She's On The Money - Moving overseas, the financially responsible way

Episode Date: November 2, 2021

It's that time again - Wednesday deep dive time! In this episode V and G talk about how to plan your international gap year, or stint overseas without sacrificing the financial security of future you. Super, health insurance, tax - we cover it all in this episode so get your ears ready - because with the boarders now open, we have itchy feet!The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. after almost two years the world is finally opening up and if you're someone who is planning on packing up your life and moving overseas to work and live then this is the episode for you one day today we are chatting through exactly what you need to think about financially before you book your flights my name is georgia king and joining me as per is victoria divine v

as you just hinted at before you know i am terribly keen to get my little my little bot off to london i'm gonna be so sad i swear if you can't podcast from london we're gonna have talks george we'll sort it out we'll sort it out yeah we'll be an international podcast by then george amazing only because we record internationally not because we'll be that big Yeah. Disclaimer. Disclaimer. Disclaimer. Have you ever lived overseas? Yes and no. So I've never lived overseas officially, but I did do an exchange to France. I lived in Grenoble, which is in the south of France and did part of my MBA over there. I wouldn't say that I've officially lived overseas though. That felt like a bit more of a holiday, but I have lots of friends

who have done this. I actually have clients who are currently living overseas and I've also, you know worked with clients to prepare themselves to get overseas and relocate also worked with clients once they get back to make sure that we are on top of things like superannuation because you don't have that overseas but yes a fair bit of experience preparing for it not so much actually getting to do it personally jay yeah cool well i am very invested in this episode because i am quite keen but we should preface today's chat i guess by saying that this isn't like a checklist for your first stint back at Bali. It's more if you're moving somewhere for six months or longer and kind of setting up your life somewhere else,

what we need to be thinking about. Which I haven't done. So like, not sure if you want advice from someone who hasn't done it, but I have done it for clients. I've set them up. So honestly, gee, who better to help you today? Exactly right. So many tickets, so many tickets from this side of the table today. The first thing I want to talk about Vee is tax. How does that work when we head overseas? All right. So if you are an Australian resident, which I'm assuming you are, because that's this podcast's audience. Hi, Australian friends. If you're heading overseas and you're going to stay as an Australian resident, then you are still obliged to lodge an Australian tax return, but please do not be scared of having to do that because if you're

working overseas, you will have to let the ATO know of all the foreign income that you are going to be making, but don't worry, you will be exempt from paying tax on that if you have paid tax on that income in another country. So, as long as it has been taxed in the right country that you earned it in, you will not have to pay Australian tax on it. So, one question I've gotten a lot historically is like, are we going to be taxed twice? Georgia, are we going to be taxed twice? No. Well, sometimes though. Yeah, look, sometimes. So it's pretty unusual to be taxed twice. So don't stress too much, but definitely always check because we don't want to be that person that ends up in that pickle. In Australia, we have what's called tax treaties, which sound kind of

cute, which are formal arrangements between two different jurisdictions. And currently we have treaties in place with more than 40 different jurisdictions and these treaties are also known as a double tax agreement and they're in place to literally prevent people from being taxed twice so that's kind of nice. So do you get taxed from like the new country that you're living in or from the Australian government? So if you're living in a country that has one of those tax treaties like if you move to England, Georgia like I think you want to live in London then you would have a tax treaty in place, which means you would pay tax over there and not have to pay it over here. Okay, cool. Good to know. How do we sort our taxes out when we're away though?

