Expats financial challenges

Financial Challenges of Moving Abroad

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Financial challenges are highlighted in expat survey

Financial challenges are among the top issues expats contend with before, during, and after their move abroad. The challenges go beyond having low funds. Unexpected complications arise even in simple, daily transactions. 

2023 Survey Participants 

A survey completed in January 2023 by Ipsos UK for HSBC bank found that expats face financial challenges in banking, credit, and account setups in their new locations. 

The survey includes results from expat families, digital nomads, and overseas students. Additionally, it includes people planning to move within the next 12 months, as well as those who have returned within the last five years. 

Survey Results 

Often, people are aware of the tasks required when they move, but for expats, these common undertakings can become giant financial challenges. 

Account Setup 

Over half (53%) of the survey respondents who relocated said they struggled to set up important things like a bank account, utilities, and the internet.  

Credit History 

Almost three in five (56%) people who have already relocated, and half of those preparing to move, learn that their good credit history is meaningless overseas. 

For this reason, financial challenges arise because expats have no local history to show to obtain a mobile phone contract or a credit card.   

Consequently, they are forced to use their original credit card, and incur all the fees and exchange rates charged for international use. Notably, there are issues using the old card, too – See European Relocation Challenges.

Banking and currencies 

Among those planning to relocate, nearly half (46%) expect a cashflow crisis upon arrival. Just under half (45%) agreed that not knowing how to juggle financial challenges between locations was a concern. Similarly, 50% of international students have the same concerns. 

Even though they may hurdle the financial challenges of opening a local bank account, there are significant charges to transfer money between countries. 

Solving Financial Challenges 

Expats can overcome many financial challenges by setting up a multicurrency bank account before moving.  

These types of accounts allow expats to exchange their money at good rates and with little to no transaction fees. The money is held in various currencies and is spent using the phone app or a card. Users choose which currency they want to pay with.

Furthermore, some multi-currency accounts allow expats to spend money in different currencies all from just one account. 

Added Benefits 

Having a bank account in the local currency unlocks the financial challenges to setting up auto-payments on phone and internet contracts, for example. 

Additionally, expats can instantly pay landlords and services providers directly to their accounts from their expat account. Moreover, expats can pay their bills at home without having to keep a bank account there.  

Examples of these types of accounts include Revolut, Wise, and Currencyfair. Review the details of each at Monito. 

What to Watch Out For 

One major potential drawback is that most credit cards come with fraud and dispute protections, while multicurrency accounts may not, according to the Consumer Financial Protection Bureau, a federal agency.  

Not all the companies that offer multicurrency accounts are licensed banks. However, many do team up with banks to offer F.D.I.C. deposit protection of up to $250,000.  

Finally, understand A.T.M.s still have charges. Additionally, be aware that the app may have weekend exchange charges. 

Country-of-Residence Taxes 

Fifty-nine percent of future expats are concerned about paying taxes in a new country. Indeed, expats learn that the rates, rules, and submission of taxes in their new country can differ greatly from what they’re used to. 

Home Country Taxes 

Uniquely, Americans moving abroad must be particularly careful. The United States is, surprisingly, one of only two countries in the world that taxes based on citizenship, not place of residency. That means it doesn’t matter where expats live, if they’re legally a U.S. citizen, they have a tax obligation to the U.S. 

If earnings are over a certain amount of income (domestic and foreign), expats must file a U.S. tax return. Notably, most Americans do not owe taxes in the US. Even so, most must still file annually. 

Beware of Fines

Fines for not filing a FATCA form from can range from $10,000 to $50,000. Likewise, failing to file the FBAR form can cost up to $124,588 or 50% of the total balance in all overseas accounts. 

Solving Tax Issues 

For these reasons, one of the best ways to make sure that both countries’ taxes are prepared and filed properly is to use a qualified tax advisor.  

The professional must thoroughly understand the taxation rules in both countries. Also, and equally important, they must be legally able to file on the client’s behalf. 

Likewise, in order to successfully manage taxes along with investments or retirement accounts, seek a chartered, Certified Financial Planner (CFP). 

On the other hand, do-it-yourselfers can learn international tax rules for the U.S. at U.S. Citizens and Resident Aliens Abroad.  

See also: 

Aisa International’s European Relocation Challenges

InterNation’s Financial Checklist for Expatriates

H&R Block’s 20 Things Americans Overseas Should Know about Taxes for Expats

The views expressed in this article are not personal advice. You should contact a qualified, and ideally regulated, adviser to obtain up-to-date personal advice regarding your own personal circumstances. If you do not, then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. This article reflects the legislation current at the time of writing. New legislation is rarely added to existing articles. Please check for later articles or changes in legislation on official government websites.



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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