So, you’re moving to a new country?
That’s great news! I’ve been an expat in three different countries now and, after three and a half years of travel, I’ve learned a few things.
Moving to a new country can be hard. There are massive cultural differences and simply re-acclimating yourself can prove to be difficult. And money, of course, can be a major stress point when moving abroad. What used to be so easy in your home country no longer proves to be quite as simple.
Earning money, spending it, moving it, and managing it becomes an entirely different experience than you’re used to. No matter where you go, things just won’t be the same as they are back home.
1. Open a Local Bank Account
This is step number one and, for some reason, the most often ignored. Get yourself a bank account with a local bank.
You simply can’t manage your finances using your account from back home, especially if you’re going to be earning money in your new location. You’ll need a place where you can make withdrawals and deposits without hassle, and without getting charged extensive ATM fees.
If you use a foreign card in a local ATM, you’ll get charged by your bank, as well as the local bank, for one easy transaction. If I use an Australian account in China, I end up paying almost $10 to make one withdrawal, whether it’s for $20 or $2,000.
BANKING TIP: If you’re a US citizen, the Charles Schwab High Yield Checking Account reimburses all ATM fees at the end of every month. You’ll never pay another dollar, anywhere in the world. But you likely won’t be able to make direct deposits from a local employer.
2. Use Online Banking
Just as you would back home (I hope), sign up for online banking, especially if you’re in a country where you don’t speak the native language. For expats, when you’re in a foreign country where communication is difficult, and just the thought of going to the bank down the street makes you want to punch a wall or scream into your pillow, it’s best to be able to manage your money on your own.
If you need to check your transaction history or double-check your remaining balance, fumbling with ATMs or tellers in an entirely different language is not the first thing on anybody’s list.
BANKING TIP: If you want to order things online from a local website, like plane or train tickets, some banks/countries require online banking to be activated on your account. I’ve mostly found this in Asia where online banking isn’t as prevalent.
3. Keep an Account Open at Home
Don’t transfer all your cash to your new account. Keep a couple accounts or cards active back home, and keep an active balance on them. Unexpected things will arise at home, and you’re going to need a way to pay for them.
On top of this, should an emergency arise while you’re abroad, these backup accounts might be your only hope. You wouldn’t be the first person to have been robbed or scammed in a foreign country, and you don’t want to be stuck on the streets of Lisbon with no form of currency or place to go (though it might make for a great story).
BANKING TIP: Pick a bank account (i.e. Charles Schwab) or credit card (i.e. Chase) with no foreign transaction fees. You don’t want to be getting charged frivolously when something goes awry.
4. File Your Taxes
Even though you’re an expat and living abroad, you’re still a citizen in the country where you hold residence. Depending on where you live, you may or may not be required to file taxes (if so, online tools can be found here). You’ll need to do this research on your own, to find out what the requirements are for your home country, but don’t let this one slip by. The consequences can be dire.
BANKING TIP: Hire someone to do this for you. It’s expensive, but it can be worth avoiding the confusion.
5. Transfer Money Between Accounts
Work out a viable way to transfer money between your local and foreign accounts. You’re going to need a way to get money in and out of the country, and duct-taping stacks of bills to the insides of your thighs is not the most feasible. International money transfers can be complicated and costly, so research an easier way to do it.
BANKING TIP: PayPal is one option, but they require different user accounts for each country you bank with. Plus, if you’re using multiple currencies, you’re stuck with their conversion rate which is NEVER good. Try other options like Wise (get your first transfer free!) and HiFX for low-cost transfers.
6. Send and Receive Money From Home
As an expat, there is always a reason to send money to and from home. Whether you get stuck in a bad situation abroad, or you need to spot your little sister $100, keeping an open line for finances is a must. Quite a few times now, since I’ve been on the road, I’ve had to send money home or have money sent to me. So whether it’s only for peace of mind or a viable way to pay your bills, working out a way to send or receive money from home is vital to any expat.
BANKING TIP: Explore your options ahead of time. You don’t want to get stuck in Tasmania, without access to cards or cash, in the middle of a flood, with zero internet access (like I did). If you already know where to go (i.e. the post office) and what to do, the pains of wiring money become far less severe. And remember that most bank transfers can take a few days (unless it’s an instant wire transfer), so try to give yourself enough time.
7. Do the Conversions in Your Head
When you’re living abroad and dealing with foreign currencies, the money you’re spending doesn’t always feel like “real” money. Spending 100 Chinese Yuan doesn’t actually feel like spending $16 USD, so it’s easy to get frivolous because the actual value of the money hasn’t been internalized yet. Make sure, for every transaction, you’re converting to your home currency until you’re able to fully grasp the worth of your local currency.
BANKING TIP: Set yourself a simple daily budget in the local currency, and stick to it! If you’re any good at budgeting, that is.
READ NEXT: A Simple Guide to Banking While You Travel
This is really helpful! I also recommend using Transfer Wise to move the money that you earn while working abroad. Transfer Wise makes it easy to complete bank account-to-bank account transfers so that you don’t have to go through your bank and pay expensive international wire transfer fees.
