Expat finance is an exceptionally important consideration for anyone relocating to a different country. Inadequate financial management can have various disastrous effects, especially in a foreign country where an expat may or may not be applicable for tax exemption or state benefits. Here are a few tips to master managing expat finances.
The Tax Net & Double Taxation
Taxes are an area that expats constantly need to keep track of and file properly. There are many tax exemption interventions and treaties that prevent double taxation on expats (being taxed on the same income both in the home and destination country). An expat should contact the tax collection organization in the country they belong to and in the one they’ve relocated to know of the treaties concluded that make certain incomes and ventures non-taxable.
One of the first things an expat should bring to order is their banking credentials. Expats should in general avoid using their bank account back home because not only are they continuously incurring tax on it but transferring the money internationally and accounting for inflation and currency exchange rates can create a lot of hassle.
Save money and open a local savings account so you can earn interest and avoid extra taxes. Opting for a global bank instead of a local one also has its advantages as they often cater to expats and offer international banking solutions. Using companies like Fintech are also a good idea if you want to be able to easily transfer money internationally on the go via the web or through an app.
Don’t Forget Insurance
Insurance is an essential undertaking for expats to prepare for life’s difficult situations and curveballs. Consult a tax consultant for US expats to know how much money you can realistically put aside for insurance coverage for yourself, your family, your house, car and other assets as well as for employee liability if you operate a business. Medical insurance is definitely very important especially if you or a spouse or other loved one suffers from a chronic condition that requires continuous medication, testing, or medical interventions.
Globally infectious diseases and impaired immunity is on the rise since the Covid-19 pandemic and medical access and attention have become exponentially more expensive and limited. Expats should take all possible measures to care for their health in a foreign country and medical insurance is vital for that. Protecting one’s assets from theft whether it happens in transit or in the home is also a priority, especially for self-employed expats.
Expats need to have various investments in order to put their money to work for them. Practicing international diversification and investing in countries richer than your home country can yield good dividends and some expats do prefer investing in developing or emerging economies where entrepreneurship is on the rise. Foreign direct investment is also very useful for expats because as newer companies grow they can grow their money very quickly in a short period of time.