5 Financial To-Dos Before Moving Abroad: A Detailed Guide to Get You Fully Prepared

Relocating to a new country is a life-changing experience, but it can quickly turn stressful if you lack the right financial management in place. When we talk about finances,  it requires you to understand basic aspects of it, such as managing day-to-day lifestyle, filing returns in foreign currencies, engaging with financial instruments and much more!

In this article, we will guide you through each aspect of the financial intricacies of your big move, step by step. These tasks are designed to provide you with peace of mind and prepare you for success in your new home.

1. Assess the Cost of Living: Know What Life Abroad Will Really Cost You

Every country has its own cost of living, and it might be very different from what you’re used to.

Every place has a different standard of living, so your cost of living will change drastically, depending on where you live! It’s crucial to know how much you will need, as the cost of living, as it will help you to set up your financial budgets.

Why It Matters:

• Knowing how much money you will require to maintain your current or desired lifestyle helps you determine whether your income or savings are sufficient.
• It provides a precise calculation of the living costs, reducing the chances of miscalculating or underestimating the living expenses, especially in big cities like London, New York, or Tokyo.
• Understanding expenses better will help you set realistic financial goals and avoid running out of money.

What to Do:

Research your destination’s living costs. 

Understanding your budget can really help when it comes to managing your finances effectively. There are several key areas to consider:

• Rent prices, which include apartments, utilities, and deposits, can vary significantly. 
• Food and groceries are essential, but imports often carry a higher price tag.
• Transportation is another important factor. Consider your options between public transit and private vehicles, including car costs and fuel expenses.
• Healthcare is also crucial, with choices like public access and private insurance available.
• Lastly, don’t forget about entertainment and daily expenses, like dining out, gym memberships, and mobile data costs, which can add up quickly!

While researching, consider the following:

• Utilise resources such as Numbeo, Expatistan, or local expat forums.
• Remember to consider one-time expenses: airfare, moving services, visa costs, vaccinations, and first accommodation.

Example:

Living in Bangkok can be quite affordable at around £1,200 a month, while the expenses in Zurich can soar to about £3,000 monthly. These variations significantly affect how much you should aim to save!

2. Understand Currency Exchange Rates and Transfer Options: Don’t Lose Money on Fees

After moving abroad, you must convert your money into the local currency, exposing you to currency conversion risks. Poor exchange rates and hidden fees can deplete your funds if you’re not careful. 

Why It Matters:

• When you’re transferring large sums, exchange rate changes can add up. 
• Some banks might have high fees or not-so-great exchange rates, which can cause you to lose money without even noticing it!

What to Do:

• Observe the key factors like economic indicators, political and geopolitical events to understand the currency exchange rate fluctuations. Knowing the key exchange rate movements could save you from unexpected losses.
• Avoid using traditional currency exchange service providers such as banks, airport kiosks, or tourist places. These could charge an extra fee unless you’ve compared their rates with forex services.
• Use reputable money transfer providers who offer a transparent price structure, a dedicated portfolio manager and secure transactions.

Pro-tip: 

• For longer stays, you might consider setting up a local or multi-currency bank account to avoid frequent conversions.
• If you’re transferring a large sum, consider using a forward contract with a forex provider to lock in a favourable rate in advance.

Example:

Transferring £10,000 via a high-street bank could cost you an additional £300 compared to a forex broker, due to less favourable rates and concealed fees.

3. Comprehend Your Tax Responsibilities: Avoid Surprises from Two Governments

Living in a different country doesn’t exempt you from the tax responsibilities of your home country. In fact, there is a chance that some incomes might fall under the double taxation rules, which can lead to legal issues if they are not complied with. Always check with the local authorities or experts while filing your return, avoiding conflicts.

Why It Matters:

• Taxation failures or incorrect information may lead to penalties, unexpected bills, or double taxation. In some countries, tax evasion is considered a criminal offence punishable by imprisonment.
• Knowing the basic taxation rules also helps with precise filing, taking advantage of exemptions or tax reductions where available, and being compliant. 

What to Do:

• When planning to move abroad as an immigrant, it is crucial to do thorough research on your home country’s tax rules and regulations to ensure compliance with the due taxation reporting and avoid any potential legal issues. Also, educate yourself on the law of the land, as different countries may have deviating approaches to taxation for expats.

