Fortunately, there are simple ways to avoid unnecessary headaches while you’re abroad. Check out these top tips from the OFXpats who have lived and learned.
1. Banking Mistake
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. That’s why many people change their on-file banking address so correspondences go to a parent’s house or other relative. Doing so may allow 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 Bruce McClary, the director of media relations at ClearPoint Credit Counseling Solutions, closing a credit card in good standing could damage your overall credit score.1 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 can be 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.
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 from thinking that suspicious activity is occurring once you start using the cards overseas.
2. Health Insurance Mishaps
Failing to have the appropriate health coverage. When going overseas, some people end up with too much health coverage and some end up with too little. Limited health coverage could end up costing you a lot of money because you will 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 confers and adjust your investment appropriately. Assuming you’ll be covered. 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. Carefully analyse the plans that are available. Bear in mind that cheaper plans may not always give you the coverage that you need and you may need special additional coverage if you’re planning on traveling to particular countries.
3. Insufficient Preparation and Research
Arriving empty handed. Some OFXers have learned that hard way that it’s very expensive to get college transcripts, birth certificates and other essential documents once you’re already overseas. If you’re going to be applying for jobs, purchasing a property, or even renting, take along the relevant documentation, so you don’t have to waste time waiting for it in the mail.
Learning the local language on the fly. It may be impossible to become fluent before you go, and not knowing the local language is definitely not a reason not to go overseas, but spending a few hours a week learning some basic vocabulary can be very helpful on that first trip to the local market.
4. Tax Filing and Financial Reporting Errors
Failing to file your taxes at home and abroad. Taxes become more complicated when you’re an expat living in another country, as you will 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 incur substantial penalties. Financial advisors can answer your questions regarding what accounts need to be reported, and how to go about reporting your information 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 and transportation costs can help you make the most of your time abroad.
Not factoring in exchange rates. Your cost of living will change, becoming more expensive or more affordable, once you move abroad. So when you’re tallying up your estimated monthly expenses, factor in exchange rates. With OFX’s currency converter on the Currency Zone of this website, you can gauge how far you can stretch your money once it has been converted, and you can use their transfer service to quickly send money online without being hit with high bank margins and fees.
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.
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