Any new journey overseas begins with some excitement and nerves. The chance to live in a new place is always exciting, and it’s sure to bring you so many new great experiences and memories. But all the new tasks you need to attend to in a foreign country can feel overwhelming. Especially because unlike when at home, you don’t have a ‘home field advantage’ of being familiar with the environment, and knowing how everything works.
The benefits of good financial management abroad are the same as at home. You can minimise expenses, seek to grow your savings, and make prudent financial decisions that can help you invest long-term. The downsides of poor financial management are bad anytime, but especially overseas, given it’s far easier for hiddens costs and expenses to add up. So let’s help you navigate this area, with our guide to managing finances.
Watch your exchange rate costs
Whether you are planning on living overseas for a short period of time, a couple of years, or permanently, you will likely retain some ongoing financial links with family and friends back home. Even if these links are nothing major like property or car ownership, there’s still likely to be bills, special treats you buy yourself, and gifts for others that will see you purchasing from afar.
Your size of your transaction may vary, but your need to keep an eye on your exchange rates expenses will not. That’s why ensuring you use a exchange rates provider that has reasonable exchange rates is vital.
There’s many offerings out there, but CBA exchange rates are always a really good first port of call, given the Commonwealth Bank’s global reach and reputation as a trusted financial institution.
Setup a local bank account
You can usually maintain your old bank account abroad but in practice it’s best to setup a local one. A local bank account will not only make it seamless to deposit and withdraw cash daily, but also ensure you get access to the network of low fee credit cards, high interest savings accounts, and other benefits you may be unable to get if using your old account overseas.
Localise all other expenses
Just the same as setting up a local bank account is wise, it’s also ideal to localise all expenses as much as possible. If you moved countries and bank accounts, some subscription services you have you setup in your old country may still be charging you for transactions – but now also charging for currency conversion fees, and this should be cut. The exception to this is if you’re able to keep old subscriptions where they would be cheaper than changing to the local one. If you can do that, do it.
Make use of special taxation offers
Life overseas will always come with some big new expenses. There’s not only the plane ticket and passport fees, but also sorting out all those everyday items like furniture, household goods, and entertainment. Some of these are just unavoidable, but that’s all the more reason why it’s vital to maximise your position on important ones.
Right now Australia has a number of special schemes and agreements in place with friendly nations around the world. Whether it’s our tax treaty with nations like the USA, or the opportunities to work for an Australian company and use an ABN overseas, there’s numerous ways an expat can earn money and look to reduce their annual tax bill via special arrangements. Considering your career alongside these taxation arrangements can be a great way to save money now, and save thousands in the long run.
Pay special attention to your disposable income
You’re living in a new place, and it’s exciting, and you want to experience all it has to offer. This is great and there’s nothing wrong with it. What can be challenging about living in a new place is the risk of ‘holiday mode’ becoming permanent. That’s a recipe for disaster as your bank account can quickly take a real hit because you’re still buzzing from the excitement of your new life.
Even people who have been prudent spenders before find they can easily blowout their budget when overseas. That’s why being proactive about managing your expenses is really important. There’s a number of good ways to do this. Some people setup an account that automatically pays a certain amount from their wage into their account each month, and once that is spent they don’t spend anymore. Other’s like a bit more freedom but use an expenses tracking app to help ensure their budget doesn’t get blown out.
Whichever works for you is what is best for you, but just be sure you use something.
Take a deep breath and go step by step [Conclusion]
Like any big decision in life, it’s easy for a move overseas to feel overwhelming. That’s why it’s really important to have a good plan in place for managing finances. At the same time it’s OK if you don’t have absolutely everything set up on the first day!
Good financial management is like building good foundations for a house. Provided you constantly look to keep building and go step by step, you’ll be sure to have a strong and stable base in place soon. Once that’s done, all that remains is to enjoy your time and the adventure of living overseas.