Okay, so I’m about to leave to teach English in South Korea for a year (maybe longer!). I’m really excited, but also totally overwhelmed trying to figure out all the logistics. One of the biggest things I’m stressing about is how to manage my finances while I’m gone.
Specifically, I’m wondering about a few things:
- What should I do with my existing US bank account? Should I keep it open? Close it? I have direct deposit set up there for my old job (obviously that’ll stop), but I also use it to pay some bills automatically (student loans, credit card).
- How will I pay my bills back home? Is it worth setting up some kind of international money transfer service? Which ones are reputable and have reasonable fees?
- What about getting paid in South Korea? Will I need to open a Korean bank account? How does that even work? And how do I then transfer money back to the US if I need to?
- Credit cards! Should I use my existing US credit cards? Will there be foreign transaction fees? Is it better to get a travel-specific credit card? I’m so confused.
- Are there any other things I haven’t even thought of related to money and banking while living abroad? Taxes? Scams targeting expats?
Basically, I’m looking for practical advice from people who have actually done this. Any tips or recommendations would be greatly appreciated! Thanks in advance!
Answer
Managing finances and banking while teaching abroad requires careful planning and execution. Here’s a comprehensive guide:
I. Pre-Departure Preparations:
- Inform Your Bank(s): This is crucial. Notify all your banks and credit card companies of your travel dates and the country you’ll be residing in. This prevents your cards from being flagged for suspicious activity and potentially blocked. Provide them with a reliable contact number (perhaps a Google Voice number) and email address where you can be reached.
- Review ATM Withdrawal Limits & Fees: Understand your daily ATM withdrawal limits for each account. Inquire about foreign transaction fees charged by your bank and credit card companies. Some banks have partnerships with international banks, offering reduced or waived fees. Consider opening an account with such a bank if it aligns with your needs.
- Credit Card Choices: Research and obtain a credit card with no foreign transaction fees. These cards save you a significant amount of money over time. Look for cards that also offer travel rewards or points.
- Set Up Online Banking: Ensure you have robust online banking access for all your accounts. This allows you to monitor your balances, transfer funds, pay bills, and manage your accounts remotely. Download the bank’s mobile app for easy access.
- Power of Attorney (Optional but Recommended): Consider granting a trusted family member or friend Power of Attorney (POA). This allows them to manage your finances in your absence, such as paying bills, handling legal matters, or accessing your accounts if needed. Consult with a lawyer to ensure the POA is properly drafted and meets the legal requirements in your home country.
- Bill Payment Automation: Set up automatic payments for recurring bills (student loans, utilities back home, subscriptions). This prevents late fees and ensures your obligations are met.
- Scan and Store Important Documents: Digitize copies of your passport, driver’s license, credit cards (front and back), bank statements, and other important documents. Store them securely in the cloud (e.g., Google Drive, Dropbox) or on a password-protected USB drive.
- Address Updates: Ensure your mailing address is updated with your bank, credit card companies, and any other relevant institutions. Consider using a family member’s address or a virtual mailbox service in your home country to receive important mail.
- Budgeting: Create a detailed budget that outlines your income, expenses in your host country, and any financial obligations back home. Factor in exchange rates and potential fluctuations.
II. Banking Options While Abroad:
- Using Your Existing Bank Accounts:
- Pros: Familiarity, convenience of managing everything in one place.
- Cons: Foreign transaction fees, ATM withdrawal fees, potential security issues if your card is compromised abroad, exchange rate fluctuations.
- Opening a Bank Account in Your Host Country:
- Pros: Avoids foreign transaction fees, potentially better exchange rates, easier to receive your salary, easier to pay local bills.
- Cons: Language barriers, documentation requirements (visa, proof of address), potential fees for maintaining the account, repatriation issues when you leave (closing the account and transferring funds).
- International Bank Accounts:
- Pros: Designed for international use, often offer multi-currency accounts, can be accessed from multiple countries.
- Cons: May require a minimum balance, may have higher fees than domestic accounts, may not be available in all countries. Examples include HSBC and Citibank.
III. Money Transfer Options:
- Wise (formerly TransferWise): Offers competitive exchange rates and low fees for international money transfers. Transfers are typically fast and reliable.
- Remitly: Another popular option for sending money internationally, often with promotional rates for first-time users.
- Xoom (a PayPal service): Convenient if you already use PayPal, but exchange rates and fees may not be as competitive as other options.
- OFX: A good option for larger transfers, as they offer competitive exchange rates and low fees.
- Bank Transfers (Wire Transfers): Typically the most expensive option due to high fees charged by banks. Exchange rates may also be less favorable. Only use as last resort.
- Cash Transfers (Western Union, MoneyGram): Fast and convenient, but usually the most expensive option. Use with caution, especially when sending money to unfamiliar individuals.
IV. Managing Cash:
- Avoid Carrying Large Amounts of Cash: This makes you a target for theft.
- Use ATMs Wisely: Withdraw larger amounts less frequently to minimize ATM fees. Be aware of your surroundings when using ATMs, especially at night.
- Inform Yourself about Tipping Customs: Understand the local tipping practices to avoid over-tipping or under-tipping.
- Use a Money Belt or Hidden Wallet: To protect your cash and cards from pickpockets.
V. Security Considerations:
- Protect Your PINs: Never write down your PINs or share them with anyone. Cover the keypad when entering your PIN at ATMs or point-of-sale terminals.
- Beware of Scams: Be cautious of unsolicited emails or phone calls requesting personal or financial information. Never click on suspicious links or download attachments from unknown sources.
- Monitor Your Accounts Regularly: Check your bank and credit card statements frequently for unauthorized transactions. Report any suspicious activity to your bank immediately.
- Use Strong Passwords: Create strong, unique passwords for all your online accounts. Use a password manager to store your passwords securely.
- Secure Your Devices: Install antivirus software on your computer and mobile devices. Enable two-factor authentication for your online accounts.
- Be Aware of Your Surroundings: Pay attention to your surroundings when using ATMs or handling money. Avoid walking alone in unsafe areas, especially at night.
- Credit Card Skimming: Be observant when using your credit or debit card. Inspect the card reader for any signs of tampering before inserting your card. Use chip readers whenever possible.
VI. During Your Stay:
- Adhere to Local Financial Regulations: Be familiar with local laws regarding banking, currency exchange, and taxes.
- Keep Detailed Records: Maintain receipts and documentation for all financial transactions.
- Exchange Rates Awareness: Monitor exchange rates. Understand the nuances of currency fluctuations.
- Tax Implications: Research the tax implications of teaching abroad. You may be subject to taxes in both your home country and your host country. Consult with a tax professional for guidance.
VII. Upon Departure:
- Close Local Bank Accounts (If Applicable): Close any bank accounts you opened in your host country. Transfer the remaining funds to your home bank account.
- Notify Banks of Your Return: Inform your bank and credit card companies that you are returning home.
- Update Your Address: Update your mailing address with your bank, credit card companies, and other relevant institutions.
- Review and Adjust Your Budget: Reassess your budget to reflect your new financial situation.
By following these guidelines, you can effectively manage your finances and banking while teaching abroad, ensuring a financially secure and rewarding experience.
