According to a UN report released in the last quarter of 2018, there were approximately 17 million Indians living abroad in 2017 – a 143% increase since 1990. The reasons for this migration could be many: a nicer job, new business prospects, higher studies, or simply the desire for a better lifestyle.
However, many move abroad in search of better salaries and larger payouts. But does it become easier to manage your money once you move abroad? No! In fact, things might get more complicated because it’s not easy to simultaneously manage one’s assets and liabilities back in the home country. Often you may end up managing two sets of financial investments.
If you are in the process of migrating abroad, or planning to do so in the near future, there are some doubts that might be in your mind. You might be wondering how to transfer your money back to your family, how to budget your expenditure, or how to figure out the cheapest way to send money.
We get it. And we’d be happy to assist. Read on for tips on how to prepare your finances for moving overseas:
Reassess your assets
By this, we mean you should check your portfolio and investments so that you can do away with the ones that don’t seem necessary anymore. For example, if your new employer is providing you with insurance, there is really no need for you to continue paying hefty premiums on policies. If at all you wish to continue, it is advisable to make the premium payment in advance to reduce your liabilities.
Similarly, if there is a need to change a nominee or sell property, it is recommended that you start planning early. The paperwork could take considerable time, so the sooner you start the better.
Convert your existing accounts
As you will not be an Indian resident anymore, ensure you convert all your Indian savings accounts, demat accounts, and mutual fund accounts to non-resident accounts so that the tax-related information in India is updated accordingly. It is advised that you consider consolidating these accounts – the fees to manage non-resident accounts might be higher and it is beneficial to minimise these overheads.
Further, conversion to non-resident accounts will help you with quick money transfer within the country you reside in.
Redeem what you can
You might want to revisit your investment portfolio and check for investments that might become costlier if you make deposits from an NRO bank account. Moreover, if your nominees are also applying for non-resident status, it might require further processes. Check if the contingency funds you built will come in use now while you are moving or whether you wish to keep the instalments active. Similarly, if you hold equity securities and think you won’t have the time to track them and trade actively, you might want to sell and redeem what you can so there are fewer liabilities to manage.
Understand the new country’s tax rules
Before you plan anything, spend some time to try and understand the new country’s taxation policies, income tax amount, rules of investments etc. For instance, if you are moving to the USA, FATCA rules will be applicable. This is to ensure that revenue earned by you during your tenure in the new country (or any investments made by you) are factored in the tax reporting. FATCA declaration is required even by Indian AMCs for investments in mutual funds. Some of them might not allow you to invest if you are moving to a country other than the USA. Hence, these checks become important.
Put a saving system in place
When living overseas, it is very important to budget and have your saving goals intact. This can be tricky because until you start living abroad, you can only plan in theory. You will come to know the practical and operational aspects of your savings and expenditures only after you have settled into an income cycle in the new country.
But when you do, that must be one of the first things to consider. Explore the many investment options available in your new country and try to invest in them. The main thing is to have a plan and budget, and follow it. For the first few months you can gauge the extent of your expenditures; once that stabilises you can figure how much of your salary can be practically saved. Since you would most likely want to transfer money abroad, efficient budgeting will help you determine the appropriate amounts.
Have a return horizon in sight
If you ever plan to return to India, it is advisable to have a general idea when. The decision may be tentative but it will play on your subconscious mind while making investment decisions. For example, if ten years is the horizon you have set for yourself, investing in a long-term asset like real estate might prove impractical.
Determine a money transfer system
More often than not, you will look out for the cheapest way to send money as you may have family back in India and you will want to transfer money abroad. Although there are many businesses that provide you with the option of instant money transfer, Xpress Money offers good value on your money transfers.
All you need to do is to visit an Xpress Money Location, fill in the recipient’s details, and pay in cash. The transaction generates a 16-digit PIN, which the receiver must present (along with a suitable ID) when they go to collect the money. That’s all! Xpress Money offers you hassle-free and instant money transfers!