With the current economic situation, many people seek greener pastures abroad. People will find work as casual labourers in countries like Qatar, and Saudi Arabia, or seek green cards and scholarships in the US. In 2022, 160 million Africans sent remittances of $95 billion. The bulk of the money went back to Nigeria, Ghana, Kenya, and Zimbabwe. When Africans end up working abroad, a significant part of their income ends up going back home—a kind of black tax. Managing your income while living abroad is essential to ensure you don’t become laden with too many debts or run out of money.
What you need to consider when living abroad
Moving abroad can be exciting, confusing, and overwhelming. It would be foolhardy to assume that your country’s laws and practices are similar to your host country. Depending on the reason for your move, work, or school, you’ll need to plan your budget accordingly. You need to look at:
- Cost of living
- Visa requirements
- Lifestyle needs
- Healthcare
- Emergency funds
- Remittances back home
- Essentials
- Black tax
How to set up a financial plan when living abroad
1. File your taxes correctly
Every country has a different tax code and varied ways to file taxes. For example, in the US individuals must file their taxes by themselves or using specialised services like TurboTax. The forms required for filing also vary depending on your job type. You need to be aware of how to be accurate in your taxes.
In some countries, you may need to pay taxes both in your home country and in the country where you are working so it is important to know your tax obligations. According to Bright tax, The United States and the East African nation of Eritrea are the only two countries that tax the worldwide income of all citizens and permanent residents regardless of where they live or where they earn money. It is important to know what your country’s laws state regarding this.
If you can afford it, you may need to procure the services of a tax accountant, especially one who deals with immigrants or permanent residents.
2. Build your credit score
One of the best ways to build credit is through getting credit cards. This kind of debt can help build your financial profile. It also enables you to have access to capital to start businesses, own a home, and even land certain jobs. Making credit card payments on time, and clearing other outstanding payments like a mortgage or a car note can help build your credit score. Ensure that the debts you’re taking on are only the kinds that can help build your portfolio. Not All Debt Is Bad. How To Use Debt To Grow Your Wealth
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3. Be wise about sending money home
When sending money back home, use remittance services that are trustworthy. You can check the reviews online to confirm whether it works well or not. Some services also have exorbitant exchange rates that can add up over time. The service you choose should also be able to send money from your chosen country back home. Not all apps can send money successfully paired with mobile wallets. Using banks or Western Union can also be extremely expensive but it may be the only option if you’re sending large amounts of money.
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4. Banking
To manage any expenses, you may have back home, you may need to retain a bank account there. For instance, if you have to pay rent or salaries, a bank account with automatic payments can help reduce how many things you need to keep up with. The bank account should have no foreign transaction fees to reduce expenses. A local bank in your host country will also be necessary to manage your finances. A local debit or credit card also helps you avoid extra expenses for the exchange rate.
Online banking can also help keep things easy. You can access your account 24/7 and can reach for funds any time you need. Download the corresponding mobile banking app and get used to how it works, whether it is compatible with mobile money wallets or other banks at home.
5. Savings and investment
It’s important to get proper financial advice from a fiduciary in your host country. An expat network can also help you locate sound savings and investment advice. If you have savings or a pension plan in your home country, you may need to find out specific tax requirements if you want to access them from your host country. You may also need to notify your bank when you’re moving. This then keeps access to your savings account open or allows you to transfer it to a savings account in your host country.
From your budget, set aside a percentage for your savings, retirement plan, or life insurance. This will make the transition from employment to retirement easier regardless of the country you settle in. Select a bank that is friendly to international transactions. This may be best with institutions with multiple branches. When investing, talk with brokers who specialise in immigrants or non-permanent residents. They help create a diverse portfolio with globally accessible investments. Consider how long you will be living in your host country. This determines what kinds of investments and savings to go for. For instance, if you’re staying for a few years for a work contract, you may prefer to invest in stocks rather than property. The Four Most Important Factors For Investment Success
Check out:
Planning For The Future – How To Create A Financial Plan
7 Things To Prepare For When Moving Abroad
Travelling Abroad? Here Is An International Travel Checklist You Should Follow
Travel: 5 Things To Consider When Choosing To Work Abroad
7 Challenges People Face After Relocating Abroad
