For many people, living a global lifestyle is an opportunity to fulfill many dreams and goals. It can be an opportunity to advance your career, start a new business venture, retire to a warmer climate, or learn a new language and experience different cultures.
Whatever your reasons for wanting to live overseas and enjoy a global lifestyle, one thing you can still count on, is that you will have to manage your finances.
- Design a Financial Blueprint– Pre-Departure
Don't leave home without it. Create a solid financial blueprint that includes a budget, which at a bare minimum should include:
Also don't forget to have a slush fund for leisure and entertainment activities such as travel and social activities to meet people and expand your network.
- Ongoing financial obligations such as student loans, alimony and credit card payments
- Additional expenses like food, housing, transportation and utilities in your new host country
- Unexpected medical expenses and emergency expenses due to civil unrest or natural disasters
Your financial blueprint should also clearly provide detailed steps for generating cash flow. Not having a solid source of income can quickly and substantially curtail plans for living a global lifestyle.
Don't underestimate the time it might take for you to start generating income, or to see your first paycheck. Also factor in additional time and potential costs associated with moving money, especially if there are daily limits and restrictions on foreign exchange and sending money home.
Even if you are on an international assignment, thoroughly review your salary, benefits and other allowances before you make a commitment. As corporate expatriate packages have diminished over the years, ask yourself if financially this international move makes sense for you and fits into your long-term financial goals.
If you are joining the new workforce of “solo expats” – people self-financing their relocation abroad and finding their own career opportunities, plan for additional expenses associated with job search like joining industry associations and attending networking events.
Also ask yourself if you are prepared to solely live on your savings to finance your global lifestyle, or if you are willing to take on a survival job, perhaps a couple of rungs down the corporate ladder while you learn the language and immerse yourself in the culture and new business environment.
- Make sure you have a good understanding of the banking/financial system of your new host country
If you plan to spend a significant time living a global lifestyle, you will probably need to develop a new financial relationship with a bank or financial institution in your new host country.
Conduct research pre-departure to investigate financial services providers and gain a better understanding of the banking rules and regulations in your new host country. Call or inquire during a pre-visit. You don't want to learn the basics of a new foreign banking system once you have arrived and you are desperately trying to conduct banking transactions. Ask detailed questions about:
- The account opening process for foreigners/non residents and what type of documentation is needed
- What fees are associated with the account, especially for international transactions?
- What are the main features of the account (i.e. interest bearing, multi-currency)?
- Daily limits on deposits and withdrawals at the ATM and in the branch with a teller.
- If you anticipate having credit needs, what are the requirements/restrictions for foreigners/non residents to apply for credit and what are the consequences for non-repayment and late payments (some countries have centralized credit bureaus that create a “black mark” against you in the country, possibly baring you from employment, housing and leaving the country. In some countries, not paying your debt can lead to criminal charges and jail time).
- What are the restrictions on foreign exchange and moving money outside the country? Especially for foreigners/non-residents, there could be restrictions for exchanging the local currency and sending money abroad. This could be quite impactful if you are dependent on your host country income to take care of home country financial obligations.
- What are the customer service capabilities? Are English language services provided? 24 hours a day, 7 days a week? Is there a toll free or collect telephone number? Can you conduct routine banking transactions without coming to the branch? Over the phone, via online or mobile banking?
- Have a Toolbox of Global Financial Solutions at your disposal
You never know what financial challenge you are going to meet living a global lifestyle. Get used to carrying a toolbox of global financial solutions so you can have the appropriate tool within reach when you are faced with a financial dilemma.
At a minimum your global toolbox of financial solutions should include multi-currency ATM/Debit cards and credit cards that are pin and chip enhanced. If possible, keep a pre-paid card or two in different currencies on hand as well. Also, having a line of credit to tap into could solve temporary cash flow issues.
Include options for moving money and making payments. Although a bit costly, you can always rely on the old standbys like wire transfers and Western Union. Don't forget the online payment pioneer PayPal as their global reach is always expanding. For your new home country financial obligations, always search around for local players, like M-Pesa in Africa.
- Invest in a consultation with a licensed, qualified tax professional
If you are a U.S. citizen and subject to taxation on worldwide income this is a non-negotiable. As a U.S. citizen, you are never outside of the reach of the IRS. In the back of your U.S. passport it states your obligation to file and report on worldwide income, however most U.S. citizens don't fully understand their U.S. tax-filing obligation and think that because they are moving abroad and will earn income outside the U.S., their U.S. tax financial obligation ends.
If you are on an international assignment for your company and they are handling your taxes, proceed cautiously. The tax provider works for your company, not you, and ultimately you are responsible for any tax liability.
Also, make sure you are knowledgeable about your unique tax filing requirements and potential tax liability in your new host country.
- Seek professional advice in other areas important to living a global lifestyle
If living a global lifestyle will become a way of life for you, investing in experienced, professional advice in all areas related to living a global lifestyle is a good investment.
A consultation with an immigration attorney can help keep those inevitable, ever changing immigration and visa issues at bay.
Meeting with a local insurance broker who can give you an overview of insurance options available in your new host country is also valuable. Securing comprehensive medical insurance should be at the top of your list. Before departing your home country, review your international medical coverage. You don't want to have a serious medical emergency overseas and discover that you don't have comprehensive global coverage.
If earning income outside your home country is now a key part of your cash flow, then you will need to find a reliable, licensed investment advisor experienced in helping people who need to manage assets globally, help you navigate planning for your children's education, your retirement and estate planning.
- Take sufficient security precautions with your finances
Global fraud is on the rise and many people experience identity theft when they are living abroad.
As a rule of thumb, always password protect your computer and all mobile devices (i.e. iphone, ipad). Change your passwords every 30-60 days. Make sure you always use a Wi-Fi connection with a password and for an added layer of protection, always use a VPN (virtual private network).
Use the same safety precautions you would at home. Never walk away from an ATM machine without making sure that you have completed your transaction. Although ATMs will time out, you could still give a thief ample time to see enough of your financial information to make you an easy target for a robbery.
Use an online document storage service to keep copies of all-important documents, especially those that could be used to verify your identification like the photo page of your passport, a driver's license, or birth certificate.
Although you should minimize your mail delivery by setting up automated payments and receiving financial statements online, consider retaining a U.S. address. In the U.S, due to financial difficulties, most post offices are closing. Also, post 9/11, a P.O. box address is considered a red flag to most companies. Choosing an independent online mail management service to sort, open and scan mail based on your instructions and accept packages on your behalf is an efficient and safe way to manage your mail while you are living a global lifestyle. Also, you can have some assurances that your mail will be discarded and shredded confidentially. Many of these mail companies also offer ancillary services, such as check depositing and processing to make receiving payments while abroad easier.
- The devil is in the details. The smallest financial details can sometimes cause the biggest headaches.
- To avoid unnecessary charges and expenditures, don't forget to suspend auto renewal of items you won't need overseas (i.e. news and magazine subscriptions).
- Keep a supply of cash on hand in the local currency as well as a mix of other easily convertible currencies such as the U.S. dollar, Euro, Yen and the Pound Sterling to use for emergencies.
- Ensure you have full access to your bank accounts at home (i.e. toll free and collect telephone number, online and mobile banking).