She's On The Money - Unpacking the Cost of an Overseas Sea Change

Episode Date: September 26, 2023

For many of us, we've all dreamt of packing up our lives and jet setting overseas to start a new life in a different country, but what is the reality of this fantasy? What are the true costs behind relocating overseas? What do we need to know before we go? And what happens to our debt left behind in Australia? Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. 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. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. 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 my name is beck syed and vd today we are talking about the cost and considerations of moving overseas. Hello, Bex Syed. We absolutely are. And according to Smart Traveller, at any time, there are around 1 million Australians living and working overseas. So I think this is relatively important to talk about. Yeah, sounds like it. I didn't expect that number. So a lot of people will be able to relate to this one. I feel like that's true. But I also feel like even if they're not currently overseas, how many of us have fantasized about moving to

London. Exactly. Like we all want to do it. How much is it going to cost though? Let's talk about it. We're going to give you the answers today. Now, I know each country, of course, has specific costs and requirements, but today we're giving you a general consideration, talking things like bank accounts, HECS, tax, super, investments, et cetera, et cetera. But firstly, what are some rough ranges for shipping your stuff overseas, just to give us a ballpark? For shipping your stuff overseas, that's where you want to start. I want to start there. I want to start there. Do you reckon you'd ship all your stuff overseas, do you? Maybe it'd be cheaper than selling everything and buying it brand new. It's a good point. You'll find out if that's the case because

I've got some cheeky, cheeky numbers for you. Are you ready? I'm ready. So obviously everyone's circumstances and destination are completely different, but here's a quick overview of the average moving overseas shipping costs to various destinations around the world, right? So this is based on moving belongings for, obviously, an entire three-bedroom house, moving port to port. I got all these stats back from a website called Scirello. I think that's how you say it. But essentially, they're an online platform who, I guess, cross-compare moving quotes and costs. Obviously, we're not endorsing them because I've never heard of them before, but I found their data and stats really interesting. And there's nowhere else on the internet that actually

provides this information. So if you're planning on moving overseas, this might be like a helpful tool. So we're moving from Australia. Yep. All of these are based on you moving from Australia. you want to move to New Zealand. It's going to cost between $860 to $1,345 to move your stuff. Oh, okay. That's not as bad as I thought, to be honest. I feel like a grand is about what people are spending on like a brand new mattress and bed frame and bedside tables and stuff. So it might make sense to actually take your own in this case. Yes, I think so. If you're moving to Singapore, it's between $1,700 and $2,300. bucks. Japan, $1,700 to $2,600. Canada, five grand to $12,500. So we're starting to get up

there. Okay. You're going to move to France. It's between $5,000 to $7,900. UK, which I think is arguably the most popular because who doesn't want to move to London? This is the one. Between $5,200 to $8,000. And if you want to move to the U.S., between $5,200 to $12,500. What the heck in? Okay, that sounds a little bit more like what I was vibing, to be honest with you. I feel like that's a good estimation because obviously if you're moving to the U.S., it's going to be very different to New Zealand because obviously our New Zealand friends are our friends across the ditch and that's much less. So maybe if you are moving there, it would make sense to take your stuff but like I'm not spending 12 grand to move my stuff to the US absolutely not no and if you

budget for that you could just go on a whole shopping spree buy brand new everything I don't know if this is true either completely wild guess I'm assuming Facebook marketplace in the US is way more exciting than in Australia oh yeah it would like go off right I think so I just feel like finding secondhand furniture because like I don't know about you but like I often find myself on American TikTok and people finding like couches on the streets of New York and they're like designer couches. I'm like, well, that would obviously happen for me, obviously. Yeah, of course it would as soon as you get there. Now, V, I think I know what you're going to say, but I want to know about insurance. What are your thoughts on it moving overseas? How

important actually is it? I know you know that I'm going to say it's very important, but essentially it is. And the reason is because I think if you're going to take such a risk and move overseas. Insurance is the thing that's going to make sure that you're safe over there, let's call it like a safety net. So obviously, as I've said on the podcast, harsh but true, Bec, if you can't afford to pay for insurance, you can't afford to travel. Straight in the gut, always hits me in the gut. But like, also, it's the most financially responsible thing to say. And you've got to remember that as an ex-financial advisor, I see it all. Like, and unfortunately,

