Money Mondays is your go-to guide for all the information you need to manage your finances. For this week’s Money Can’t Buy Me Love column, a financial expert shares three quickfire tips on managing your money when working abroad.
Sometimes, after a long winters day of never-ending rain or a sweaty summer commute tucked under a stranger’s armpit, we like to fantasise about upping sticks and moving abroad. And we’re not alone - there are some 1.3million expats from the UK living in Europe alone.
As citizens of the UK, we’re lucky enough to hold passports that will allow us to work in numerous countries across the world. We currently don’t need a visa to work in any EU country (here’s hoping Brexit doesn’t change this) and we can apply for visas to live and work in countries such as Australia, Japan and Canada.
If you do decide to take the plunge and give living in a different country a try, managing your money will obviously be one of your main concerns. Here, Dean Blackburn, Head of HSBC Expat, offers three quick tips to help get you started.
Set up international bank and savings accounts
It might seem simpler to keep your money at home, but half of expats actually hold most of their wealth abroad. Setting up a local bank account is an important first step. If both accounts have online access, you can then transfer money from your home bank to your bank account abroad.
You may also be able to open an expat bank account. Specifically designed for expats, these accounts allow you to hold money in multiple currencies. Typically, they allow you to manage your money from around the world and are more flexible if you plan to be hopping from country to country. Check with local banks to see if they offer these, and shop around for the best rates before making any decisions.
Understand exchange rates
While living overseas it’s likely that you’ll keep some financial interests at home, and 31% of expats see a less favourable exchange rate as one of their main financial wellbeing concerns. This is because you might need to regularly transfer money from the UK, or perhaps send income back home to cover mortgage payments or support your family.
Whatever your needs are, sending money across borders exposes you to exchange rate fluctuations, and this can come with a number of risks. If you want to convert a large amount into another currency, but don’t need to make the transfer immediately or in the near future, you may want to wait and see if exchange rates improve. But be mindful that exchange rates might not get any better. A currency specialist could help you convert your money at a specific exchange rate of your choice - and make the transfer - only if the exchange rate reaches the level you are prepared to accept.
If you intend to stay abroad in the long term, it’s tempting to get on the property ladder. Moving from the UK, there is a good chance that property in your new location will be more affordable, but don’t make any rash decisions. The process for purchasing a property can vary significantly from one country to another and specific expat restrictions might apply.
Although more than a third of expats buy abroad, renting when you first move lets you test-drive different locations and types of accommodation without tying up too much of your cash straight away.
Images: Unsplash, Didier Weemaels, rawpixel