So you will have your MyGov account set up, which is easy in 2021 to organize. My dad lived overseas. I think it was like in the eighties, seventies or eighties. Who knows? It could have been the forties. I can't remember how old my dad is, but that would have been much harder. But in 2021, you just log on online. You've got a MyGov account. It's established with the ATO. everything's all linked and you just have to make sure that you're lodging a tax return each year so you'll be able to stay on top of that very easily and you can manage your super from that as well as all the other tax little bits and pieces and of course an accountant will be more than happy to help you out during this period of time if that's a bit daunting for you or you just

don't want to do it yourself so do not be afraid to seek help that could potentially save you a good amount of money in the long term but stipulation on that if you are going to be approaching an Australian tax agent, they can't lodge like your UK or US tax return. They can only let you know what you are meant to do for Australia and let you know like, oh, gee, like, don't worry, you've already been taxed over there. It's all good. You just have to tell them what's happened, but they're not going to be able to lodge your tax return in the US or the UK. So, you might have to engage a tax agent over there if that's what you're looking for help on. Right. Okay. Perfect. Let's move on to superannuation then, Vee, our favourite topic.

It's my favourite topic. I love super. How does that work when we're living abroad and working over there? Okay, so your super fund will just tick along while you're overseas. It's still growing. You still can't access it in the same way that you can't access it while you're here before the age of 65, and you will still be charged the same fees.

In Australia, as you know, we are obliged to pay 10% of our earnings to super, and if you're working for the same company but you're just doing that abroad then it's very likely that nothing is going to be changing and you are actually going to still be earning super so that is a money win but please please please if you're in that situation clarify that that is in your agreement because some companies like to be a little crafty and drop the superannuation component of your income because they think oh it's all right she's overseas she doesn't need it but you deserve it. If you are not working for an Australian employer though when you're overseas then this is going to change. They do not have any obligation to pay you superannuation so that's

something that you are on your own for and I absolutely would be making sure that your superannuation does not slip behind because I do and I'm sorry I know these clients actually listen to the show so hey there. I have a few clients who have lived overseas for 10 plus years and we are in a situation where we are aggressively trying to build back their super to make sure that they aren't missing out for the lost time and lost super contributions that they missed while they were over there, but they were actually in the financial position where they could have just been paying it the entire time. So if you were in that position, great. But often when you move overseas, gee, it's pretty expensive. Like living in the UK can be quite pricey, so you might not

be able to afford it. So if you're a few years off, actually this move, or you're a few years off planning it, maybe upping your superannuation contribution now so that you don't have to come home and do it might be a crafty little idea for you. That's a good idea. Yeah. Which is something that you can do through your HR department at work. All you have to do is say, Hey, can I please make some additional contributions? Or you could just be pay it to your account and make them on your own. So, there are a number of ways you can do it, but essentially, please look after your superannuation because it's literally there for your retirement. And as I've said before, my personal job can be distilled down, George, into the most boring sounding job ever. And that is,

as a financial advisor, my job is to get you to a safe and comfortable retirement. That's it. I just want you to be in a position where you can retire comfortably. There's obviously lots of goal setting and all of the other stuff along the journey. But superannuation is a really key component of that. So please don't forget about it. I'll leave that there. I can imagine a lot of people do let that slide though when they travel overseas because like it's, you know, it's something that we have to worry about like way down the line. Why would I stress about it now? Yeah, don't worry. What are the impacts of not contributing to your super for one or two years? So one or two years isn't the worst thing in the world. It's when you move overseas for one

or two years and you're like, oh, I'm just going to be away for a year. And then you end up living away for 10, 15 years. And then you come back to essentially like you've been out of the workforce for 10 to 15 years because you don't have those contributions and money. And the way that compound interest works is it compounds over time. So the sooner it gets into your account, the sooner it's compounding, the more compounding it's going to be able to do over time. So essentially, if you're not making those contributions, you're not accessing that compounding. And it means that you're going to have to contribute more later to reach the same goals you would have reached had you contributed less earlier. Right. Okay. So don't forget about that.

