Things to consider when setting up your finances overseas

Moving abroad? You're certainly not alone! According to a recent United Nations report, an estimated 272 million people live outside of their country or region of origin. One-third of all international migrants come from only 10 countries, and two-thirds live in just 20 countries[@international-migration-report-2019].

Whether you're moving solo or with the family, things to consider include securing a visa, finding accommodation and organising healthcare.

And all of these details might depend on setting up your finances, both at home and abroad, so it's a good place to start.

Many countries are leaning toward more cashless transactions. You'll most likely need a local bank account to set up a phone contract, deposit your salary, and to pay utilities and your rent (or mortgage). Doing this will also help you build credit history.

The complexity of your finances will determine your needs. Ask yourself:

If you continue to use your home account to withdraw the local currency and to make global money transfers, the transaction fees can quickly mount up. Setting up your finances abroad before you move is not just about meeting your daily banking needs – it's also financially prudent.

To create a budget, you'll need to know what it's going to cost you to live in your new destination. Factor in all the elements that make up the cost of living: food, housing, security deposits, insurance, utilities, transportation and schools (if you're bringing the kids).

Take all that information and make a monthly budget based on your income and expected spending.

Say you're moving from Sydney to New York. Assuming you're renting in both cities and living the same lifestyle, what costs you USD5,800 down under would cost USD8,400 in New York, where rents are 85% higher and restaurants are 43% more expensive[@international-cost-of-living-comparison].

Your visa may require you to have a certain amount in your bank account to show you can support yourself while you're abroad. Plan to have enough savings to cover you for at least 6 months while you settle in.

Moving countries and don't know where to start? Find the essential info you need for your new life abroad in our country checklists:

Setting up your finances overseas starts with a local bank account. Do this before you move abroad and you can have your ATM and credit cards ready pre-departure, or sent to your new permanent address. Get familiar with online and mobile banking and you can manage all your accounts in one place.

An international bank account will allow you to make free global transfers between your accounts. There's no need to close your home account, especially if you'll still be paying bills from it, and you can link the two accounts together. Online and mobile banking now make it easy for you to manage all your global accounts.

Once you've set up your new bank account overseas, you'll need to transfer some money into it to cover the expenses of moving abroad. HSBC Global View and Global Transfers (GVGT) makes it easy to transfer money between your accounts so you'll have money there when you arrive.

With GVGT you can view, link and manage all of your eligible HSBC accounts online, and transfer up to USD200,000 (or the currency equivalent) per day in most markets to your eligible or third-party HSBC accounts worldwide.

Best of all, the transfers are almost instant and there are zero transfer fees.

Taxes can be tricky, especially if you own assets and earn an income in two places. What you pay in taxes when you're working abroad will depend on your nationality and where you live. Notify the tax authorities where you're living now to let them know you'll be moving. You may be liable for fewer taxes or even be exempt.

Some countries have eliminated dual social security taxation. Under these bilateral social security agreements (SSA), for example, non-resident Indians (NRIs) are exempt from paying twice in 18 countries, including Australia, Canada, Japan, France and Denmark.

If you're working in another country or region for only part of a year, you may also be eligible for a tax refund when you return home, depending on the country.

Are you moving from a country with a residential system, like Canada, or a citizen-based system, like the US? With a few exceptions, citizens under the latter system must file taxes in their home country or region, no matter where they are in the world. If you're still earning money in your home country or region, such as through rental income or from the sale of property, you may still be liable for income or capital gains tax.

Talk to a tax professional who understands dual tax systems so you can take advantage of tax breaks and avoid penalties.

There may be a few options for you if you're currently contributing to a pension scheme in your home country or region and move abroad. This will depend on whether you have a private or workplace pension, and where you're living. Private pensions are similar to workplace pensions but they'll be set up by you rather than your employer.

In the UK[@international-pensions-advisory-service] for example, you might be able to leave your pension where it is, and even continue paying into your scheme while you're overseas if you wish. Or you could transfer it to your new country, if your plan is part of a Qualifying Recognised Overseas Pension Scheme (QROPS).

Your private pension will probably still be deposited into your local account back home. Link your global bank accounts to make fund transfers between your accounts easier. Just remember that your pension could be considered taxable income, and that you'll have to declare it.

What happens to the pension fund you paid into in your new country when you return home? In some cases, you might be entitled to a refund, especially if your assignment is only short term. Contact the relevant pension authority if you think you're eligible for a pension from another country or a refund when you move.

We know your family loves you and means well. However, unless they're super financially savvy, this doesn't necessarily mean their (unsolicited) advice is always right for you.

This is where talking to someone like a financial adviser can be helpful. They can help you open an account overseas and sort your pension and legacy planning details, and possibly put you in touch with a tax consultant. And they can be objective – something not all family members can do.