The following is a guest post from Graham who runs moneystepper.com, and moved from the UK to the South of France 16 months ago. You can find Graham on Twitter. Let me know if you would like to guest post on The Savvy Scot.
Costs of moving abroad – 10 things to remember
In October 2012, my fiancée and I were offered a great opportunity to move abroad.
Having lived in the UK all our lives, we were offered a two year transfer with our current employee to experience two years in Marseille, France. We prepared as much as we could before we set sail. We tried to estimate the costs of moving abroad and to ensure that these costs did not have too great of an impact on our finances and net wealth.
However, there are always unexpected costs in life and never more so than when starting a new life in a foreign country. Here are 10 costs which you may incur, but might forget to think about (we were guilty of overlooking many).
Given that we were moving abroad for 2 years, we needed to move all our belongings to France. Therefore, we needed to send all our bits and bobs on a ship. Everything went in: surfboards, bikes, pots & pans, instruments.
My number one tip here is to get as many quotes as you can. We called five different shipping agencies who could move our belongings in the time frame we required. The quotes ranged from £600 to £3500 for exactly the same thing.
Tip: Get at least 5 shipping quotes to make sure you get the best price.
Accommodation / Housing
The second cost you will incur is housing. Unless you have contacts in the city, it is likely that you will be in a hotel/hostel for the first days or weeks when you arrive.
We moved a week before we started work in order to arrange our accommodation and booked one week in a cheap hotel in advance (also benefitting from cash-back and hotel rewards).
However, things didn’t run smoothly and despite all our efforts, finding furnished accommodation in the city was very difficult. We just assumed that the split between unfurnished/furnished accommodation would be the same as in the UK. However, it is more normal for French people living in large cities to live in apartments for their entire lives and hence there are less furnished flats available for rent.
After the first week, it became more difficult to look for an apartment after we had started work. In the end, it took us four weeks to find a suitable place. This meant an additional 3 weeks of hotel costs which we had not budgeted.
Tip: Research the rental market before you move abroad. Have a budget set aside for hotel costs if you cannot find what you want straight away.
Healthcare / Security Costs
When we started our new job, we were informed by our employer that they would “take care” of our social security and healthcare insurance applications.
Coming from the UK where medical costs are covered by the NHS, we knew that there would be differences in France. However, we made the mistake of placing too much trust on this one statement from our employer.
Following a herniated disc, I needed hospital scans, consultations and prescriptions. I paid for all of these costs, amounting to hundreds of euros. When I went into the social security office to obtain my reimbursement, I was informed that I wasn’t registered on the system.
Upon discussion with my employer, I was informed that they had essentially done nothing. There started my rocky relationship with French bureaucracy. 9 months later, I have incurred hundreds of euros of additional expenses as a result of a cycling accident and, despite a weekly trip to the social security office, I have still only got to the stage of having “temporary” number.
I am now only missing a “carte vitale”, a “numéro mutuelle” and a “carte mutuelle” and then I can start to reimburse my costs. However, I have helpfully been informed that I may not receive the refunds as the accident occurred too long ago!!
Tip: Understand the healthcare and social security requirements in your destination country before you go. Do not trust other parties with the applications – sort it yourself.
Local transport costs differ greatly in different countries (even if the network and infrastructure seems identical). We live centrally in the city and public transport is very cheap.
Currently, we buy a monthly “public transport” ticket, which allows us to use all buses, trams and metros in Marseille for €44 per month. This allows us to get a 10 minute bus and then a 20 minute metro into work.
In London, the same ticket costs over €200 per month!
We also decided that running a car would be too expensive. We would have the cost (and aforementioned bureaucracy) of buying and insuring the car, repairs (which are inevitable with the way that people drive in Marseille) and petrol. And whilst there is no road tax, there are tolls to use the highways, which are extremely expensive. Additionally, parking in the city is all underground and comes with a hefty price.
With cheap train and air travel in France, having a car just wasn’t worth the cost.