Yeah. Don't forget about it. And as I said, it can be as simple as upping your contributions now, because you know, in the future, that's something that you want to do and you're just covering yourself. I've got a couple of clients who have done that. They've done it without my advice as well, they just somehow were geniuses and did it, but they did that and they've gone overseas. And when they get back, they'll probably keep that contribution level up just so that they are actually in a better position than they were in before. It's all in your hands. Like you have the power to choose. And even if you bumped it up a couple of percent, because it comes out of your pre-tax income, it's very likely that it's not going to impact your take-home income too

significantly. So it's definitely something I would consider looking into because it's not like I'm here saying put thousands of dollars aside each and every single month so that you don't miss out. Like that's not it at all. It could be a few dollars that in the long term actually turn into thousands. Right. Okay. So that's tax covered and that's super covered. What happens to our HECS debts when we're away? Just for you, G King. Moving overseas does not get you out of paying your student debts. You can't run away from them. So long as the income you're making when you're abroad is above the minimum threshold, then you still need to make repayments on your HECS debt as you would if you were at home. So that kind of sucks because often, as we said before,

in Australia, your HELP debt is taken out of your pre-tax income so you don't feel it as much. Whereas if you're going to move overseas, this is going to be a voluntary contribution that comes from, you know, could be the US dollar that you earn. It could be pounds that you earn. It could be yen. You're going to have to save for that to make sure that you can make that repayment. And again, this is for people who are moving overseas long-term, not for a few months. If it's for a few months, don't stress too much. Stressful though, Bea, I imagine if people aren't paying their HECS as they go, then tax time could be quite like a nasty shock. Yes. And that's why we want to talk to an accountant or someone who can help us stay

on top of it if that's something that you want to do just because we want to feel like we're in the right position and I've seen too many times people just go moving overseas so romantic like so many great ideas and they just forget that tax and hex and just life happens in the background unfortunately that doesn't stop gotcha all right my last little question before we head to the break here is how health care works when we're overseas yeah I know obviously like it'll change depending on where exactly you are and the different healthcare systems that are set up, but how can we just make sure that we're covered financially if something goes wrong? Yeah. So, first things first, I would be making sure that you have insurance when you go overseas.

Like we have spoken about travel insurance. If it's for a few months, absolutely consider that. If it's for a few years, have a look into some options that might work for you. It's hard for me to comment because I don't know what countries you are going to and it's different everywhere, but because we are Australians, gee, we have what's called a reciprocal healthcare agreement. So in Australia, we are lucky enough to have agreements in place with 11 different countries where we are able to access publicly funded medically necessary care. So those countries are the UK, Sweden, Slovenia, Ireland, Norway, New Zealand, the Netherlands, Malta, Italy, Finland, and Belgium. So apologies to our US friends. That's where you would absolutely need

to be making sure that you have your own insurances in place in saying that in addition health insurance is really really important especially if you are overseas so even if you are going to one of the countries i just mentioned they absolutely don't cover everything and you just don't want to be slugged with enormous fees and like i've seen it before and you guys have seen it before as well one of our money diaries was about someone's partner who had to be flown back from overseas and it was hundreds of thousands of dollars worth of debt that they ended up slugged with because they didn't have insurance so please make sure you have insurance it's one of those things that people like oh it's not worth it i'm not gonna use it it's like yes

in a perfect world george i hope that absolutely nothing happens to you i actually want insurance to be the biggest waste of money you ever spend money on because it means that you didn't actually have anything negative happen to you and that's better. But if something does happen, we don't need to end up with enormous amounts of debt that is going to take years to pay off. It's not worth it. So in all honesty, G, I want your insurance to be a big waste of money. I know that that's not what every insurance advisor is going to want me to say, but in a perfect world, you're not slugged with it. But it's something that as a financial advisor, I say all the time because I have to manage claims and I have to call the phone to clients who say, hey, V, can you help

me? I've just been diagnosed with cancer or I've just gone through this traumatic event or something has happened and I'm going through that. So I guess from my perspective, it's absolutely worth it because when shit does hit the fan, George, it hits it pretty hard. It does. And Murphy's law, like if it can happen, it will happen, you know, like just cover yourself. Just get it. Just play Get it done. And remember, it's not about, is it worth it? We want it to be a waste of money. No. Yeah. We do want that. Smart. A potato question maybe here, V. Yeah. I prefer chips over crisps.

