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7 Tips for managing expat finances

For expats, those retiring offshore or even those going abroad for over a year, managing expat finances is critical. For most, moving abroad and working overseas can be one of the most exciting things of your life. However, expats will want to plan ahead to preserve and grow expat finances and investments. It is very important for individuals and families to plan ahead and maximize their expat finances. In this article, we will discuss 7 great tips for managing and protecting expat finances and investment while living and working abroad.

1. Know Your Expat Tax Status 

A common misunderstanding about expat tax is when expats move abroad, they are instantly exempt from their hometown tax system. This is usually not the case. For example, a British expat living abroad who is no longer a UK resident (spend fewer than 16 days in the UK), he or she may still be responsible for tax of the profits of a UK business or property situated in the UK, and UK pension income. Other countries such as Argentina, joint filling income tax is not available. For American expats, the complexity of expat tax can be quite daunting. Expat tax issues can be very complicated and it often makes sense to work with a professional firm. It is important to do research and visit your local tax office before moving overseas to make sure that you know the rules. We often recommend that expatriates talk to an expat tax expert such as Trowbridge.

2. The Cost of Living for Expats

Before accepting a job offer overseas, you should definitely do some detailed research on the cost of living in your destination country. This may include any additional costs you may face: school fees, transportation fees (driving a car and parking fees), rent an apartment or buy a house, leisure and entertainment, etc. The cost of living for expatriates can vary significantly from one place to another and will often be more expensive than what the locals pay. For example, according to Numbeo, in Mexico, rent a 3 bedroom apartment in city centre costs over $500 USD; Whereas in Singapore, a 3 bedroom apartment rent per month could almost $4,000 USD. Knowing the cost of living in your destination country will give you peace of mind and let you plan ahead.

3. Currency Management is Critical for Expats

It is common for expats to exchange currencies from their hometown bank accounts into destination country’s currency. However, banks may charge high flat rates and currency exchange rates which expats will want to avoid. This is especially important for expat families with international payments across countries. Some international banks offer fixed exchange rate for a period of time. Expats should definitely explore different methods of managing currencies as this can save quite a bit of money and time. You can obtain more information on currencies and currency issues on our Foreign Exchange page and you should talk to an exchange expert.

4. Organize your Expat Investment Portfolio

You should organize and take stock of all your current investments before your become an expatriate. You should try to make sure you will be able to manage your various stock, bank and investment properties from abroad or if you will have to sell some of those investments before you go offshore, especially for tax reasons. Many expatriates often sell their homes before living abroad, but when they return they find that they should have retained and rented the home as house values have increased dramatically – this is especially trued for many Canadian and Australian expatriates.

Your risk profile may change because you will be living abroad. Will you have the time and ability to manage your investment portfolio and will your new expat location impact your investment decisions. If you have a private or company pension plan, you should examine how living abroad will impact your retirement savings and taxes. It makes sense to talk to an investment expert before you live abroad.

5. Have You Cancelled Payments in your Hometown?

This is obvious. However, many expats may forget to cancel their orders in hometown and receive penalty charges. Remember to cancel any subscriptions such as phone, internet, magazines, etc before you move abroad.

6. Do you have Adequate Life & Disability Insurance? 

One of the most overlooked parts of protecting you and your family’s financial future is making sure that you have adequate life and disability coverage. While your employer may provide some coverage, more often than not it will be inadequate to fully protect you and your family members from the financial hardships associated with a death or disability. Many expats employers only provide medical coverage and expats are expected to obtain their own life insurance or disability income cover. However, when you are living abroad you may not qualify for local coverage and such life cover may not be desirable or even available in your new home country. Also, expats needs something both global and portable. Note that most expat life and disability plans are not portable back to your country of citizenship and if you have existing coverage, its probably a great idea to see if you can retain the policies as expat plans are usually more expensive.

To learn more about your expat life and disability requirements & the policies available, contact our firm for more information.

6. The Importance of Obtaining International Health Insurance

To many expats living and working abroad, the local healthcare system is usually not the best choice. The cost of using private medical care is usually very high in many parts of the world or you may be living in a country where medical care is inadequate and you may need to see medical care regionally or globally – sometime you may have to be evacuated. Either way, a large medical bill can wipe out your investments and put your financial future in peril.

With an appropriate international medical plan in place, many individual expats and their families are covered worldwide (except in the USA unless you add it as optional benefit). International health insurance plan provides day-patient care and full hospital coverage, extensive cancer coverage, maternity and baby care (conditions may apply), dental & vision care and international medical evacuation and repatriation. This is especially important for expats going to visit rural area in some less developed countries.

Expat Financial offers independent advice, solutions and ongoing service and support to clients around much of the world and we have extensive experience in sourcing medical cover for individual expats and expat employers worldwide. We can source plans from large and secure global insurance companies with excellent global service and support. 

If you have questions about international medical insurance plans we offer to individual expats or your company requires a global expatriate group insurance plan, please contact us or complete the quote form. We look forward to hearing from you soon. 

Is your company employing American expats?

Is Your Company Aware of the Risks for American Expats?

Is your organization or multinational company employing American expats? Are you aware that most American expatriates will want to seek medical treatment in the USA if possible, especially for serious conditions? If so, are you aware of the significant costs associated with medical care in the USA?

We have sources some excellent risk prediction guidelines for expatriate claims in the USA or for American expats who more often than not wish to obtain medical care back in their home country. These medical costs can easily run into the hundreds of thousands of dollars and if not covered, more often than not the employer will have to cover.

Our firm is extremely experienced in sourcing global medical coverage for firms that employ American expatriates and also covering their dependents who are located with the overseas employee or residing back in the USA – otherwise known as trailing dependents. Unfortunately, we often see extremely inadequate medical plans provided for American employees that will often restrict medical care in the States or not cover the USA at all. Even worse, some expat employers will have group insurance plans that don’t cover pre-existing medical conditions for these American expats.

international health insurance for chronic conditions

Annual Medical Costs in the USA

Our firm has gathered a detailed “Risk Prediction Guideline for Expat Claims in the USA” that we are able to share to corporate clients that employ expatriates in the USA or have American expat employees working overseas. Note that the costs can vary widely depending on the state, city, medical provider and of course the nature and severity of the claim. Here are some sample annual medical costs from the report:

Rheumatoid Arthritis: $40,000 to $60,000

Bone Cancer:  $100,000 to $250,000

Lymphoma: $80,000 to $150,000

Diabetes: $30,000 to $40,000

Valve Replacement: $60,000 or more

Transplants: Over $200,000 in most circumstances

Back Disorders: Over $50,000

Complicated Pregnancy & Birth: Easily over $500,000

So, as you can see from the sample medical costs in US dollars, the annual medical treatment costs in the United States can often run in the hundreds of thousands and for many clients one claim can easily exceed the entire medical premium that they would be paying for a group of American expatriates. Many expats or their family members will often suffer from one of these conditions or may in the future. Many expat employers are not aware of the fine print on their global medical coverage are are being served by domestic focused brokers with limited or no understanding of expatriate medical coverage.

Next Step for Expat Employers

Thus, it makes sense to cover these risks with a global benefit plan that will provide superior coverage for your entire expat population, especially American expats or foreign employees located in the USA. To learn more, contact our firm to discuss your global expatriate insurance needs as it pays to work with a specialist firm. You can also visit our corporate expat insurance page for additional details. If our firm is engaged as your expat insurance broker, we would be pleased to share our valuable risk report.