Relocating overseas is a dream for many but for some, it becomes a reality.
There are UK expats all over the world enjoying the benefits of better weather and a more stable financial situation. There are many countries where property and the cost of living are cheap compared with the UK, which means that your money goes further. However, that doesn’t mean that you don’t need to be careful with your finances and there are some important things you should know.
These are some of the most important financial tips for expats.
Understand The Tax Legislation
Although there are some countries that have a 0% income tax rate, the majority of countries in the world require you to pay something. Tax laws are different in every country, so you need to do your research before you go. Some countries that are popular with expats, like Nicaragua, for example, have tax incentives for expats so you may be exempt from certain taxes. You need to make sure that you claim any exemptions that you are entitled to but also that you pay everything that you owe. Getting in trouble over your tax affairs could put your presence in the country at risk, so make sure you know the law inside out before you relocate.
Keep Multiple Bank Accounts
Having a bank account in your chosen country is important for your day to day spending activities. However, you can still keep a UK bank account while living abroad and this can be beneficial for many expats. You may still have financial interests back in the UK, especially if you still own property. Having bank accounts in both countries makes it much easier to keep abreast of your financial interests. Many expats also decide to hold an offshore bank account because they can get more favourable tax rates.
Track Your Spending Closely
Managing your spending well is important, especially if you are a retired expat. Many people fall into the trap of overspending because the cost of living is low and they assume that they will have more than enough to live off. But if you plan to live in a new country without working, you need to watch your money closely to ensure that it lasts. That’s why you should track your spending closely when you first arrive so you can get a real sense of the cost of living and what your lifestyle is likely to cost. There are some great budgeting apps that will track every penny that you spend and break it all down into categories so you can see exactly where your money is going. They’re great for getting used to the cost of things in a new country and they’re also brilliant for finding ways to save money.
Take Out A Life Insurance Policy
Life insurance protection is just as important for expats as it is for everybody else, but your current policy may not cover you when you are living in a different country. Before you relocate, you need to look into life insurance policies for expats and make sure that you have the cover you need. Consider the needs of any family that are still living back at home and how they will be protected if something should happen to you.
Look Into Health Insurance Needs
In the UK, you don’t have to worry about health insurance but if you are relocating, you may not have access to free healthcare. A lot of expats don’t consider this when they are first making their plans and this leaves them in a difficult position after they relocate and realise they have another big expense to cover.
For somebody that has never had to take out a health insurance policy befor, it can be confusing. There is a range of options and the monthly premiums vary a lot. The cheaper policies make it easier to manage your monthly expenses but if you require medical treatment, your additional costs will be greater. In many cases, it is best to pay for a more expensive policy with comprehensive coverage so you can avoid large medical bills.
Each country has its own system for managing medical insurance and you may be entitled to some government assistance, depending on your situations and the rules that are in place. It is important that you spend some time understanding the system so you can ensure that you have adequate coverage to protect you.
All expats must consider these issues before relocating to avoid any financial problems.