Just to jump in. Salt and vinegar, of course. The way to go. Pringles? No. I don't know about Pringles. I reckon Pringles are overrated. Yeah. Pringles are overrated. This is unsolicited advice that maybe you want to add to this week's newsletter. Talk to me. coles brand sour cream and chive chips over pringles they're like the old pringles really yeah you know how they've gone smaller skinnier tubes they're trying to stooge us yeah old pringles so wait are they in a pringle jar are they in a packet yep no they're in a

pringle container and everything it just says coles on the front sour cream and chives he's stunning across it all right that's my appointment after this i'm sorry for bringing potatoes up. I shouldn't have said it, but if we were overseas and we had like a cold or something, are we allowed to like go to the doctors and just pay money? Like that's okay? Yes, you absolutely can. In different countries, it could be very expensive though. And it's not like in Australia where we just have bulk billing systems. So we can walk into the doctors because we've got our Medicare card. We can just get a bulk bill and it's free. You're very likely to have to pay for it. And that's why we want insurance. So definitely

do a quick google search if you're going to slovenia look up slovenia healthcare australia there's going to be expat forums and stuff like that that you can read through online about what's worked for other people also another hot tip before we go to a break which i know you are raring to get to g facebook groups are a really great place to start as well so there are going to be facebook groups like aussies living in the us or aussies living in the uk have a look at joining those, because I know that they're a wealth of knowledge as well, because it can be a bit daunting doing all of the research on your own. And sometimes you just don't know what you don't know. Yeah, for sure. And that can make the information just so much more digestible,

just hearing it from people that have done it. Exactly. And also the ability to just like, oh, I could question up and someone's like, this is the one I went with and why? And you're like, great, I'll do my research on that instead of having to work out what this is and what that is. because for me, it's like you and I know the big brands in Australia, right? Like we know what the four banks are in Australia. We know what they look like. We know what safety looks like. We know the dodgy ones that we probably want to avoid. I wouldn't be able to say the same for the US or the UK. Yeah. I've got no idea. I've never lived there. I don't have that brand experience. So sometimes it's just really nice to ask somebody who's willing to share.

Yeah. Amazing. All right, guys, we will be back after a very short break to talk about investing when we're abroad and also whether or not Vee thinks we should have a job lined up before we go. Don't go anywhere. Alrighty Vee, how does investing work if we're overseas? Okay, big question, long answer. I am going to summarize it. It depends how long you're staying overseas for and what your plans are and how you are generating income. So, if you're investing G500 bucks each every single month. You can still do that in Australia if you're planning on being overseas for a year. That's fine. But if you're planning on moving overseas, it might be worth not doing that anymore in Australia and actually investing overseas. In saying that, there are a number of

people in our community who have asked this question. And it's hard to say because it's going to be different for everybody's personal situation. But essentially, it's about the ultimate outcome. Are you planning on coming back to Australia? In which case, why would we go to all of the effort of setting up investments in the UK in a different currency so that then we have to wrap them up at some point to move them to Australia to manage them in the future? From my perspective, I would be thinking about future us and what they're going to need and what they're going to want, because it might sound really sexy to do it over there, but it could be creating a lot more admin and hassle in saying that. You could always stop investing if you can't afford

to do that for that period of time, which is okay. As I've said before, it's completely flexible. Yes, we want to be investing regularly and continuously, but that's not feasible for each and every single person. And then also you could be making a plan to not invest while you're over there, but invest aggressively when you get back or a completely different option. Again, the outcome is really based on what future you's going to need and want. But legally, yes, you are able to still continue to invest in Australia if you don't live here. And what if you were just starting? So, maybe we've got an Australian living in London right now who's found the pod, wants to start investing. How should they go about doing that? Completely depends on what you are