definitely from my perspective that's the truth like I remember one of my friends who was going on an overseas euro trip and she was so excited about it and we got a wine before she left and I was like oh my gosh who did you go with because I'm obviously pervy when it comes to money I was like who'd you go with for insurance and she's like it doesn't matter I think I've got some free stuff on my credit card and like I booked my flights on credit card and I was like oh okay what credit card are you with so then we spent 20 minutes of me like deep diving into their insurance and I was like absolutely insufficient like what if you get sick what if you break your leg what if you do all these other things and did they cancel the trip straight

after no they didn't we had this it wasn't an argument because like obviously I'm not gonna argue with you but I was like you are definitely getting this do you know what ended up happening I gifted it to her the next day I just couldn't deal with it I just couldn't deal with it I was like I know that those are your values and I see it but like I am going to stay up all night being like she's in Europe what if she goes hiking in Italy and falls over and needs to get home like absolutely not. That is very sweet of you, V. No, it had nothing to do with me being sweet and everything to do with me lessening my own anxiety. It's nice, but I was also like, I can't be that friend. You know, what happens if something happens? And I kind of was like in my

head, if I buy this, it's going to be the biggest waste of money. And that's great because nothing will happen and then I can sleep at night. Totally. That's a really good way to look at it. I would like to sleep through the night without waking in a panic. So I'm going to buy you travel insurance. It's probably not the way everyone should deal with their stuff. I think that's just me being kind of a little bit low sunity. But I was like, absolutely not. I kind of caught up for a whine with you. What if something then happened? What am I going to say to your parents? Oh, yeah, I told her to get it, but she didn't. Yeah, absolutely not. And she wasn't going for that long. So like, wasn't that expensive? I was kind of low key, like, no, you're gonna do it.

You can tell I'm the older sister, right? Oh, yeah. Yeah. It's a bit obvious. I love that about you. So obviously travel insurance, very, very important. If you have a job in the country that you're going to be living in already, so sometimes that can be teed up early, check whether your new employer actually has insurance before you leave. Because if you're moving to the US, they might actually already have a health insurance policy for you or some type of insurance policy that could benefit you. And in that case, there's literally no reason to double up. Like why pay twice? It doesn't make it double nice. Like I just don't think that's a good idea. So confirm if you're covered for like medical expenses or theft of

valuables, baggage damage, cancellations or flight interruptions. So if you're moving for work, they might've actually done all of that for you already to cover their butts, which would be very smart. But in that case, check so that you don't double pay. That's a great idea. The insurance so nice you bought it twice doesn't actually double pay out, which sucks. If your employment agreement offers medical cover, make sure that you actually clearly understand what is and isn't included in the policy because there might be like terms that you don't understand. Do a click Google or even call the insurance company and be like, what does this mean? What's included? What's not? Because like maybe maternity isn't covered. Be like, that's not an issue for me in the next

12 months. I'm going overseas to live my best life. Not going to be a problem. But then dental isn't. And you're like, oh, like what if something happens and I'm overseas? That could be a really, really big cost. So make sure the things that are important to you are included. Consider local insurance to cover your needs instead of long-term travel insurance because long-term travel insurance can be really expensive. And if you're moving overseas for an extended period of time, as much as you can buy travel insurance, it might not be the best financial decision. So make sure you choose a cover that actually suits your needs and is actually valid for the entire period that you're living overseas. Gotcha. So some travel insurance

companies might say, ah, this is our travel insurance for a maximum of six months in the policy. So even if you can go and sign up for it for longer, it might not be valid. So double check that. If you extend your stay, remember also to extend your insurance. Like what if you, Beck, go overseas and meet the love of your life and you're like, I'm just going to cancel this flight and stay another three months, okay, I'm all for that. I love love. But go check your insurances and extend them out for another three months. Gotcha, gotcha.

Because what if, God forbid, something happens in the last three months when you've cancelled it? Because it would when you don't have it anymore. That's how it works, right? The laws of physics. That's exactly. They're the rules of the world. I don't make them.

