Updated: Feb 13, 2020
Expatriates — those country natives whose wanderlust causes them to pull up stakes and move to another country — seem to be doing well, thank you very much.
According to a 2014 study by global banking giant HSBC, the vast majority say they enjoy their new homes, and Switzerland, New Zealand, and, yes, the U.S. are all high atop the list of countries expats call home.
That doesn’t mean becoming an expat is a great or even a good idea — not unless you cover some foreign destination basics first.
"There are a great many decisions involved in making the move abroad, ranging from consideration of finances and managing money, right through to integrating into the local community and arranging childcare,” says Andrew Ireland, EVP and Head of Premier Banking at HSBC Bank USA.
Knowing what you want — and what works — in a foreign land is really Job One when preparing for life as an expat.
According to the HSBC study, the following issues top the list of priorities:
Education: Expats clearly want good schools for their kids. 78% of expat parents are opting to state-educate their children compared with the global average of 37%, HSBC says. Additionally, 50% of expat parents rank the U.S. in their top three best countries for schooling.
Financial benefits: Money matters for expats, too — especially older ones. 65% of expats keep their retirement cash in the new country they call home.
Let’s expand on this one a bit, as the financial side of expatriatism is a huge reason why many Americans leave the U.S. in the first place (primarily because of over-taxation and the mounting debt, both public and private, threatening U.S. citizens).
Many countries in beautiful climates offer lower tax burdens than the U.S. (Panama, Belize, Thailand, Malaysia, and Costa Rica are at the top that list). The cost of living in these countries is significantly lower than in the U.S., with beachfront properties in Panama City going for less than $100,000.
You’ll want to look at the currency rate of the country you’re moving to as well. For instance, if you’re an expat because of your job, you’ll want to be paid in U.S. dollars in countries where the currency is weaker and in local currency if the country’s currency is stronger than the dollar.
Ease of assimilation: Expats also want to “blend in” to a new country in the easiest way possible. Expats in the U.S. find that especially easy — 73% of U.S. expat respondents said they found it easy to assimilate into the local community (compared with the global average of 65%).
How to Become an Expatriate
Becoming a durable and sustainable expat is all about preparation, with a dash of flexibility and risk involved. To live the expat life on the best terms possible, take these actionable steps:
Research visa and work statutes: Do your homework first and figure out several potential landing stops, lifestyle-wise. Two key components of that research is finding out exactly what the visa requirements are in those countries and what their work guidelines are.
Are there age restrictions or time limits on both visas and work permits? Does a visa or work permit restrict you because of what you do for a living? Get the answer to those questions first before making any big decisions about where you’ll live.
Living abroad: In the HSBC study, many expats said they weren’t as prepared as they’d have liked to be before moving abroad and that it dampened their enthusiasm for the expat lifestyle (at least until they figured out how to get things done in their new foreign home).
To reduce that risk, make sure you have living quarters arranged before you move aboard (a research trip abroad is highly recommended for your country of choice). You’ll also want to know in advance how to set up a bank account, sign up for phone, heating, and electrical services, and get a driver’s license.
Get to know local customs and laws: Do all the research you can on your target country. Visit expat-themed web sites for good living and lifestyle advice in any country. Also visit the government websites of any country you’re considering, especially when you’re looking for more data on embassies, visas, and work permits.
Make sure your health insurance is valid overseas: Any trip abroad comes with some element of a health risk, and many U.S.-based health plans don’t cover heath issues in foreign countries. If you study or work abroad, the good news is that you’re likely already covered by your employer or university. If you’re gainfully employed abroad, part of your paycheck may go straight to the government if your country offers nationalized health care.
Check beforehand to see if that’s the case. If you’re not working, you may be able to make monthly cash contributions to be included in any country’s government-run health insurance program. Check with your target country’s government website to find out for sure.
Take care of your money: You’ll be dealing with different currencies and different tax and investment rules in most countries you move to as an expat. Think ahead and know what this means to your financial liquidity. Use websites like Oanda.com and XeCurrencyConverter.com to break down currency calculations relative to the U.S. dollar and to the currency you’ll be using as cash money.
By all means, set up an account at a local bank, but before you go, check with your bank to see if its debit and credit cards work in your new overseas home. Major credit cards usually work fine in foreign bourses, but their usage does come with much higher interest rates than you’ll typically see in the U.S.
Consider pre-paid credit cards from the major credit card providers as a back-up plan — they can prove invaluable in getting cash out of ATMs when all else fails.
You’ll also want to check out local transportation up front, especially if you’re not driving in your new home country. Also, check with your cell phone and Internet provider to see what changes need to be made to get your mobile phone and computer up and running overseas.
Planning the expat life brings with it a long checklist. You’ll need to go down that list one by one to make sure your experience away from the U.S. meets every last one of your expectations.
Brian O'Connell for Wealth Daily