set up to do. So, if you don't have Australian bank accounts, it's going to be very hard to invest in Australia because they usually require you to sync those things together, improve residency and all of that other fun stuff. But again, you're more than welcome to invest in the US or in the UK. If there's a micro investing platform that you want to play with over there, go for it. But again, if you're going to go see a financial advisor and have a full financial advice plan set up and it's in the UK, but you know, in like five years, you're going to move back here. I would probably say that's not the smartest idea because you're going to run into a few issues trying to move it back over. Because remember, we lose money potentially if we sell

our investments too early. And you're going to have to do that and probably pay capital gains tax on the assets if they've increased in value to then bring them back into Australia. So it depends on where you're at or what you want to do. But essentially, the world is your oyster in 2021 or now 2022 nearly. And you can invest from wherever you are. So if you've got an Australian bank account, you can still invest in Australia, but it's completely up to you and your personal situation. Let's talk about bank accounts now, V. How do you go about setting one up when you're overseas? And do you actually need to do that or can you just use your Aussie ones and, I don't know, transfer? So, it depends again how long you're going to be there for. So, I have a couple

of different options that I speak through with clients. Obviously, international fees are really expensive. So if you go overseas just for like a month, I'm not going to say go set up an entirely new bank account. Even if it was three months, I'd really wonder if that is worth it. But again, it could be for you. So I would be thinking about what you actually need to do. If you're moving to the UK, gee, because this is where you want to go and you're going to be paying rent and bills, it's going to be much easier to have a UK bank account. It's also potentially going to be necessary for whatever employer you join. So as we said before, if you're transferring overseas with an Australian company, it might be that you need to transfer money over and you're spending

Australian dollars and living in the UK, like you're on holiday in a way, you might still just be using your normal bank cards. But if you're moving overseas and you're going to put down some roots, I absolutely would recommend getting a bank account over there. Again, same rules apply. We will be trying to make sure that we have minimal to no fees and it's with a reputable bank. So again, do some research into what is reputable in your country and what is going to work well. Gee, if you're moving overseas and you're moving in with some housemates, potentially ask them, who are you banking with? Who should I be banking with? What should I be doing? And they will be able to help you. Again, Facebook groups are going to be really helpful as

well. Full of expats who might have already done it before. Brilliant. Do you know if you would need a job first before you can open a bank account or like even have a residential address like does that I don't know and I think it is very different for very different countries when I've been doing some research it seems to be here there and everywhere but the one thing I can say is no you don't need a job to set up a bank account I think you just need to prove that you've got an address there and it makes sense for you to do that so work that out however you will. And I hate to do this again, TG, Facebook groups and expat forums. Yeah. It's helpful. It's good. It's good advice.

Look, it's really helpful and learning from other people's experiences. Honestly, there's nothing like it. Okay. I am excited to pivot this conversation a little bit towards career stuff now, V. From a career and finance perspective, what are your thoughts on finding a job before you head over? Or if you'd like, can you just do it when you're there? What's your take on that? You could do either. And I don't think that there is a right. And I don't think that there is a wrong. It's all about your financial situation. Okay. If you cannot afford to be without a job, I would absolutely say, please don't move to another country without having a job secured

in the first place. But if you've got more of an emergency fund and some savings and you're like, you know what, I'm going to move overseas. I'm going to go to all these interviews and find the right fit for me. Great. You do you. But the important thing is to have a think about your financial situation before you do that. Because I think as well, especially going through COVID and coming out the other side, we don't know what the future job markets look like. We know here in Australia, lots of people have lost their jobs. The same will be true internationally. So I don't know what the job markets look like. So from my perspective, I'm conservative. I do some research first, see how hard it is. And then if I was in the financial position to just move and then find a

