countries, where the level of healthcare is substandard. In China, we were also with SOS which makes sure you can fly out of the country should you need to in an emergency. For more info check here.
3. Poor Preparation and Research
Arriving empty handed. Some expats have learned the hard way (i.e. yours truly)! It’s very expensive to get college transcripts, birth certificates, marriage certificates and other relevant documents, once you’re already overseas. If you’re applying for jobs, purchasing a property, or even renting, make sure you’ve packed the relevant documentation in your hand luggage, so you don’t have to waste time and energy waiting for it in the mail or potentially travelling to other cities with embassies etc to get what you need. This also stands for renewing visas, where in some countries, you need all sorts of legal documents.
Learning the local language on the fly. It may be impossible to become fluent before you go (and just quietly while you’re there) but not knowing the local language is definitely not a good reason not to go. Spending a few hours a week learning some basic vocabulary beforehand and during your time there, can be super helpful.
4. Tax Filing Failures
Failing to file your taxes at home and abroad. Taxes become more complicated when you’re an expat. You’ll need to meet the regulations and requirements of both your home country and your new residence. Asking tax experts for guidance will ensure you don’t incur penalties for improperly reporting your earnings when working abroad. These same experts will also alert you to tax breaks you can take advantage of as an expat.
Not reporting foreign bank accounts and investments. In addition to filing your income as an expat, you might also need to file the appropriate forms to report foreign bank accounts and investments to your home country, otherwise, you could rack up substantial penalties. Financial advisors can answer your questions regarding what accounts need to be reported, and how to do it accurately.
5. Monetary Misfortunes
Not establishing a reasonable budget. It can be tempting to spend a lot of money in the first few weeks of being an expat as you settle in, but expat life can be unpredictable, so it’s important to spend with caution. Keeping extra money aside for things like your visa, any necessary permits, your rent, lawyer fees, unplanned holidays, transportation and health costs can help make things less stressful in a foreign country.
Not factoring in exchange rates. Your cost of living will change, becoming more expensive or (hopefully) cheaper, once you move overseas. When you’re tallying up your estimated monthly expenses, factor in exchange rates. Use OFX’s currency converter, in this blog’s side bar and gauge how far you can stretch your money once it’s been converted. You can also use the OFX/Clearfx transfer service to quickly send money online without being hit with high bank margins and fees, which we did regularly! For more about that you can read my post here.
Here’s to a happy expat life!
A Few Extra Tips for Success
Set aside additional funds in a separate bank account. Make sure this money will be easy to access as soon as you need it, in case of emergency.
If you’re planning on starting a new business venture abroad, keep in mind that cultural differences can be blinding. Give yourself some extra financial cushion and don’t assume that what works in one locale will work in another.