For instance, the UK employs a Statutory Residence Test to determine an individual’s tax residency status, while the US imposes taxes on its citizens regardless of residency status. American citizens may be liable for tax obligations while residing in a different country. 

• While paying taxes, one must also cautiously check for the double taxation treaties between your home country and your new country of residence, as these treaties often alleviate the tax burden by preventing double taxation on the same income. 
• As you consider moving, you must ask yourself a few critical questions regarding your finances: 

Are you required to declare foreign income? 

Will you be taxed on rental income, pensions, or investment earnings?

Additionally, exploring any available tax benefits or exemptions specifically designed for expats is wise. 

• Given the complexities of international tax law, consulting with a tax advisor who specialises in expat tax issues is highly recommended, especially if you possess multiple income streams or assets. A knowledgeable advisor can help you navigate these challenges effectively.

Example:

A UK citizen relocating to Australia is still required to declare UK rental income to HMRC, but may be able to avoid double taxation due to a tax treaty.

4. Secure the Right Health and Insurance Coverage: Protect Yourself from Costly Medical Bills

Healthcare systems vary worldwide; medical care is not free or expensive in some countries without proper insurance.

Moving to a new country is much more than renting a new place or finding a new cafe to get coffee. It also includes crucial aspects of life, such as health care systems and the right insurance policy that will stand by you through emergencies without burning a hole in your pocket.

Why It Matters:

• Medical emergencies often cost thousands, especially when you are new to a country, don’t have direct access to citizens’ rights; a simple fever could cost you a few hundred pounds.
• If you are moving on a long-term visa or work visits, many countries will require proof of adequate health insurance, so get one in advance. 
• As a new resident, local public healthcare may not provide coverage for you, or in case of accidents, you may need to pay out of pocket to get proper medical attention.

What to Do:

• Check your currency insurance documents to understand the availability of the insurance coverage on foreign stays. If it’s not there, consider talking to your agents for further options.
• If not, buy international health insurance. Make sure it covers:
  • Doctor visits, hospital stays, emergency treatment.
  • Pre-existing conditions (if applicable).
  • Medical evacuation or repatriation (necessary for remote areas). 
• Apart from the health insurance, do consider other insurance types:
  • Travel insurance for your relocation.
  • Income protection if you depend on your salary while abroad.
  • Life insurance to support your dependents.
  • Renter’s insurance for your possessions

• Some employers offer health insurance — check what’s included.

Example:

A private hospital stay in the US could cost over $10,000 for just a few days. Having international insurance avoids wiping out your savings.

When moving abroad, it’s crucial not to just focus on the immediate future. While you may be concentrating on renting now, think ahead to one, five, or even ten years into your new journey. You might eventually buy a home, invest in a car, or make investments that will require large international transactions.

Why It Matters:
Relocating abroad impacts your financial life, from retirement planning to investment opportunities and even your credit history. By planning ahead, you can take control of your finances, build wealth, and manage your finances effectively while overseas.

What to Do:

Retirement:

• Check if you can still contribute to your pension back home.
• Look into local retirement plans or private savings options in your new country.

Investments:

• Some platforms (like ISAs in the UK) may have restrictions for expats. Review your investment portfolio and be aware of any tax implications.

Estate Planning:

• Update your will to reflect assets you own internationally.
• Research and understand the inheritance laws in your new country.

Debt:

• Inform any lenders about your move abroad.
• Set up international payment options if necessary.

Credit Score:

• Your existing credit score won’t follow you, so begin establishing credit in your new country—consider using a secured credit card or applying for a local loan to build your credit history.

Planning for the long term will prepare you for a smooth financial transition abroad.

Example:

If you leave the UK and stop paying into your pension, your retirement savings might grow more slowly — unless you set up an expat plan or keep contributing voluntarily.

Conclusion: Prepare Now for a Smoother Move

Moving abroad is more than just an adventure — it’s a major life decision that affects your financial future. By thoroughly preparing for these five key areas, you’ll avoid costly mistakes and start your new life on solid ground.

Take time to research, plan, and seek advice where needed. The more you prepare now, the more freedom and confidence you’ll have when you arrive in your new home.

Stay informed with more expat finance tips at Finance Markets Today — your guide to smart money moves worldwide.