I just have to obey them. If you're not insured, you actually might have to pay thousands of dollars for upfront medical care. and I need you to understand what a reciprocal healthcare agreement is, right? So in Australia, we are actually lucky to have these agreements in place with 11 different countries where we are actually 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. Oh, how very lovely. Exactly. Isn't that kind of cool? So you need to take that

into consideration if you're like you know going for the top top tier of medical cover sure do you need it what's included in our reciprocal health care agreement oh I did not know that was a thing that is really cool it's really cool I'm gonna go have a google let's have a little break a little break already I'm on a roll I know it's a bit too soon isn't it but I do need a little bit of so let's go to a quick break and on the flip side we're going to talk more about tax and importantly what do you do with your hex when you move overseas let's do it All right, V, we are back. I'm so excited.

Are you excited? Well, you were telling me that I get to talk about tax and HECS, so I'm ready. I did say you can talk as much as you like. No one's going to stop you. Except our producer, Annalisa. She will stop us. You would let me.

She would not let me. Probably for the best. We'd be in for hours otherwise. Now, I want to talk about tax. How does it work when we move overseas? All right, so if you're an Australian resident and you're planning on moving overseas and the intention is to remain an Australian resident, then you are obliged to still lodge, even if it's $0, an Australian tax return each and every single

year. Bet you didn't see that coming. No. If you're working while you're there, you actually need to let the ATO know of all your foreign employment income, as well as any exempt income, even if tax was withheld in the country where you earned it. So we're not saying you're going to be double taxed, but you do need to declare it to them and be like, by the way, like, you know, I got paid £30,000 for my job in the UK. And they'll go, thanks for letting us know, Bec, this, this and this, because you still have to pay HECS while you're away. And that is a joke. Like, it's not a joke. It makes sense. But like, you're going to end up with a HECS bill when you get back and you might end up on the back foot. So if you work for an international company and

you're doing what's called a campus exchange, then you're actually going to be taxed in exactly the same way as you were in Australia. So like, let's pretend for a hot second that She's on the Money is actually UK based and you're currently working at our Australia office. And then I say, hey, Bec, come work in the UK office, but your contract for Australia is going to stay exactly the same. You're just going to come and work for us in the UK. So nothing about your income would change, which means you still do an Australian tax return, but you're working in another country. There are a whole heap of things to consider when that happens. And one of those things is the exchange rate.

So like right now, if let's say She's On The Money was an American company, the American exchange rate sucks. So like if I was still paying you in Australian dollars, but you were living in the US, you would have to convert some of your Australian dollars to the US dollar so you could spend it and live there. But you're actually on the back foot because the exchange rate sucks. so you need to consider those things when making decisions like that because you might go oh V that makes sense that's easy because I know for my budget how much is in there like in my brain Australian dollars just work better and a lot of people will immediately go that makes sense no worries but in reality you might be being a little bit messed over by the exchange rate because as someone who's heading to the US soon the exchange rate is not that pretty and I'm not

looking forward to paying for things in US dollars. Gotcha. Okay. Yeah. And I know you said you won't be taxed twice. Yeah. Let's talk about it more. Yeah. Because that seems I can't. It's a scary concept, right? Because if you're moving overseas and you're like, well, why do I still have to do an Australian tax return? Surely they're trying to, you know, do a money grab. That's not the case at all. It would actually be very unusual for you to be taxed twice for anything. In Australia, we have what's called tax treaties with lots of different countries, which are formal agreements between two different jurisdictions. And we currently have these treaties in place with more than 40 different jurisdictions, which is kind of cool. And these

treaties are also known as double tax agreements, and they're in place to prevent people from being taxed twice. So it's okay. It's not something you need to worry about. And obviously in the top list of countries that has this treaty with Australia is the UK and the US. So don't worry too much. What about the other ones that don't have it? I'm not going to go through a list of 40 if you are planning on moving overseas to a country. What do you mean? The ones that aren't there? The ones that aren't in the treaty. Right. So it's just a little bit more complex.

