Manage your finances before going abroad
Ideally, your living expenses abroad should be equal to the expenses you would have at home. However, this is not always the situation. If you are going abroad for the first time, it is not easy to know what to expect and how much money you will need, and it is difficult to create and manage a budget.
Any move overseas is a challenging task as you have to shift to a new place with a new set of bank and other operations. All your finances have to be managed from here henceforth.
Shifting abroad means a change in currency and other financial know how as well. Here are a few steps to take care of pending financial tasks before the big move.
- Remember to convert your savings account into a non-resident ordinary (NRO) account. NROs can deposit their income such as rent, dividend, and pension into NRO accounts and make payments.
- We also recommend expatriates have credit cards established in both their home and host countries. Your host country credit card will come in handy for everyday purchases. You can avoid foreign transaction fees and exposure to exchange rate fluctuations since it defaults to the host country’s currency.
Once you arrive in your new locale, it will be important to have a banking relationship there as well, for managing your everyday cash needs. We recommend that you fund this account with a substantial sum – three to six months of living expenses reserves.
Money exchange projecting is extremely difficult and so by having a fundamental amount in your base currency, it helps to avoid undue currency risk. A major problem for the expat earning in, say, a dollar denominated currency, is when to move into sterling, assuming that they intend to return to the UK.
Tax is a very important and tricky part. Consider the tax reporting requirements of your home and host country’s tax authorities and the compliance of the tax reports provided by your investment company with each authority.
Create your budget
You have to pen down all the fixed costs you have per month and split them up into weeks. Those expenditures may include rent, food, toiletries, tuition fees, books, study materials, the internet, cell phone, etc. Also consider some of the entertaining stuff, like movie tickets, trips, and nights out. Strictly stick to your budget and soon you will get a hang of living on your budget and it will give you ease of mind, knowing where your limits are.