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Pursuing a job opportunity abroad, whether it is as a long-term career move or a short-term experience, is filled with excitement and anticipation. Having said that, it is important to familiarize yourself with certain financial aspects involved in such a move before hopping on that plane.
I’ve picked up a few tips along the way whilst I was working as an EFL teacher in the Republic of Korea, and although every country is different, there are certain things you should always take note of. This list certainly does not cover every financial aspect you may run into, but it should get you thinking about the financial implications of working abroad.
1. What’s the basic cost of living?
The allure of working in another country and potentially earning a higher salary than what you are making at home is intriguing, but there may be a catch: What does it cost to live there? Even though you may have traveled to the country before, there is a vast difference between spending money as a tourist and what it will actually cost you to live there. Also consider that you may need to support yourself for up to a month before you receive your first salary.
In order to attract potential employees from other countries, some employers may offer free or subsidized housing, which will lower your living expenses. In such a scenario, think about whether you would be responsible for furnishing your home and paying the utilities. If so, how much would that cost you? Also figure out how much cell phone and internet contracts, transportation and groceries will set you back on average. Many international recruitment agencies offer country profiles, which may include cost of living estimates. Expatisan is a great tool for calculating cost of living in many different cities.
Having said that, other people who have gone before you are the greatest source of information in this regard. I cannot stress enough how important it is to understand how far a salary will really get you!
2. How does the tax system work?
Certain countries are eager to attract candidates in specific sectors (for example, as foreign language teachers or experts in the hospitality or medical fields). In order to make these sectors attractive, foreign nationals may be offered tax exemption. It is important to note that these exemptions may only apply for a period of time, and may differ based on your nationality. In addition to understanding your new country’s tax system, you also need to know whether you will be taxed on foreign income earned in your home country, so be sure to consult an expert before you depart.
In order to prevent a nasty surprise when tax season arrives, familiarize yourself with exactly how foreigners are taxed, and to also pay close attention to any rules that may apply to your particular nationality. Your prospective employer should be able to provide you with information. I would also recommend finding people in the specific country ask about their experiences.
3. What is the best way to transfer money home?
Whilst working abroad you may still have financial responsibilities in your home country or you may want to save and invest a portion of your salary at home. Although this is pretty easy to do, it can also chisel away at your income if you use a bank or service with high administration fees. Shop around before opening a foreign exchange or remittance account. Since you may also not be fluent in your new home’s native language, it is helpful to find out if certain banks have accounts and internet banking facilities aimed specifically at foreigners. If being able to do your banking in English is extremely important, and you need to find out which banks offer that service.
Additionally, if you are sending money home, you want to do it at a time that makes sense in terms of the exchange rate. Keep your eye on the exchange rate and transfer your money when you stand to make the most in your home currency. Xe.com (also available as a mobile app) is a handy tool to use for live currency exchange rates.
The most valuable resource in your planning is reaching out to other expats in a similar position. Facebook and LinkedIn are of immense value when it comes to meeting new people, and asking questions before you leave your home country. For example, a simple search for “South Africans in Korea” led me to numerous groups, and the people I connected with helped me with anything from setting up a bank account to navigating taxes!
The world doesn’t feel as big as it used to, and more and more people are gaining work experience in other countries. Navigating the financial implications of your move can help make working abroad an enriching experience.