A guest post from Currency UK
Moving abroad is a fantastic adventure, but it definitely isn’t cheap. Aside from the big costs of finding housing and transport, once you get there you have a whole new set of costs to cover. So how can you make sure that every penny counts?
Here are five tips all expats should take note of for keeping track of their money.
1. Emergency Fund
For any financial endeavour, it’s a good idea to have an emergency fund; moving abroad makes it absolutely crucial. Not only are you in a different country, but you will also be entering a system that can be very different from how things run in your home country. As the Scouts say, be prepared! An emergency money fund will help you with many things, including:
- Unexpected hospital bills
- Extra expensive months: monthly pass renewal/larger bills/increased living costs/birthday or Christmas presents
- If your debit or credit card is stolen
- Unforeseen charges – eg solicitors’ fees, setting up utilities etc
Cash ISAs or regular savings accounts can be good for keeping your emergency fund safe as they have reasonable interest rates whilst letting you have access to your money when you need it. Remember, if you take money out of your fund, put it back in as soon as your finances even out again.
2. Budget Option
This is not always a good idea when moving abroad; you do after all want quality of living before anything else. However, it can be a helpful start-up option for getting yourself acquainted when you first arrive in your new country.
It’s often claimed to be money down the drain, but if you rent, you won’t constantly be paying a mortgage or property tax. Also, contracts aside, it leaves you free to move to a better property or region once you’re established.
A good rent contract sometimes includes utility expenses such as gas, water and electricity, which leaves you with a consolidated sum to pay rather than individual bills; knowing and keeping track of how much you’ll be paying for living costs per month can give you better control over what you can and can’t afford.
Buy raw ingredients instead of ready meals as home cooking is much cheaper and healthier.
In terms of leisure, try to restrict yourself to two or three nights out a month to avoid overspending.
Rein in your spending by cutting out restaurant dining, holidays and excursions.
Though it’s important to cut costs, don’t go cold turkey with your pared-down budget, or you might go crazy from boredom! It is equally important to give yourself a few indulgences to look forward to in the midst of the frugal living.
3. Visual Plan
Don’t keep all the numbers in your head. Create a visual plan to help you make sense of your financial plan, utilising spreadsheets and visual data.
Record your calculations for each month’s spending.
Make a spreadsheet and include tables, pie charts and graphs of your spending plans so you can literally see where your expenditure lies.
Your visual plan needs to include all facets of your finances if it’s to give you an accurate overview.
It’s advisable to plan ahead; booking things like transport or event tickets as far in advance as possible is usually much cheaper.
4. Professional Advice
When moving abroad you’ll be faced with a new legal and financial system to get your head around, and usually it is much different to the system you’re used to. Therefore, it’s not a bad idea to seek professional help from an Independent Financial Adviser (IFA). A professional opinion can help you properly understand:
- Visa costs
When using an IFA, it’s advisable to check their qualifications to ascertain their legitimacy before committing to hiring them.
5. Local and Home Bank Accounts
Having both a local bank account and an account in your home country can certainly help to keep your financial options open.
Advantages of a local account:
- It allows you to make withdrawals and deposits with minimum hassle.
- Using a card from your home country when abroad will incur charges – having a local account sidesteps this problem
Don’t just open an account with the first bank you see; hunt around for the one that can offer you the best value for your money, or a loyalty scheme that benefits you.
Advantages of a home account:
- Unexpected costs can occur back home, in which case it is a lot less hassle to have an account in your home country.
- Use it, naturally, on your visits back home.
- It’s an excellent place to keep your emergency fund.
Consider also using Online Banking, as this can make it easier to send and receive money between your accounts.
There’s not much point in moving to another country if you can’t afford to have the experiences you’ve worked so hard for. Therefore keeping a handle on your finances should be your main priority when moving overseas!