Moving abroad can open doors to better career opportunities, higher salaries and a different lifestyle. It won't be wrong to say that between expensive housing, unfamiliar tax rules, currency conversion charges and financial commitments back home, even a well-planned move can put pressure on your finances.
For Indians planning to relocate overseas, here are five common financial mistakes to avoid before making the move.
1. Underestimating the cost of living
A higher salary can look attractive until rent, groceries, transport, utilities and healthcare start eating into it. The cost of living can vary between cities, even within the same country.
Before accepting an offer, calculate your expected monthly expenses and compare your take-home salary, not just your gross salary, with the cost of living. Keep an emergency fund to cover unexpected expenses or a gap between jobs.
2. Ignoring tax residency rules
Moving abroad does not automatically end your tax obligations in India.
Understand the rules before relocating, especially if you earn rent, interest or investment income in India. Seek professional advice if you have income in multiple countries.
3. Forgetting to update your Indian bank accounts
If you move overseas and qualify as a non-resident under the applicable rules, you may need to change the status of your existing Indian bank accounts. Continuing to use a resident savings account without checking the requirements can create compliance issues.
Understand whether you need an NRE or NRO account. These accounts serve different purposes, particularly when managing overseas earnings and income received in India. The Reserve Bank of India provides the applicable banking framework for non-residents.
4. Losing money on currency transfers
Regularly sending money to India to support your family, pay loan EMIs or invest can become expensive if you overlook exchange rates and transfer fees.
Compare the total amount the recipient will receive, rather than choosing a service solely because it advertises low fees. Also account for exchange-rate fluctuations when planning long-term commitments in rupees.
5. Overlooking insurance and financial protection
Healthcare, temporary unemployment and unexpected travel can strain your finances abroad. If you think existing Indian insurance policies will cover every expense overseas, you are wrong.
Review your employer's health benefits, understand exclusions and arrange suitable coverage for your destination. India's Ministry of External Affairs also advises travellers to organise their finances and obtain appropriate medical and travel insurance.
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