Living or retired in another country, how do you manage your financial life?
Virtually, with the support of a laptop and an internet connection.
At least that should be your goal.
This way, you don’t have to worry about not being able to access an account, get cash, move money, send a wire, or pay a bill. You want these critical functions to be hassle-free… not a distraction and a big pain in the neck getting in the way of all the fun you’re supposed to be having in your new life in your chosen Shangri-la.
In addition, of course, you want to avoid late fees and to minimize the costs associated with accessing and using your own money (via ATMs and your credit cards).
When I began covering this beat, more than three decades ago, things like managing bank, investment, and retirement accounts and paying credit card bills while living overseas were a real challenge.
On one hand, today, thanks to 21st-century technologies, I’d say this is no longer the case. I’d no longer call managing your financial life while living in a foreign country a challenge. It’s more a to-do list.
On the other hand, in this post-FATCA, anti-money-laundering era, banking overseas is a greater challenge in many ways than it’s ever been and more of a challenge all the time, especially if you’re an American.
Establishing the necessary financial management infrastructure is key to your success living, retired, or investing overseas. Here are seven practical recommendations for how to accomplish this, based on personal experience:
Managing Your Financial Life Overseas Tip #1:
Put all the pieces in place before you move. You’ll find it more complicated to set up some of the systems you’ll want to set up if you wait until after you’ve already left home.
Some banks today, for example, require use of security tokens (or fobs), sometimes virtual, sometimes physical, when sending a wire. If your bank requires a physical token, you’ll need to take possession of it somehow. Easiest way is to go to the bank and pick it up.
If you’re already living in another country when you realize you need a physical fob to make a wire transfer, you aren’t going to want to make a special trip back to your home country to visit your bank to collect it. The alternative would be to ask your bank to mail the fob to you. However, if your bank is in the United States, it’s likely only going to agree to mail the thing to a U.S. address… meaning you’ll still have to figure out how to get it to wherever you’re living…
Managing Your Financial Life Overseas Tip #2:
This follows directly from Tip #1…
As you want to be able to manage all aspects of your financial life online, set up all online access and management systems before you leave home. Set them up and test them.
If your bank or brokerage house, for example, doesn’t offer you the ability to accomplish any and every task you imagine you’re going to want to accomplish online, you want to find that out sooner rather than later and for sure before you’re living a thousand miles away…
Managing Your Financial Life Overseas Tip #3:
Make sure, as well, that your bank will allow you to move money (from one account to another or from one country to another) and to pay bills remotely and electronically. If it won’t, you need a new bank.
Managing Your Financial Life Overseas Tip #4:
If you have but one current bank account in your home country, consider opening a second. This should give you more options for executing online transactions. Plus it will mean you’ll have debit cards from two banks, which will come in handy should one of them get cut off while you’re overseas.
In addition to two debit cards, you want to have at least two credit cards before making your move… again so that you have a Plan B (and maybe a Plan C) should the first cut get cut off… which, unfortunately, can happen often.
Managing Your Financial Life Overseas Tip #5:
Consider opening an account with Schwab, which doesn’t charge a fee when you use someone else’s ATM machine and which even credits you when you are charged a fee by another bank. Schwab automatically refunds any ATM fee you are charged. When I’m charged US$5.25 by a machine in Panama, for example, Schwab credits me the US$5.25 on my account when the withdrawal is debited.
Managing Your Financial Life Overseas Tip #6:
In today’s world, the biggest money-related challenge you’ll likely encounter will be to do with wiring money across international borders. Many banks still require you to show up in their offices to present wire instructions. Increasingly, though, it’s possible to initiate wires by phone or online, using either a security token or a series of passwords.
This is another deal-breaker. If your bank won’t allow you to initiate international wires unless you show up at a branch in person, you need a new bank. How are you going to stop in the office of your bank in Des Moines to approve a wire transfer if you’re living in Buenos Aires?
Managing Your Financial Life Overseas Tip #7:
If you’ll be moving to a country that doesn’t use the U.S. dollar (or whatever your home base currency happens to be) and you aren’t able to open a local bank account in U.S. dollars (or, again, your base currency, whatever that is), consider setting up an account with an online foreign exchange company like MoneyCorp.
You’ll be able to save on wire fees, and you’ll get a better exchange rate on each transfer you make.