There are many reasons for moving abroad, and situations differ from person to person. One thing which remains the same for everyone is that uprooting and moving your home can be very expensive. Such a big change needs to be prepared for very carefully; otherwise it could result in financial difficulty or even ruin.
According to UN data, there were over 244 million international migrants living around the world in 2015. This number is likely to have grown since then. As a result of this, the number of services available to make your move easier has increased accordingly.
It is important that you know which of the many services available can be useful to you to save money and how to plan your budget wisely for your move.
Build Up Your Savings Before Moving Abroad
Financial planners recommend that everyone needs to have an emergency fund to ensure some kind of financial security. When planning to move abroad, you’ll also need to build up an additional fund to deal with any expenses, expected or unexpected, which might be involved in this process. It is advisable to save money, as much as you possibly can.
Some ideas on how to do this include:
- Reduce every possible expense. Change your cell phone contract, cancel cable TV and streaming services, switch to generic brands, etc. Do all you can to minimize your living costs even if this means a temporary loss of comfort. Consider your transportation, grooming and travel expenses carefully. There are things that might be deemed luxuries that can be sacrificed completely for the time being.
- Save on food. Use services like Food Rescue US, Food for All or goMkt to get discounts or even free food through food sharing. Also, you should use every discount and special offer you can find. Find ways to minimize your food expenses without actually harming your health.
- Sell everything you can that you don’t desperately need. Even if you only get a few dollars for your items, it is better than holding on to things you do not really need. Clearing out your closets and basements this way will benefit you in more ways than one. In addition to the money you will earn from selling things you don’t need, you will have fewer things to ship and reduce your moving expenses.
Research Taxes and Other Costs
Moving to a different country does not in some magical way relieve you of your tax liability. Therefore, long before you start packing, you will need to research:
- Taxes. According to IRS regulations, every U.S. citizen living abroad must pay the same taxes as they would while residing in the U.S. It doesn’t matter where in the world you choose to stay, your income will still be subject to income tax. The good news is that you can offset some of your tax bills by using Foreign Tax Credit and some other exclusions for expats. Also, do some extra research to find out if there are tax requirements or limitations in the country you are moving to. Local regulations might put additional obligations on foreigners. One great resource is the book “U.S. Taxes for Worldly Americans: The Traveling Expat’s Guide to Living, Working, and Staying Tax Compliant Abroad” which helps break down your new tax reporting needs and deductions you can qualify for.
- Fees. Do you need to pay any fees or arrange for notarized copies of specific documents when moving? Remember to research visa and residency requirements for the place you move to as local governments might require specialized paperwork. You should be able to get help from your embassy or employer if you are moving for reasons relating to work.
Find a Good Money Transfer Service
Even the UN acknowledges that the high cost of transferring money is complicated and expensive and is trying to do something about it. Bank wire transfers and services like Western Union usually take days to process payments. They also claim about 3% of the transfer amount in fees. You could lose even more as a result of currency exchange rates.
Luckily, today there are online money transfer companies that offer these services far more cheaply. Using them will allow you to cut your overall costs to about 1%. However, as they are, essentially, third-party businesses that you entrust with your money, ensure that the company you choose is reliable.
The market for online money transfer services is extremely competitive. When looking for a money transfer platform, start with the industry leaders because the top companies with the highest funding and best technologies are the ones that can offer lower fees and top-quality service. Today, TransferWise is a great option we like and valued at $3.5 billion, which makes it the largest company in the industry. WorldFirst, which was recently purchased by Alibaba, is a close second because it now has access to a massive budget.
Both of these companies offer fixed margins. Therefore, their terms and fees are usually the best you can hope for. Luckily for migrant workers and expats all over the world, both services are rapidly expanding to new countries. Their standards of practice motivate other service providers in the industry to offer more competitive terms.
Set Up a New Bank Account
When you settle in a new country, opening a bank account is a must. In fact, in many countries, opening an account and maintaining a set minimum balance is mandatory for all aliens. You’ll need to find out if there are any such regulations in the country that you are moving to. Moreover, if you are moving for work, find out how your employer must legally pay you.
When moving abroad, you should also research what you need to do with your old bank account. Depending upon your situation, you might need to close it. For example, this can be the case if you are changing citizenship but may not be necessary if you are simply relocating for work.
Create a Budget and Fund for Living Expenses and Rent
When moving anywhere, you need to have enough savings in your emergency fund to cover several months of rent and living expenses. Create a budget based on how much your new accommodations will cost.
Do your research on expenses like groceries by visiting local shops and markets online and talking to people on social media. This way, you will get a good idea of how much you’ll actually need to spend on essentials, such as food and toiletries.
Don’t forget to factor in any fees or other payments that foreigners are required to make. For example, if you are studying abroad, you might have to pay more simply because of your non-resident status.
Find the Best Moving Deal
Moving abroad usually means you’ll need to move some possessions with you. Start researching the costs of doing so at an early stage as this will help you decide what exactly you can afford to bring with you. You may find it cheaper to buy new things in your new location.
While researching your options, include companies beyond specialist moving companies. Check out whether it might be possible, and cheaper, to use international delivery services to ship your belongings overseas. Also, be sure to compare the costs of delivery by sea and air.
Keep Up with Your Savings No Matter Where You Are
Many people often forget about the necessity of saving when stressed by handling the details of moving and the inevitable changes in their lives. Finding the time to save money might also prove to be more difficult when settling in at your new place. However, this doesn’t mean you should stop building up your savings accounts. Start by opening one in your new country, and, in the meantime, use money-saving and investment apps, like Acorns, to make an additional side income from micro-investments.
The most efficient way to build a nest egg is to automate your savings. If this is not possible, use the time-tested method of saving up a bit of cash every week by cutting your expenses. Even saving the cost of one meal a day, by cooking instead of buying, will accumulate surprisingly over time, so make these small additions to your savings a priority.
Prepare in Advance to Cut the Costs of Moving Abroad
Multiple studies have proven that moving abroad, especially for work, is an extremely stressful experience. Money issues are a major stress factor in their own right, and you have to learn how to deal with it.
Overall, cutting the costs of your move and making sure that you are financially secure in your new place will go a long way towards reducing stress. However, to achieve this you’ll need to begin preparing long before you actually make the move. Do your research and take your time comparing services. Be sure to immerse yourself fully into these tasks and stay organized. Once you actually settle into your new country, your preparation will provide you with a measure of the stability that is necessary to begin your new life.