It also aims to match the mid-market rate, which means you won’t be charged an exchange-rate markup.
There’s no minimum transfer amount and you can sign up and send a transfer in just a few minutes.
In fact, this service made it possible for me to transfer money between my bank accounts in different currencies, which is something PayPal won’t allow you to do without having two PayPal accounts in each country and would cost way more in fees if you go through MoneyGram.
Good tips regarding bank accounts, but not everyone can get a local bank account where they live. Many nomads will go to Malaysia, for instance, only to find they can’t open an account without a residence permit (from a job or an investment). That’s why having the best international bank account is important; there are 1 or 2 banks in the US that are international friendly, but most are overseas.
Thanks for the interesting articles. (Also read about bringing taxes down to $0) I came across this blog as I was researching how to invest my family’s money legally while living abroad. We are (former?) residents of Massachusetts and currently live in China. What exactly is the law regarding investing with a brokerage firm while living abroad? It’s getting to the point where we are stagnant because we don’t want to break any laws. But it kills me to see money sitting in a savings account doing NOTHING! Any advice?
That’s something you should talk to a professional about. Talk to this guy—I hear he’s very good: http://ustax.bz
These are really great tips! When moving to a foreign country you should be prepared to manage your finances as there are so many specific things to consider. Having a local bank account is a must… also having a back up account for emergencies back home is a great idea. I used to live in Spain for a year and I was working for a firm in Barcelona. Moving there was already quite an expense. I find your tips really helpful for people moving abroad for the first time! Lovely post and a great blog! 🙂 Thanks!
Do you have any recommendations for US-based bank accounts that don’t charge foreign transaction fees, as you mention in your article? I’m living in China and am tired of Bank of America’s 3% + $5 per-transaction ATM fees when I need to use my American account. I’d love to take my business to another bank. Any suggestions?
Hey Ivan! Check out the Charles Schwab High Yield Checking account. No foreign transaction fees and no ATM fees!
I’m retiring to Brazil from the States as I got married there in 2012, my question is this. Besides Schwab High Yield accounts what’s the next best bank as I want to keep most of my money in the states while opening an account in Brazil. (Unfortunately I couldn’t qualify for Schabs products) Thanks
I would recommend looking into partner banks between the States and Brazil. Then check their foreign transaction policies to find out if there’s a fee. Capital One 360 is a great choice for people who want to bank online, but you’ll have to check associated fees with banks in Brazil.
Take this advice with a grain of salt.
If you’re leaving the US for more than six months Schwab will close your Bank accounts (checking, savings etc.). I know because it happened to me.
After 10 years banking with Schwab I took a temporary work posting overseas. Even though I kept my permanent US address they dropped me as soon as they found out I was going to be out of the country for more than six months and claimed this was per standard Schwab Bank policy. They’ll let you keep your brokerage accounts by converting them to International accounts, but the FDIC-insured bank products will be closed. It was a serious pain in the you-know-what, and really disappointing from a customer relationship standpoint.
If you have a Schwab bank account just keep a low profile and hold onto it. Schwab are a great bank, they just don’t cater to expats. If they find out you’re overseas, they will close your account.
Thanks for the write up. I’m a European working in Kenya, and I was based in South Africa before. I’m still looking for the best ways to manage my money as I now have 3 bank accounts in 3 countries and I still have banking issues. For example, call center helplines are only reachable with local telephone numbers or transactions can only be done if you have a local ID number – which I obviously don’t. It looks like there are offshore accounts available to solve this problems (expat accounts). These accounts claim to follow you everywhere you go.
An other tip I would give is to negotiate your salary in a stable currency if possible. I managed to negotiate my salary in USD, a colleague of mine in local currency only (Ghana Cedis). With the local currency weakening my colleague has now missed out on hundreds of USD over the past months.
On the upside, I get higher % interest in South Africa than in Europe, probably because they are compensating for higher inflation. I get 6-7% easily on savings whereas 1% in Europe is a miracle. Then again, there is always that moment where you need to get your money out of the country, and I haven’t solved that problem yet.
Has anyone actually calculated net differences between local inflation rates, apparently higher local interest rates, & off-shore interest rates?
Great tips! I have seen you write about the Charles Schwab High Yield Investor Checking account before. It definitely helps us out here in Thailand. We still haven’t opened up a local account yet…we probably should as good emergency backup though. Paypal is definitely a great option as a quick and easy way to move cash around. Thanks!
Yeah, the Charles Schwab account is great for accessing your money, but it’s still easier to manage (i.e. easy deposits and transfers) your money with a local account. Opening accounts in some parts of Asia is incredibly easy, so really there’s no reason not to do it!
I think learning about the local tax laws is important before you move to a place. Some people have no idea, for example, of just how costly it is to live in Europe.
That’s a great point. In Asia, foreigners don’t appear to get taxed. Go to a place like Europe, though, and unknowing expats will be very unpleasantly surprised!