By Lisa R. Mitchell
The unrest in Libya, Bahrain and the tsunami in Japan are vivid examples of the unexpected dangers faced when living abroad. Whether you are a career expat or starting your first assignment, when sudden events cause a country to descend into chaos to the point where the basic infrastructure starts to decay, the lives of everyone living overseas is impacted.
In Egypt during the civil unrest, the government shut down the internet. Forget trying to access Facebook, Twitter or Skype. Try conducting banking activities without phone or internet service. How would you move money, pay bills and conduct other necessary banking transactions if you were stuck in the middle of political unrest or living in a country that experienced a natural disaster?
Also in some areas of Egypt banks were closed for several days. When banks are closed for days, ATMs will begin to run out of money as customers start to hoard cash and the central bank can't make deliveries to resupply banks.
Also as unfavorable weather conditions also impact the local employees, who do you think will be staffing the bank in your host country? Last November, while on vacation in Koh Samui, I was caught in a monsoon. As I was checking out, I realized I did not have enough Thai Baht and went across the street to the local bank to exchange money. However due to the excessive flooding in many areas, the bank never opened because the staff could not make it to work.
I think it is easy to imagine what it is probably like trying to find a bank or ATM in areas of Japan that have been tragically reduced to a pile of rubble and sludge.
Unfortunately in other parts of the world, life goes on and it is business as usual. Tuition needs to be paid. Mortgages on rental property are due. Financial obligations must still be fulfilled.
These 7 financial tips can help expatriates living abroad financially prepare for when danger and catastrophe suddenly strike.
- Cash will always Rule
Citizens in the developed countries depend heavily on credit cards and cash in the form of plastic (ATM/Debit cards). However, many citizens of emerging countries don't always have access to banks. In these countries only the rich and middle class can afford credit cards and the privilege of a formal banking structure. Also, in some cultures to incur debt is not looked upon favorably. These citizens operate on a primarily cash basis.
Keeping 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 and Pound Sterling may help you secure hard to come by necessities and transportation.
- Retain a bank account outside your host country
When expats move to another country they sometimes assume they won't need a banking relationship with their home country and close all their bank accounts. If you are a expat, frequent business or leisure traveler, it is probably not ideal to keep your money in one country.
Have a bank account outside your home country that you can access remotely via online banking or telephone banking. If you feel comfortable enough, enlist someone you trust as a joint account holder or signer on the account so they can access the money for you in an emergency.
A multi-currency account is the best possible banking option. You will have access to more than one currency if global financial markets start to fluctuate wildly as they often do after widespread civil unrest and a catastrophic event. HSBC, Lloyds TSB, Everbank and Barclays offer multi-currency accounts.
- Maintain a portfolio of financial solutions
Relying only on cash or credit cards can be a recipe for disaster for a dangerous situation that is changing rapidly and is escalating by the minute. As my Jamaican grandmother used to say "it is a poor rat who only has one hole." Leave no financial stone unturned. At a minimum you should have the following financial solutions:
- Debit/ATM cards
- Credit Cards
- Pre-Paid Cards – This is the new financial product du jour gaining in popularity due to its less regulated status. Banks and non-banks offer pre-paid debit and credit cards. Cash PassportTM a re-loadable travel money card available in several currencies by Travelex is a popular choice.
- Virtual Credit Card/Virtual Credit Card Number – Due to an increase in global identity theft and fraud rings, these are also becoming more popular. They eliminate the need for having a physical card and work well for online transactions. Check with your bank to see if they offer this product or service.
Don't overlook Pay Pal and Western Union. A pay pal account will allow you to send and receive money and make payments online with a valid email address. Western Union is available in over 300,000 locations worldwide and you can also send and receive money online and in person.
Also don't forget to pack your checkbook when you move overseas. Although almost obsolete, checks are still recognized as a negotiable instrument. A check drawn on a global bank with branches in several countries might come in handy. Exchange fees and rates might not be the best, but an emergency is hardly the time to join the raging debate on bank fees.
Fund your own exit strategy
Before taking that overseas assignment, plan and begin to fund your exit strategy. After 9/11, most companies developed Business Continuity Plans. Your company's primary goal will be to implement this plan effectively. Have your own financial resources available to execute your exit strategy for leaving your host country and ensure flexibility to make decisions for you and your family's well being and security that best suits your needs.
- Purchase extra insurance
Travel insurance is essential. However, it is not enough these days. Make sure your exit strategy includes a plan with a crisis response company that can provide travel, security, medical and evacuation services and if necessary repatriation of mortal remains. These companies are staffed with medical and security personnel and have vast experience in dealing with natural disasters and large scale emergences. Many of these companies offer corporate and indivual plans for travelers not attached to a corporation. Global Rescue, On Call International and MEDEX Global Solutions are some of the companies that have provided advice and assistance on evacuating people from Egypt and Japan.
- Pay for membership with local chapters of expatriate organizations
Don't wait for your company to sponsor your membership to expatriate organizations. Create your own network by purchasing membership for local chapters of expatriate organizations where you can meet veteran expatriates who have experienced an emergency or two and can provide support and helpful tips.
Also, these expatriate organizations work tirelessly on behalf of the rights of their citizens overseas and can provide a wealth of information about what is going on in your home country and how it impacts you even though you are living overseas. American Citizens Abroad (ACA) and The Association of Americans Resident Overseas (AARO) offer memberships. InterNations is an expat community for people living and working abroad and it is especially great for solo expats as they have quite a few social events to network and meet people. Membership is by invitation only.
- Invest in technology
Technology is one investment you can't do without. A satellite phone is useful if cellular service becomes unavailable. If permissible in your host country, a two way radio is also a good option. I never travel without my Doxie scanner, which fits into my carry-on luggage and is useful for uploading receipts, pictures and important documents. For storing sensitive data like passwords and account numbers, there are many IPhone apps available, and some of them offer encryption as added protection.