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Are you Financially Confident?
Money is an important criterion that one considers even before moving to a new country. Is the move finically viable? Will we be able to make ends meet? Will we be able to enjoy the same or a better lifestyle if we move? These are some of the questions that one considers before moving.
Making a budget when moving to a new country, is as important as having a budget when back home. If you really want to start right from Day 1, then have a simple budget for the first month. What is the total income going to be for the month? How much of this do we want to save? How much of this are we saving for something specific - like a trip to Hurghada at the end of the month? How much of our income can we spend?
In the first month, the outflow will be higher. There will be some beautification to be done of the house. Little knick knacks, paintings on the wall, a piece of furniture you know will be perfect in your foyer. Perhaps your landlord refused to replace the shabby curtains and you just can’t bear to look at them, so you have to buy new drapes yourself. The kitchen will need to be stocked with basic spices and condiments from scratch.
If your sponsor company provides a relocation reimbursement, then it would be wise to check what will or will not be reimbursable. If they provide a flat sum, then that makes life a lot easier.
By the second month, you will have a better idea of the Cost of Living and your basic expenses. Make a note of all the monthly essentials. Rent, salaries for the household help, cell phone bills, electricity, club fees, insurance premiums (here and at home) all the recurring expenses that are almost fixed. This could even include your gym membership or art classes that you feel are essential for your child. Include all the expenses for things that you just can’t do without (except groceries and eating out.) The sum of this is your fixed expense for the month.
Now set aside a budget for groceries, eating out and entertainment. Allocate a certain amount for this monthly and try to stick to the budget. If you spent money on imported exotic vegetables that were out of season, then compensate by ordering one dessert less when eating out or rent a DVD instead of going to the theatre. Although the amount itself is fixed, you have the discretion on how you want to spend it.
The rest of the money is your savings. What you are saving for is something you need to decide. Is it very long term like college education for your children or down payment on a house when you return to your home country? Is it long term like an annual foreign holiday/summer break? Is it something shorter term, like an expensive gold necklace, an Egyptian carpet or a piece of Mashrabiya furniture?
Once you have decided what you want to spend your savings on, now you can take a decision on how to save that money. If your savings are short term (but longer than a month) and you intend to spend the money in Egypt, then check with your local bank what rates they offer for Fixed deposits. The interest rate is normally higher than what it would be for Savings Accounts. The Egyptian stock market is quite volatile and meant only for the serious risk takers.
If your savings are long term and meant to be spent back in your home country, then it may make sense to send the money home via wire transfer. The best rates for this can normally be got by having a bank account with the same bank in Egypt and in your home country. This will help save a lot on transfer fees.
Do note, that unless your account in Egypt and in your home country is in the same currency, you will lose a small amount in currency conversion. Check around with the banks to see who gives you the best rates of conversion and interest both here and at home. Try and transfer money whenever your home currency is at a strong rate. With the dollar fluctuation, it is quite easy to increase your savings, just by following the currency exchange rates daily. It barely takes 10 seconds on the internet.
With inflation rising at a higher rate than interest rates on Savings accounts, you are better off investing your long term savings in options like mutual funds, stocks, shares and bonds. Blindly investing in these markets is not advisable at all. Try and check on past performance. The markets across the world have being going through a downturn, so do go back at least a year to check on performance.
If you invest in SIPs (Systematic Investment Plans) of mutual funds, it will help you balance out the irregularities of the market. How this works is that every month on a pre-assigned date, a fixed amount is deducted from your account towards a particular mutual fund. Mutual funds and SIPs are advisable if you are looking at holding the investment for at least 3 years. The risk is minimized if you consider this time horizon.
Try and ensure that you activate the Online banking options on all your accounts and credit cards. This is a huge time saver if you regularly move across geographic locations.
Each country has different Tax Regulations. Ensure that you follow the regulations of your home and host country regarding filing of returns and paying of taxes. You do not need anything catching up with you at a later date.
These are just general guidelines to help you stay in control of your finances. Each country also has different laws for non-residents, pertaining to investments. Educate yourself about them and try to adhere to the rules and regulations of your home country.
Karishma Pais (Kim) is an expat trailing wife in Cairo. She has a Masters Degree in Human Resources and Behavior. She consults on HR projects, delivers intercultural training at the CSA, counsels new and experienced expats, writes for several magazines – online and offline, she runs firstname.lastname@example.org and email@example.com among other activities. Her Social Commentary and blog about life in Egypt can be read at http://whazzupegypt.blogspot.com