Managing Your Money While Working Abroad

Welcome back to the Velvet Runway and this feature about Managing Your Money While Working Abroad.

Living and working abroad can be a once in a lifetime experience. Yet no matter where you’re from or where you move to, two things remain the same across the world:

You’ll need money to live and a plan to manage that money.

From budgeting your overseas income to understanding foreign banking and exchange rates, here are five tips to manage your money while working abroad.

Managing Your Money While Working Abroad

Set a Budget and Stick to It

The first step in money management is to create a budget that you can stick to. To do so, you’ll need to consider what your new income will be and understand the cost of living in your new country.

From rent and utilities to food and transportation, it’s important to total up every monthly expense you’ll have when you move. The cost of living varies from country to country and from city to city within each country, so you must understand how much it will cost to live comfortably in your new town and how that compares to your current cost of living.

For example, if you’re moving from the United States to New Zealand, you might be excited by the fact that New Zealand has a lower cost of living than the US. However, if you’re moving from a small Midwest town to the big (and expensive) city of Auckland, the cost of living may be much higher than you’re accustomed to.

Read articles that explore different cities within your destination country, like this one from International Citizens Group, to learn how the cost of living and lifestyle vary from region to region.

Understand Exchange Rates and Transfer Fees

Exchange rates between currencies vary, as do foreign transaction fees when making purchases abroad and conversion fees when moving currency from one country to another. Before you choose a bank or payment system to move or process your funds, do your research to compare fees and rates.

These fees can add up quickly and can drain your finances if you’re not careful. Learn more about foreign transaction fees and currency conversion fees in this article from Forbes. 

Set Up a Local Bank Account

Having a local bank account in your new country can help you avoid foreign exchange charges and associated fees. It also makes it easier to pay for local essentials like rent, utilities, internet, and groceries.

Every country has its own rules and regulations regarding who can and cannot open a bank account. Some countries require that you hold a specific type of visa, while others require that you have proof of residency. Be sure you understand the requirements well in advance of making your move. 

Keep Your Bank Account Back Home

Unless you intend to remain abroad indefinitely, it’s best to keep a bank account at home. This will streamline the process of making payments on existing loans and credit cards in your home country. It also makes it easier to transfer money to and from family or friends if need be.

If you own property in your home country, maintaining a bank account at home is a must. Unexpected maintenance issues can arise at any time, and having money in a local bank will make it easier to pay for repairs in a timely manner.  

Pay All Your Bills on Time

No matter where you’re living or how much you’re earning, it’s essential that you pay all your bills on time. From student loan debts in your home country to current utility and rent bills in your new location, be sure to make all your monthly payments on time.

Making timely payments in your new country can help you establish and build credit there — a must if you decide to stay longer or wish to buy a car or a home abroad. Conversely, making late payments in your home country can ruin your credit back home, which can make life more complicated should you decide to move back.

Final Thoughts on Managing Your Money While Working Abroad

Managing money abroad can be complicated, and it’s something that many expats don’t even think about before deciding to work in a foreign country. But it’s not something you can put off.

Determining how you’ll manage your finances abroad is as important as finding a place to live, getting your visa and health insurance, and booking your airline ticket. And since it’s not one of the fun aspects of moving overseas, we recommend doing it early in the process. That way, you can focus on the parts of the move that you are excited about!  

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