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Setting Up Your Financial Life Abroad

18 April 2011 One Comment

The following is a guest post.

Business people and their families are often at the whims of their careers – this often entails assignments to foreign countries for months or even years. This is generally an excellent opportunity, however, for people with detailed savings plans it can be a spanner in the works. Indeed, you will have to create a new financial life, especially if you are going to be there for a while. This can entail setting up a credit card in UAE, a bank account or even taking out loans.

Living in a country without a local bank account is annoying and inefficient – you will not be able to use cash machines without incurring major charges. Indeed, all sorts of transactions will come with extra fees that will sap your finances. Additionally, you will be at the mercy of the vagaries of exchange rates – this makes it difficult to plan your financial life. Setting up a foreign bank account is generally quite easy, though the bank will require your passport and documentation regarding your status in the country.

Once you have a bank account you can set up credit cards, mortgages, and personal loans in Dubai, Scotland, Malaysia or whatever country you happen to be in. This will allow you to have all the necessary tools you need to responsibly handle your finances. If you are in a country for a very long time you can even consider setting up a savings account there and a stock portfolio.

The most crucial element of living abroad is to continue to execute your financial plan – though you may be in a far-flung nation you can still make regular payments to your pension plan, and continue to support your other investments. Living abroad should ideally be a financial opportunity – you don’t want to sabotage this by letting it waylay your retirement plan.

One Comment »

  • Ryan said:

    I disagree completely with this post. I myself am a business person, and I spend a lot of time abroad, I spent 6 months in the Netherlands and am currently based in Germany.

    It's very cheap to withdraw money from a cash machine, in fact if you are using the right plastic (a couple of years ago it was Nationwide's flex account offering no loading and 0% fees on cash withdrawals, and currently it's the Halifax Clarity Credit card – very low fees and no loading on the exchange – also pays 5 GBP per month for having a balance of 300 GBP or more…)

    I think it's important to note that you need to get the right bank account abroad, and highlight that many banks abroad are not free – free banking seems to be mainly a UK thing. If you get the wrong bank account abroad, it can be very costly in both the short and long term. I have one friend who spent a few years in Germany, moved back to the UK for 5 years,and suddenly couldn't open a bank account as the German account he thought he'd closed had stayed open due to an administration error, causing difficulty to re-open and bad credit history in Germany (due to the fees not being paid).

    I agree with the rest of what you say, particularly being at mercy to exchange rates. It can be very difficult to plan finances. A bank account is only necessary in the long term, for bills etc.