Moving to another country can be one of the greatest things you’ll ever experience, but can also be one of the most difficult. So many people are leaving America for career opportunities or a lower cost of living, so they can set up an emergency fund for later in life, but there are many things you need to consider in a financial sense. If you move to another country without a proper financial plan, it could all collapse underneath you. Here are some key things to consider before you make the move.
Start Saving Now
If you are seriously thinking about living in another country, you’ve got to start saving now. As a rule, you need between seven and nine months of living expenses in the bank prior to moving abroad. You also may need more, depending on your lifestyle.
There are many other things you need to consider, such as the exchange rates, your lifestyle, and your family status, as well as the legal implications of living there, much like the green card here. People who move to the United States from another country will have to get a green card, and when we start to think about the numerous repercussions of not fulfilling the requirements of the green card or even having a divorce after 10 year green card status, there is certainly a myriad of problems that can await any of us.
You should also think about the costs of moving back, or at the very least, flying back to visit friends and family.
Choose Your Bank Before You Go
If you’re moving from the United States to a country with a less sophisticated banking system, you’ve got to conduct some research in advance. You need to focus on the bank’s international clearing networks and if they issue credit cards like Visa or MasterCard. If you can find banks that participate in networks that are customer-oriented this is a good sign they’ve been vetted by major businesses.
Additionally, you need to look at if bank deposits are guaranteed in this country. Once you’ve made all of the relevant background checks on a bank’s networks, you need to look at variables such as the fees, interest rates, and even if there is access to an ATM. Because even if you plan on purchasing a home in a new country or you need support, you will need to find a bank that allows you easy access to finances.
You also need to make sure that the banks in your country allow American citizens to open a bank account. In some countries, a private bank can refuse to let you open an account. This is why background checks are vital for your peace of mind.
Understand the Taxes for Expats
It’s not just about moving to another country based on the budget you have; there’s a lot more to bear in mind. People who hold green cards in America need to file tax returns and pay taxes and may even have to file a tax return in the country where they come from. While this may seem frustrating, it’s not likely that you will be double-taxed, but it depends on your earnings.
State taxes can also apply if you are renting your home while you are in another country. This is why it’s so important for all of these complex issues that you discuss your situation with an accountant before you move to another country.
Focus on Your Credit Score
You may want to leave the United States to live abroad, but if you ever come back, you will need to be prepared for the fact that your credit score could drop drastically. Even if you are living in another country for an extended period of time, you’ve got to have a US credit card and use it a few times every year. It’s easy enough to keep your credit score in check by paying your debt on time.
It takes time to reestablish your credit if you let it plummet, and can be a very frustrating thing even if you’ve already shown that you are a trustworthy customer in the eyes of the banks and credit agencies.
Save for Retirement
You always need to keep putting away cash for retirement. If you work for a company that has a 401(k) plan, you need to keep contributing while you are living in another country. Even if you made the move to another country, you can still find other ways to save for your retirement, such as establishing an investment, brokerage, or savings account for the purposes of retirement.
Living abroad can be the perfect opportunity to start again. But you’ve got to make sure that you are savvy before you step on the plane.
(Disclaimer: This content is a partnered post. This material is provided as news and general information. It should not be construed as an endorsement of any investment service. The opinions expressed are the personal views and experience of the author, and no recommendation is made.)
