With around one million Australians working or living overseas at any one time, according to the government’s Smart Traveller site, it’s no secret that staying abroad for the long term is an attractive option for many people.
But if you’re thinking of buying a one-way plane ticket once coronavirus travel bans have been lifted and these uncertain times are behind us, then you’ll need to first plan out the finances for your extended stay.
TorFX’s managing director, Nigel Fox says this means figuring out details like the amount of savings to move to your new temporary home and the most affordable way to make the international money transfer (IMT).
“When it comes to deciding how and when to move your money, it’s important to explore the options available to you,” Fox says.
The options extend beyond our major banks.
In fact, Mozo’s number crunch found that for a transfer of AU$10,000 into US Dollars, you could save US$256, just by going with the average online IMT specialist exchange rate rather than the average big four bank rate.*
On top of shopping around for a cheap money transfer deal, here are a few questions to ask yourself before packing your bags and hopping onto your flight post-coronavirus.
Should I transfer all my savings in one go, or bit by bit?
The short answer is, it depends. You’ll need to weigh up a number of factors, including foreign exchange (FX) rates at the time of your transfer.
“Generally speaking, the more you’re transferring, the more competitive the exchange rate you can secure, so moving your funds as one lump sum could leave you better off,” Fox says.
He adds that if market exchange rates are poorer than desired, “you may wish to move your money in stages, as the rate may have improved by the time you exchange your next installment.”
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The other risk to consider is currency volatility.
While a lump sum transfer would protect you from this volatility, sending your money in monthly increments would do the opposite of leaving you open and exposed to fluctuating rates.
In Fox’s view, the latter approach “could result in the value of your transfer differing from one month to the next, netting you more or less depending on which way the market has moved.”
Take the example of Brexit, which caused significant shifts in the AUD/GBP currency pair. Fears of a no deal Brexit, as the United Kingdom prepared to exit from the European Union, resulted in the Pound slumping, while news of a Brexit deal had the reverse effect.
Aussie-based IMT specialist SendFX's Hannah Churcher says that it’s important to look at the exchange rates when making regular transfers.
“Although a fee may not be charged, you could still end up with a dent in your final amount when you’re exposed to unfavourable exchange rates,” Churcher says.
Some quick tips
Minimise your risk and save on time by taking advantage of these IMT features:
- Lock in a forward contract: This allows you to secure a favourable exchange rate for up to 12 months, although the catch is, you may miss out on rates becoming even better down the track.
- Set up recurring payments: This automates your regular transfers so you won’t have to go through the hassle of sending money manually each month.
Should I keep my funds on a travel money card or a local bank account?
A good rule of thumb here is while a local bank account will become more essential once you’re staying overseas for longer than just a brief visit or holiday, a travel money card can help meet your financial needs initially.
“In some cases it can be difficult to open a bank account before you’ve moved to a country,” Fox says.
For instance, for identification purposes, some banks may require you to actually be in the country to set up your account. So, while you’re still establishing yourself, a travel money card may be your best bet.
Another benefit of travel money cards, according to Churcher, is that they generally let you load multiple currencies “which is great if you’re visiting more than one country during your long stint abroad.”
But relying on this option for too long can also hinder you.
“You may incur higher fees and exchange rates when loading and reloading the card, while some cards may have a maximum balance and take several days to process reloading,” Churcher says.
“When setting yourself up in a new country, there are many expenses you may need to take into account such as purchasing a car or rental bond, which may not be suitable for payment by travel money card.”
So to ease the process of settling in, consider switching to a local bank account with low to no ATM, application or ongoing account keeping fees.
More money transfer tips for your overseas stint
Besides asking those big questions, it’s also worth keeping a few smaller things in mind before making an international money transfer for your long term stint:
1. Keep an eye on the market
To stay on top of the latest currency movements, you can subscribe to daily FX news with a specialist IMT provider, or use their rate alerts feature, which would notify you via text or email if your ideal rate has been reached. That way, you’ll be informed about the best times to move your money overseas.
2. Check what support your provider offers
It pays to make sure you’ve picked a money transfer service that provides quality assistance to its customers. This means having a direct point of contact who knows your circumstances and whom you can reach out to, should something go wrong.
Churcher recommends the following litmus test: “If you need support, do you have an account manager you can contact, or if issues arise, is there a proper complaints system in place?”
3. Avoid sending over all your savings
“It’s often beneficial to leave a small amount of funds in your bank account back home,” Churcher says.
This would save you the trouble of having to send money back to your home country later on, for things like student loan or mortgage repayments.
RELATED: How to rescue your international money transfer from coronavirus panic
For more tips and information, check out our guide on expat money transfers.
Or if you’re ready to send funds overseas, hop on over to our international money transfer comparison table to check out today’s exchange rates.
*Mozo data, as of 9.25am, 21 April 2020