With high living costs, concerns around Brexit and — of course — the UK’s notoriously dreary weather, it’s no wonder more people than ever are moving abroad. The number of Brits emigrating to the EU has risen by 30% since the Brexit referendum alone, with the latest statistics showing that roughly 407,000 people left the country in 2019 overall.
In addition to European nations, the most popular expat destinations include New Zealand, Australia and various Caribbean countries. It’s easy to see why people are picking these countries from an enjoyment standpoint alone. Take Australia, which gives Brits the opportunity to embrace an outdoor lifestyle like no other. The Caribbean offers similarly idyllic opportunities. For example, Barbados has been labelled “the paradise island”, while Dominica is nicknamed the “Nature Isle” and boasts a pristine coastline, acres of unspoiled tropical rainforests, incredible marine biodiversity, and a number of natural hot springs.
But of course, emigrating isn’t quite as simple as just booking a one-way ticket to your destination of choice and working it out from there. Doing so requires careful consideration around everything from employment and visas, to where you’ll live and healthcare provisions. One of the biggest aspects to consider is your finances. The only way you’ll successfully manage a move abroad is by having your money matters in order, otherwise you won’t be able to support yourself. To get you thinking about the kind of things you need to consider, we’ve outlined four key financial tips to take into account when emigrating.
1. Save and budget carefully
It goes without saying that you should secure yourself a job in the country you want to move to. However, even if your earnings aren’t particularly affected by your emigration, it’s still important to save money before you take the plunge. This is because doing so comes with a whole host of added expenses that your income alone might not cover. For example, you’ll need to pay for things like flights, visas, deposits on a property and storage space. It’s also a good idea to have some money left to cover for emergencies and the costs of moving back to the UK should you end up deciding that emigrating isn’t for you. Financial company Acorns recommend saving up to three to six months’ worth of expenses before moving abroad.
It’s also essential that you work out the cost of living in your new country and budget accordingly. Although the UK has a high cost of living, this doesn’t necessarily mean your new home country will be cheaper. You don’t want to leave yourself short by assuming you can spend money in the exact same way as you do here. So, prior to moving, work out the costs of recurring expenses like food, housing, utilities, transportation and insurance so you can make a monthly budget based on your income and spending.
2. Sort out your bank account before moving
Although the internet has made remote banking simpler than ever, this doesn’t automatically mean you’ll be able to use the same bank account in your new country. In fact, many nations prohibit certain foreign banks from operating within their borders. So it’s important to check whether it’s possible to continue using your current bank account and set up a new one if not. It’s also recommended to sign up for at least two accounts and do this before you move to reduce the risk of having no bank access when you arrive.
While many countries will allow you to open up a new bank account there from the UK, others may not be so flexible. For example, some will only let you do so face-to-face or require you to have a permanent residential address in the country in question. If you’re unable to open a bank account prior to moving, it’s critical that you check with your chosen provider which documents you’ll require so you can prepare them in advance. This will allow you to sort out everything quickly once you arrive.
3. Settle everything tax and pension-related
Sorting out your tax affairs in both your new home and the UK can be extremely complex, particularly if you have investments or property. The rules can differ hugely from country to country — for example, investments like ISAs are tax-free here in the UK but not in Australia. What’s more, just because you’ve moved away doesn’t necessarily mean that you’re exempt from UK tax laws and things like National Insurance. Consequently, we recommend getting expert tax advice to ensure you don’t end up either underpaying tax and landing yourself in hot water, or overpaying and wasting money.
Similarly, it’s crucial that you get your pension affairs in order too. What happens with your pension depends on whether you have a defined contribution or a defined benefit (final salary) plan. For the former, you can either leave your pension in the UK and drawdown funds from your new home, or transfer it to a pension scheme there. For defined benefit pension schemes, you’re probably better off leaving it in the UK, as transferring it to your new country may result in you losing out on the guaranteed income it offers. Whatever scheme you’re on, it’s advisable to talk to a regulated financial adviser before making any decisions, or you could risk being unable to rely on your pension abroad.
4. Get your insurance sorted ASAP
In the era of coronavirus, insurance is more important than ever. So it’s crucial you get all the cover you need so you’re not left short if anything goes wrong. For example, travel insurance is essential should your flights be cancelled — something that’s becoming all too regular an occurrence during the pandemic. This will cover the costs of arranging new flights, as well as things like lost luggage and personal injury suffered during travel.
Health insurance is also increasingly vital considering the stress healthcare systems are currently under. Should you or a family member become unwell overseas, you may face much longer waiting times than usual or even be unable to receive healthcare at all. This will make private health cover a godsend.
Of course, it’s not only coronavirus-related insurance you should be purchasing. Everything from renters and auto insurance, to pet and life insurance could be essential in your new home country. For a more in-depth guide around the types of cover you’ll need when moving abroad to countries like Australia, the US and the UAE, check out this article by MoveHub.