How to Manage Finances at Home While Living Abroad
Use all electronic means available to manage your finances from abroad.
When you're living abroad for a time, how do you arrange your affairs and manage your finances at home? Issues like accessing money, managing payments, paying taxes, and dealing with property can seem overwhelming. Here are some options and tips on how to manage your finances at home while living abroad.
How to Manage Your Property from Abroad
If you own property, you can either sell it or keep it. There's a lot to consider, and many options available.
Reasons to Sell Your Property
Regardless of why you sell your property, you need a plan for the proceeds. If you don't have a plan, invest the money in something secure that ideally provides a rate of return beating inflation. Don't allow yourself to access the money randomly; it can disappear before you know it.
Here are some reasons to sell your property:
You were planning on downsizing anyway
You can't afford to pay the mortgage while you're away (even with rental income, or if you're unwilling/unable to rent)
You don't want to be concerned about it while you're abroad
You need the money for something else (consider where you'll live later on, and how you'll afford it if you spend the property proceeds)
It's a market timing opportunity (be careful of timing markets; even if you lock in inflated gains with the sale, nothing is guaranteed – including where the market is headed)
You want to relocate, but don't know where to yet
Reasons to Keep Your Property
Keeping your property can be lucrative — for a little additional work and coordination. The degree to which your mortgage is paid off influences the profit/loss factor; the higher the mortgage, the more you have to hustle to pay it (with rental or career income).
Here are some reasons to keep your property:
You want to return to the same place from your travels abroad
You plan to keep a foothold in the real estate market
You want to earn income from renting it out
Ways to Manage Your Property From Abroad
You have a number of options when it comes to finding occupants for your home while you're away.
Hire Property Managers: A property management company will market your place, bring in tenants, and manage any issues along the way – for a fee, which is usually expressed as a percentage of rent collected.
Have a Friend or Family Member Manage it: If a friend or family member can step in and keep an eye on things (especially if you find a stable reliable tenant before you leave), you can save money on property management fees. Consider the responsibilities involved, and what will happen if the tenant leaves while you're away; and how difficult it might be to afford the property mortgage/expenses if your friend or family member is unable to find new tenants quickly due to their own busy schedule.
Short-term Rentals: Short-term vacation rentals for holiday-makers are on the increase. Depending on the area and your property, you could have a steady stream of short-term tenants come through — which is generally more lucrative on a nightly basis than long-term rentals.
The catch is, you need somebody local available to prepare the place, check in new arrivals, and clean up afterward.
Holiday Rental Agencies: Subscribe to a holiday rental agency, and, similar to a property management company, they'll occupy your space with holiday-makers while you're away, and manage issues as they arise. If your property is in a desirable area, this can be lucrative — but remember it also comes with fees.
Other Options for Your Property
These options might not cover the mortgage, but they ensure your home isn't empty while you're living abroad.
House-Sitting: Make sure your property is enjoyed and secure, your plants watered, and your mail checked by house-sitters! This is a great option if you're leaving pets behind too.
Home Exchanges: Similar to house-sitting, home exchange sites afford you the benefits of a house-sitter back home, with the added value of getting free accommodation abroad yourself, while you stay in somebody else's home.
Paying Bills, Dealing With Mail While Overseas
The easiest and most obvious way to pay bills while living abroad is online. Most merchants have an online platform for getting paid and will email you when money is due. Regular payments can be set up automatically through your online banking platform.
In cases where periodic bills can't be received electronically, you can have a house-sitter or neighbor/friend/family member either forward your mail in batches or open it to scan the contents and email them to you.
Virtual Mailing Services
If you don't have somebody to check your mail (or an address for it to be sent to), you can subscribe to a virtual mailing service. It gives you an address to which your mail is sent. They notify you of the mail's arrival and, on your instruction, either scan it, forward it, or trash it.
You'll want to maintain a financial foothold at home if you plan to return; so during your time living abroad it's all about setting up a secure system to access your money, minimizing fees and charges.
Setting up a Local Bank Account While Abroad
Depending on your citizenship and the regulations of the country you're visiting, setting up a local bank account is a good way to access your money at home to use locally. It takes a bit of administrative leg work (plus monthly account fees), so you'll only want to do it if you are staying for a while (at least six months) and/or are returning frequently.
Assuming both accounts have online access, you can then transfer money from your home institution to your bank account abroad. You'll get good currency conversion rates, and can use the money abroad to pay local bills and make cash/debit payments.
You need to continue to file taxes at home. Establish a relationship with an accountant (or tax preparer) before you go, so that you can coordinate things from abroad. Whoever receives your mail (be it a virtual mailing service, neighbour, or family member) can forward any necessary tax slips to your accountant, and, if you are keeping an electronic record of your expenses and other tax-related affairs, you can email the rest of the information required for filing to your accountant.
You'll need to sign off on your taxes; this can either be done with an electronically signed document or via mail to your address abroad.
Depending on how and what you are being paid, you can manage these finances accordingly:
Any cash or check-derived rental income from the property options described above can be deposited to your account by the person collecting the rent. Property management and holiday rental agencies often transfer payments electronically.
If you have a location independent business that's partially funding your life abroad, online payment systems like Paypal are user-friendly, and link to your bank accounts.
Most employers and businesses are accustomed to making online payments. If you currently receive checks, contact the issuer and ask to switch to electronic payments. If they're unable to comply, then the person who opens your mail can manually deposit it for you. (Some virtual mailing services also offer this service).
Designating a Representative and Power of Attorney
No matter how you manage your finances, if you're living abroad it's prudent to have somebody at home who can act on your behalf if you're unable to. This needs to be somebody you trust implicitly, because the best application of this principle is to give them power of attorney for property.
By doing this, they can receive registered mail, perform banking transactions, and ultimately act on your behalf in any way necessary.
And because they have copies of all your information (banking, passports, insurance, etc), they are your ultimate emergency contact. If something happens abroad, with a phone call, they can advocate for you.
Here are some other tips on how to arrange and travel with your official documents.