Here are some ways workers living overseas can manage and protect their money for better long-term financial health.
Open a local bank account
A local bank account can help you save money on extensive ATM fees. It’s also a good thing to have for making deposits each time you get paid. When you use a foreign card at an ATM, you’ll not only be charged by your bank but also by the local bank.
Pay attention to exchange rates
Exchange rates can impact an overseas worker’s take home salary over time. It can also play a role in how an overseas worker budgets for living expenses. There are two key ways in which a currency exchange rate impacts an overseas worker’s salary. The second way is the amount of money an overseas worker receives relative to their home currency and the location where they’re spending on living expenses such as apartment rental costs.
When an employee is earning an income in one currency, especially over a long-term assignment,the currency conversion can actually mean they’re earning significantly less than they would back home. For example, an American working in Zambia and earning in kwacha will face currency fluctuations when the kwacha value decreases or the dollar gets stronger. This means they will not have the same financial security than if they were making USD.
Find a way to transfer money with low international fees
Get the mid-market exchange rate – the midpoint between the buy and sell prices of two currencies – when you send money abroad.And, most importantly, protect your money and accounts by only working with compliant, safe transaction providers. There are international regulations and standards against money laundering that your bank or transfer agent should adhere to each time you need to make a transaction.
There are many such services you can use, but the best and secure fund transfer is OFX that has centers in UK,Australia,USA,Canada, New Zealand, Hong Kong and Singapore. I always use this service to transfer funds overseas with confidence at a competitive rate than what the banks can charge you. Kiwis use this service to transfer their Kiwi Saver to Australia or Australian Pension back to New Zealand.
Keep your credit score high
Often, moving to a foreign country means losing your credit history.
Budget for taxes
Depending on the country and the type of visa you have, you may be responsible for taxes at home and in your working country. The US is one such country where citizens are responsible for filing and paying income tax, even when they live outside the borders. For UK residents, if your business or property is situated in the UK, you will still be responsible for some UK taxes.
Don’t forget to plan for retirement
This can be a big mistake down the road. Before you leave to work abroad, make sure you’re aware of how your time overseas will impact your eligibility for retirement plans both in your host country and home country. «If employment status doesn’t allow for either, it’s sometimes possible to take advantage of tax-deferred retirement opportunities without the employer,» advises one expert. If you’re unsure where you will eventually retire, at the very least, start building an emergency or rainy day fund.
This fund can grow over time and eventually become your retirement nest egg. Ask a financial advisor in your home country if there are alternate retirement funds available to overseas workers. For example, British expats could consider a QROPS scheme.