Living beyond their means
Many studies like that of HSBC Expat Explorer have highlighted the difficulty of expats in managing their finances abroad. Obviously, when you earn more abroad, you are tempted to spend more. During the first few months, you will naturally be tempted to go out as often as possible to explore the surroundings. Eating out regularly, afterworks on Friday nights, sightseeing, shopping in big malls and posh boutiques will probably be part of your everyday life. But you should know when to stop. Just because others (your friends, colleges, or other expats) have done it doesn't mean you should too. Think about the purpose and duration of your stay in your host country, especially if you have moved with your family. You will definitely have plenty of time to enjoy your new life, so there's no need to rush about it in your first few weeks or months. So how do you live comfortably as an expat without breaking your piggy bank? Start by listing your priorities, taking into account your family's needs: food, rent, transportation, education, healthcare, leisure, etc. Also, put some money aside and forget about it. After all, choosing to move abroad probably means that there's something you're looking forward to achieving.
Poor banking options
Whether you are employed or a retiree, having a bank account with help not only in receiving your monthly income (salary or pension), but also to make your regular banking transactions, such as paying rent, money transfers, etc. Of course, you may choose to preserve your initial bank account, that is, in your host country. However, opening a local account has benefits such as making you eligible for credit card or mortgage in the long run. You can even open an international bank account so that you can make your banking transactions in any foreign currency and benefit from favourable interest rates. Besides, you won't have to worry about exchange rates for your international bank transfers. In any case, do not hesitate to seek information from an expert in financial matters. Very often, our wrong choices come from a lack of advice and information.
Lack of tax-related information
Once you have settled in your host country, whether as an employee or as a retiree and start receiving income, you will have to pay income tax. So make sure to inquire about the tax system of your host country, especially on the tax rates and conditions that apply. Also, check whether your home country and your host country have a double taxation agreement. Besides, expats often forget to inform the tax authorities in their home country about their departure, and some formalities, and maybe taxes, are left pending. If in doubt, and to avoid any mishaps, seek help from a tax advisor.
Underestimating the health insurance
In most countries, expatriates contribute to their host country's social security system. But is that enough? Do you have enough information about the conditions relating to your retirement and health plans? How is the performance of your host country's public health system? Are you covered by the health system? What are the conditions that apply? Do you need complementary insurance? What about your dependents? You need to be able to answer these questions and realise that this might require significant investment. So, once you have received your monthly salary or retirement pension, budget and make sure to include your health insurance contributions. Also, your savings might help in case you need urgent care abroad or a treatment that is not included in your health insurance plan.
Rushing into property investment
The COVID-19 crisis has had a huge impact on the international real estate market. In many countries, property prices have dropped over the past few months, which is encouraging for expats who are looking to invest in property in their host country. According to real estate experts, the global property market is not likely to improve anytime soon, so property investment doesn't look like a bad choice. In fact, there are many long-term benefits to buying property abroad, such as saving money on monthly rents and the possibility of renting out the property. However, there are other things you should take into account before buying property, such as the duration of your stay in your host country, renovation and maintenance costs, or even the resale value of the property. Does this look profitable? Also, do you really have the financial means, or will you need a mortgage? What about bank interest rates and property taxes? All this definitely needs proper planning, so don't rush.
Every expat has their own dreams, projects and ambitions. However, some things do take time, so stay motivated and disciplined. Take the time to assess your budget and to make some savings. Good luck!