job. Great. More than welcome to do that. But again, gee, I'm conservative. I like knowing. I'd be that person that wants a job before I go. But you do you, my friends. Brilliant. Okay. Last question for you today, V. If anyone is listening and they're like, oh, I really want to live overseas. I want to have that experience, but I'm worried that it's going to put me behind financially and maybe career wise. What would you say to that? What's your advice there behind what george behind your expectations behind what other people are doing the question is why are we comparing ourselves to the journeys of other people because if you want to move overseas and you want that to be a part of your journey why are you behind aren't you ahead

because you're actually doing the thing that you want to do so from my perspective i really don't think that you're going to be in a worse off position and if the last 18 months has taught us anything, George. It's that life's pretty unpredictable and we need to make the most of opportunities while we have them. Gee, your career is going to fall into place as it's meant to. Plus, employers definitely look fondly at job applications that include time spent overseas because, you know, more experience. It sounds like you're a go-getter. And look, at the end of the day, probably not the advice you want to hear from your friendly financial advisor, but there's always time to make more money. It's just set yourself up, make sure that you aren't in mountains

of debt to go and enjoy yourself and live the life that you deserve to live I think it's more about going and living the life you want not going oh my gosh I'm not going to be super super rich like I don't think I've ever met someone who says oh I really regret living overseas for 18 months yeah really regret that like I really I've never met that person no 100% I definitely get the stress of feeling like there's pressure on your back to like nail all of these goals but yeah from my perspective I think that you just learn so much from I mean I haven't done it yet hopefully I will learn so much from living over there but you learn from experience right yeah exactly and from somebody who's always put a lot of pressure on themselves to perform I suppose like school

I was very stressed about getting good marks university I was very stressed about you know again getting good marks but I went straight from school to university and for me the idea of a gap year, I was like, no, I can't miss out on anything. Life's going to leave me behind. I have to go straight to uni. I kind of regret that mindset in a way, as I've said before, don't regret anything, but I just wish someone had sat me down and said, hey, it's not as important as you think it is. Like go live life, you know, spend a year abroad, go work overseas. It doesn't matter what you're doing, get some life experience and do that. And I'm not saying that I don't have life experience, but I think, you know, having gone through that and now looking at my little sister who took a

gap year lived her best life and now has a great career I'm like cool so you're saying it wouldn't have changed anything and I would have got an awesome experience during a period of time that I could have really enjoyed it I was you know young I was single I didn't have any financial commitments like I kind of wish I'd embraced that whereas I was the type of person that I actually looked at like my ATAR score as being a reflection of my personality and if I didn't get a good ATAR score, for me, it felt like I wasn't maybe a good person. And that's absolutely preposterous and the stupidest thing in the entire world. But I think we all need to remember that experiences are worth so much more than money sometimes. And giving ourselves that space to grow and learn as a human,

like we deserve that. It's not all about wealth creation. I know we're on a wealth podcast, but it's not all about wealth creation. Yes, let's care about super. Let's do everything in the right way doesn't mean you can't have fun, doesn't mean you can't live overseas and live your best life though. Oofta, this episode has made me so excited. But I guess the key things we need to remember are to consider tax, super, remember how investing works when we're heading over there. Remember the rules and laws in different countries. Make sure you do your research according to the region that you're moving to. Make the most of those forums. There's a lot to take on. Literally, just go do a hygiene check. What do you need to get in order before you go? Because HECS, super, tax, all of

that is going to work while you're over there. You just have to set it up properly and know what you're on top of. It's not going to require any additional effort while you're over there living your best life, but do future you a good service and set yourself up before you go. It's a bit of admin for long-term gain. But G, I think we're done here. We're done here. But just before we head off, we'd like to acknowledge and pay respects to Australia's Aboriginal and Torres straight islander peoples the traditional custodians of the lands the waterways and the skies all across australia we thank you for sharing and for caring for the land on which we are able to learn we pay our respects to elders past and present and we share our friendship and

our kindness and remember guys that the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and we promise victoria divine is an authorized representative of australia pacific funds management proprietary limited abn 34132463257 afsl 339151 see you next week guys bye guys Thanks for watching!