8 Things to do for Financial Planning before Moving to Abroad

Moving abroad is a dream for many. Whether it's for further studies, better career opportunities, or simply to explore a new culture, the prospect of living in a foreign land is exciting. However, such a significant life transition requires comprehensive financial planning. So, if you're contemplating crossing borders, it's crucial to prepare your finances well in advance to make your journey smooth. This article will guide you through essential "financial planning for moving abroad" and "financial steps to take before moving abroad."

Start Saving Early

The first step in planning your finances for a move abroad is to start saving as early as possible. Consider the costs you'll encounter like flight tickets, visa fees, initial accommodation expenses, deposits for housing, and the cost of living in your destination country. Aim to have sufficient savings to cover these expenses and support yourself until you find a regular source of income abroad

Plan for Health Coverage

Healthcare can be expensive, especially in countries like the U.S. or the U.K. Therefore, it's vital to research health insurance options available in your destination country. You should also undergo a thorough medical check-up before leaving, which can help avoid unexpected health issues and related expenses.

Understand Tax Implications

One crucial aspect of financial planning for moving abroad is understanding the tax regulations in both India and the destination country. You need to comprehend how Non-Resident Indian (NRI) status affects your tax liability. Also, you should familiarize yourself with India’s Double Taxation Avoidance Agreement (DTAA) with several countries to avoid being taxed twice on the same income.

Manage Your Indian Investments

While moving abroad, you don’t need to sever your financial ties with India. You can continue to maintain and grow your money with different investment plans in India. However, you should be aware of the regulations concerning NRI investments. For instance, you need to convert your existing savings account into an NRI account, like an NRO (Non-Resident Ordinary) or NRE (Non-Resident External) account. If you have mutual funds or stocks, you should inform the respective fund houses or depository participants about the change in your status.

Settle Outstanding Debts

If you have any debts in India, like home loans, personal loans, or credit card dues, create a plan to manage them. You could either close these debts before moving or arrange a systematic repayment plan. Defaulting on loans can adversely impact your credit score, affecting your financial health.

Budget for Your New Lifestyle

Every country has a different cost of living. Research the cost of living in your destination country, including housing, food, transportation, taxes, and leisure activities. Once you have a rough estimate, create a budget to manage your expenses effectively. Remember, you may need to adjust your lifestyle, especially in the initial phase, until you are financially stable.

Prepare for Foreign Exchange and Bankin

Before moving, research the banking structure in your destination country. Opening a bank account might require certain documents and a minimum deposit. Also, understand the foreign exchange rates and services, as you'll need to transfer money between your home and host countries.

Plan for Retirement

Moving abroad doesn't mean you should neglect your retirement planning. If you were contributing to retirement plans in India, like the EPF (Employee Provident Fund) or PPF (Public Provident Fund), check the implications of your NRI status on these contributions. Similarly, understand and start contributing to retirement plans available in your destination country.

Final Thoughts

Moving abroad is a significant life decision and requires comprehensive planning and preparation, especially concerning finances. By considering these financial steps before moving abroad, you can ensure a smooth transition, leaving you free to make the most of the opportunities that come your way in your new home. Remember, it's always better to overestimate expenses and prepare for contingencies. By planning wisely and making informed decisions, you can achieve your dream of moving abroad without financial worries.