Tip: Depending on where you live, create a budget of how much different methods of transport will cost and carefully consider the hidden costs of travel.
Income taxes vary greatly in all countries. In the UK, it was easy. Everything (income taxes, national insurance, etc) was taken off our gross salary through PAYE. The tax year runs from April to April.
In France, our social security is deducted at source. However, our income tax is payable for the calendar year and is payable 9 months after the end of the calendar year.
Therefore, we have to save up a portion of our income to ensure that we can meet our tax payment in the following year.
Tip: Make sure you understand the income tax system so you are not hit with a nasty surprise
And it is not just income tax.
Again, in the UK, our only other tax was council tax which was agreed and paid up front with the council for the year. Not the case in France.
After 16 months of living here, we have just received three tax bills in the last few weeks which we had no idea about:
- “Tax d’habitation”, which is essentially a tax to live in a house of €642.
- “Montant de votre contribution à l’audiovisuel public”, translated a contribution to public audio and video (!!) of €131.
- “Ordures menageres”, which we think is emptying of bins, amounting to €515.
That’s another €1300 which we hadn’t budgeted for – it’s a good job we have an emergency fund!!
Tip: Ask around to see what other taxes and expenses people pay in order to effectively budget for taxes.
Fluctuations of exchange rates
If you are moving abroad on a short term transfer, you may be keeping bank accounts and other assets in the UK.
When moving money back to your home country, you should consider the effect of exchange rate fluctuations on your money.
Additionally, you must be prepared for changes in exchange rates.
Imagine if you moved from the UK to Brazil in February 2012 and were offered a salary of 150,000 Brazilian Real. This would be equivalent to £55,555.
Fast forward 2 years, and today that same salary would only be worth £38,462.
So, where your salary would not have changed in the country you are living, if you needed to send money back to the UK, it would be worth a monumental 31% less!
Tip: If you are moving to a country with a volatile currency, consider moving money back at regular intervals rather than all at once to reduce the variance in the exchange rates.
Additionally, there is often a fee for moving money between countries.
This could be a one-off fee or a percentage fee on the money you transfer.
However, banks also often disguise the “fee” by transferring the money at an exchange rate less favorable that the true exchange rate on the day. If you are transferring large sums of money, this can be a significant cost.
Tip: When transferring between different currencies, investigate forex transfer services to minimize the costs.
Bank account charges
Banks are also different (it’s amazing the number of differences between two countries only separated by 21 miles of water)!
I the UK, if you pay everything on time, there is no charge to have a bank account. When we set up our account in France, we assumed it would be the same. And it was for the first year. However, we have since found that after this grace period, all banks charge a monthly fee to have a bank account and a credit card. Ours is currently €8 a month, which is now being added to the monthly budget! (Editor’s note: I bank with ING direct in France which has a zero fee current account and free credit card).
Tip: Discuss bank charges up front with your bank provider and compare different banks to find the best value service.
Cost of living
The final thing that I would suggest you consider is the cost of living. For us personally, the cost of living here in Marseille is similar to what it was in the UK. However, the prices of different categories vary wildly.
Housing is about the same, groceries are more expensive, transport is cheaper, wine is MUCH cheaper, and beer is MUCH more expensive.
Tip: Understand the detail of the cost of living and consider changing some of your habits to fit the culture and to save additional cash.
Editor’s note: I wrote a post on Canadian Budget Binder about how one should make the best of what is available when moving abroad. While in France, drink wine, eat baguette and cheese, and go back home for a beer when you feel like one. If you try to take your exact lifestyle with you, life will be really expensive. For example in Senegal, 4 yogurts cost around €8, when you get the same four for €1 in France. But you can eat bananas for mere pennies. There will always be something delicious and cheap at any destination. Enjoy it until you are bored, because you’ll miss it when you get home.
I’m sure there are many other unexpected costs we have incurred, and many more that we don’t even know about yet! Are there any other unexpected costs that you have faced when moving abroad?
This post was featured on the Carnival of Money Pros, thank you!