Congratulations! You are all set to shift abroad – perhaps to Canada, Australia or New Zealand. These countries have increasingly become liberal in immigration policies and it’s a more systematic process now.
As you embark on a new journey, follow these financial tips for a smooth transition:
Control your Budget
Ensure you have control over your household budget in the foreign land. It is easy to get enamoured by the rupee equivalent of your foreign salary. Your Canadian salary might be five times that in India. However, on an average, you also pay a rent which is 400% higher than in India, while paying 160% and 260% higher for your groceries and restaurant bills respectively, according to data provided by Numbeo.
If you are moving from Bengaluru to Toronto, monthly rentals for a one-bedroom apartment in City Centre will shoot up by 545% in rupee terms to Rs 1,10,000. Utilities bill will shoot up by 354%, while that of school fees and vegetable (tomato) increase by 660% and 800% respectively (see table).
That’s why cost-of-living calculations are important. Check if there is scope to slash budgets by renting out apartments in the outskirts of the city. And what could be its travel-related cost consequences? Control your discretionary expenses like those on entertainment and leisure travel to ensure you live within your income or savings.
Keep Adequate Liquidity
When you move to a new country, there are high initial expenses to grapple with. There is money to be paid for rent, multiple taxi rides, restaurants, and grocery stores. You might not be able to set up a bank account right away to pay these expenses. Moreover, using a credit card may not be easy initially. It is therefore safer to carry a forex card, or even foreign currency, while moving abroad.
Shifting to a new country exposes you to a newer tax regime along with a change in interest rates and exposure to currency risk. While you might save big in foreign currency, you must also ensure your investments beat inflation in that country. Be aware of various investment options and accordingly build a financial plan.
Once you become an NRI, back home you might need to change the residential status of your KYC documents. Moreover, you will have to provide overseas address and link holdings to an NRO or NRE bank account.
That’s why cost-of-living calculations are important. Check if there is scope to slash budgets by renting out apartments in the outskirts of the city? And what could be its travel-related cost consequences. Control your discretionary expenses like those on entertainment and leisure travel to ensure you live within your income or savings.
If you have short-term debt in India, try to repay it. If there are home loans, ensure you automate your repayments by linking it to a bank account. Surrender existing credit cards to the local issuers.
While abroad, ensure you keep your credit under check and repay on time to keep up the credit score.
Check with local insurers if your existing life insurance policy is covered in the country you are moving to. Moreover, medical and dental treatments can be expensive in developed countries. So, check if your foreign employers are providing health insurance. Alternatively, make arrangements to buy adequate health cover for your family. Surrender the local health policy before you move.
Moving abroad might seem a daunting task. After all, it’s seldom easy managing two identities – citizenship of one country and residency of another. Moreover, holding wealth in more than once currency calls for considerable procedural preparation. But, meticulous financial planning can ensure you smoothly cross the waters.