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One of the biggest issues you will have as an expat is getting your money sorted.
The last thing you want is to erode your wealth and return home poor. So to ensure you remain living abroad and loving your new life, here are 5 mistakes expats can avoid when it comes to money.
1. Paying High Transaction Fees
The best way to transfer your money when moving to Australia is with a foreign currency specialist rather than a bank. (OFX, formerly Ozforex, has generously offered SMG readers free money transfers for life. Please take advantage of this offer and other services such as locking in your exchange rate.)
Banks will charge you up to £40 per transaction and over the course of your expat time these fees can certainly begin to accumulate. For example, two transfers a month can lead to £1,000 in fees alone. Transacting through a specialist currency company can substantially reduce the fees. Fees won’t be eliminated altogether but many currency specialists provide free transfers above £2000 (GBP equivalent).
You’ll also get a better foreign exchange rate, this can be up to 4.0% which, if you transfer a large sum of money, can add hundreds or thousands of Australian dollars to your total. Since Sydney is an expensive city to live in, making sure you have as much money as possible will make the relocation easier, plus it’s your money you shouldn’t have to pay to have it in another country.
2. The ‘Actual Exchange Rate’
When transacting with a bank or foreign exchange broker, always benchmark the rate offered with the ‘actual exchange rate’ as this will give you a clear understanding on whether you have been offered a good or bad deal.
Remember you are the customer and have a choice, so make sure you are quoted inside 1% of the actual exchange rate, if not compare other competitors. Other foreign exchange retailers can give you extra currency on larger transfers, which is ideal when you’re relocating, and exchangers now promote a price promise.
If you find a cheaper price elsewhere, they’ll refund the difference. Also a foreign currency specialist will usually offer more help on the exchange rate and transfer process compared to a bank.
3. How Much Money You Bring
It can be very tempting to take everything out of your bank and bring it with you, but I must warn you that it is not safe to bring large sums of money with you.
Of course, you need to ensure you have enough money with you to support yourself when you first arrive. But it’s recommended that you have roughly $1500 to $2000 for the first two to three weeks to pay for accommodation and transport. The rest you should either transfer or use Traveler’s Cheques or an International Credit Card, as Traveler’s cheques can be cashed at any bank or currency exchange in Australia.
If you’re carrying $10,000 or more in cash, then you must declare in when entering Australia or you could be arrested and the money taken off you, and no one wants that.
Whereas, lost credit cards or traveler’s cheques can be replaced and they don’t expire so can be used at any time.
Lauren: Just wanted to say that I have another article that covers how much money you will needed saved for your move to Sydney. It will help you sort out your savings as it will obviously be different for everyone. Some people will need more than $2,000 with them when they arrive in Sydney.
4. Forward Contracts
You need to protect yourself against any sudden changes in the foreign exchange rate, to do this you can use what’s called a forward contract.
Forward contracts can help you reduce the risks of fluctuations. They fix the exchange rate at a certain time, so even if the rate changes your contract guarantees that you will receive the rate you were offered.
For example, if the pound rises to 1.76 against the Australian dollar, with your forward contract you’ll receive 1.76 even if the pound later falls to 1.46.
There are two types of contracts, fixed forward contracts and open forward contracts. A fixed forward contract, you taken delivery of your currency on a specific date that you choose, giving you complete control. An open forward contract is where you can draw your currency at once, or in different amounts at different times when you need them all at the fixed rate you were offered.
5. Don’t Settle For the First Deal
The payment system has matured and there is an ever greater choice for you to choose from when looking to transfer money abroad.
Don’t settle for the first deal you may stumble across, and if it comes to it don’t underestimate the power of good old fashioned haggling either!
Businesses never want to turn away business, so don’t hesitate to suggest a counter offer to your supplier. You honestly will be surprised at the lengths organisations go to sustain business, and what’s the worst that can happen, that they can say no.
About the Author: Sarah Jayne Adams is a UK based magazine journalist, who is eager to travel the world but for now is a freelance writer and a part-time waitress, until her savings pot is full.
Disclosure of Material Connection: This is a “sponsored post.” The company who sponsored it compensated me via a cash payment, gift, or something else of value. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”