It’s not hard to find a happy Aussie expat!
Yes, pulling up roots and leaping out of comfort zones is not easy, but it sure is an adventure that Australians seem to love. The Australian Bureau of Statistics reports that more and more Australians are biting the bullet and moving overseas – and mainly for business and financial reasons.
And the vast majority enjoy their new country and the experiences that go along with it. But another reality is that all too many expats don’t plan ahead well enough from a financial point of view.
Many expats either find that they suddenly have more disposable income that they need to manage correctly, or they run into money worries due to the altered arrangements, a new system and culture, and unwelcome financial surprises.
It’s all because not enough expats plan properly. Financial planning can be tedious, annoying, or just not fun – but is it really that hard? And is putting it on the back burner really worth the risk to your prosperous future?
When broken down, a financial strategy as an expat is pretty simple.
Here are 5 Big Tips to get you started:
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Know your tax
All too often, an expat will think that as soon as they cross that border and start earning and saving in a new tax system, that’s all they need to know from a tax point of view.
But there are a number of scenarios in which an expat will still be subject to Australian tax rules, even if they’re no longer Down Under. For instance, you could be subject to tax on businesses or assets, or you may not be classified an actual expat at all for a number of reasons.
The Big Tip: The rule with tax is to understand that you definitely don’t know it all. Careful research of the relevant tax systems and laws and preferably some expert advice is highly recommended.
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Watch your costs
Many expats leap at an overseas opportunity by reading only the headline news – and forget all about the fine print.
The mere cost of living can really catch many expats out. One destination could be significantly more expensive than another, and life as an expat can be a lot more pricey than it is for a local, too.
The Big Tip: Again, the key is research, research, research. If you haven’t even compared something as basic as the cost of renting accommodation prior to committing, you have a lot of homework to do.
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Factor in the currency
Leaping from one country to the next might seem as straightforward as booking an airline ticket, but that’s nowhere near the full story.
Once you’re in your new country, it’s more than normal to find yourself needing to change your old currency – Aussie dollars – into the currency of your new country, and vice versa. But every time this happens, you could be shedding more than more cents in the process, and almost without knowing it.
Most expats simply use a major institution like the Commonwealth Bank of Australia (CBA) to do their currency exchanges. But there could be high flat rates if you pick the first option under your nose, and CBA exchange rates are also very often not the best option on the market by a long way.
The Big Tip: Wise expats will explore alternate methods of exchanging currencies, such as specialist FX providers – which can save you not only money but also time and hassle.
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Be an expat investor
To make a clean break, many expats also clean up their investments by getting rid of the lot – but that might not be the best financial strategy at all.
Yes, you will need to take stock of the current investments you have before leaping aboard the expat train, considering whether you can manage it all once you’re overseas from a time and financial point of view. It might make sense from a tax perspective to make adjustments, whilst also considering that your investment risk profile is likely to change.
The Big Tip: Just like with your tax, talking to an investment expert makes sense prior to making the move. If you go this route, select someone experienced in servicing the unique investment needs of expats.
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Insurance is for expats, too
Believe it or not, while many expats took insurance very seriously in their home country, they can overlook this important consideration once in the midst of an overseas adventure.
Life insurance in particular is commonly forgotten about. Overseas employers often provide some sort of coverage, but too many expats don’t look into whether it covers both you and your family should the worst really happen. It’s the same for health and disability insurance, with many expats also forgetting to check if their plans are ‘portable’ back to their home country if need be.
The Big Tip: Before cancelling what you’ve already got, look into whether your insurance providers will keep your existing plans up and running – because it can be a big cost saving.
The final Big Tip: Take expat life seriously
You may have decided to become an expat because you wanted an adventure, but don’t kid yourself: you definitely don’t want it to become a financial rollercoaster ride.
Earning, spending, moving, managing and investing money overseas is completely different once you’re out of your comfort zone, so the final Big Tip for today is to take your expat adventure seriously from a financial point of view.
The Big Tip: A bit of specialist financial planning will mean you’re not tripped up by the added difficulty and complexity of life as an expat. Don’t forget, you signed up to have fun, but for that to happen, you sometimes need to get a little serious too!