Oh, okay. So it just means that when you're submitting your tax return, there's no treaty in place. So like the Australian tax office are going to have to do a bit more to work out what is and isn't included. again it's going to be really unusual for you to be double taxed it's just a bit more work a bit more paperwork whereas this makes it really easy and what happens is let's pretend it's the UK for a hot second you'll do your tax over there and you'll have all of the information and when you do your Australian tax return you'll basically go hey here's the information of my UK income and then the Australian government's going to go oh but Bec did you earn anything in Australia and

you'll go, no, no, no, haven't even been home. So you'd put a big zero on it. Any other information? No, submit it. They just want to know that you're checking in on an annual basis. They want to track what you're up to and what you're earning internationally and just to be across it. They're not trying to double tax you, I promise. That's very good to know. Yeah, they're not. I mean, I can't promise that forever because as you know, the tax system doesn't seem that fair sometimes, but that's not the episode for this. Sure. It's a conversation. It's a conversation for another day. Yeah, in the beer garden of a pub. So how do you actually sort out your taxes while you're away? So it's very easy, I promise. So make sure you have your MyGov account set up

before you leave. And a lot of us might already have that. Make sure it's linked to the ATO. I say before you leave just because sorting things when you're in another country sucks. Having to call the Australian Taxation Office and trying to get things all sorted and done while you're away, not a vibe. So just set it up before you go so you don't have to stress later. Then you'll be able to manage your finances and just stay on top of what you need to do for your tax return. And you can also manage stuff like super through there, as well as, you know, other different tax bits and pieces. The thing with super as well, while you're away, let's get to that in a hot second, actually, because I know you're going to ask, but it's very important that

you're across your super while you're away. And of course, you could always get an accountant to help you if it's a little bit too daunting. You can see a normal accountant who should be able to do it relatively quickly if you don't have a dual income and there's nothing too complex about your situation. But if your situation is a little bit complex or you're a super high income earner overseas, what I'd be doing is going and seeing what's called an expat accountant, which is someone who specializes in Australian residents who live overseas. So they're completely across it and will know a little bit more than the average bear accountant. In saying that, your average accountant should be able to get across it. It's not that complex. Just if you're a super

high income earner or you've got any complexity around it, you might want somebody who is a little bit more, you know, in depth to make you feel a little bit more secure. Gotcha. Okay. It's funny that you knew. I just knew you were going to ask me about super because all I do is talk about super. Because I am curious about it. So how does it work? Like you're still getting paid super while you're overseas. Unless for some reason you have that campus exchange that we're talking about, in which case you might still get paid super. However, if you move overseas, don't mean to be blunt, but a different country doesn't care about your retirement if you're going to remain an Australian tax resident. They're going to be like, that's your deal with Australia. Like,

we don't have to pay that. Sure. They might be contributing to, in the UK, a pension for you, or in the US, you might have a pension account or something that money is being paid into as a part of your salary package, which is fine. Again, one of the reasons why you might want to have a chat with an accountant, because how do you get that money out? If you're moving back to Australia in two years, Bec, and you never have plans to live overseas again, having a retirement fund in the UK doesn't help you that much, does it? Useless. Useless. So what do we do in that circumstances? But your super fund is still going to tick away while you're overseas. It's growing, hopefully, because of compound interest, but you're not contributing to it. So we need to

be across that. You'll still be charged the same fees, even if you're not contributing to it. So in Australia, we know that our employers right now have an obligation to pay 11% of our earnings into superannuation, which is very sexy. Yeah, quite like that. Well, how many of us are actually saving 11% of our incomes to invest into our futures? Jokes on you, all of us because of superannuation. I see. Wow, those are trick questions. But if you're working for the same company and you're just doing it abroad, as I said before, very likely that you're still being paid super. But if you're not and you're working for an

international employer, then these changes because your employer, they're not obligated to pay you super. You need to be across it. Sure. So what are you going to do? I mean, one year of not paying for super might not sound like a lot to you personally right now. And you might go, whatever, like I'll deal with it when I get home. But it does compound. Like these are conversations that we have when the maternity conversation comes up. Like, am I meant to just miss a whole year of superannuation, which is ultimately going to impact my retirement. Like if you're investing every year, like let's say it's between $5,000 to $10,000. If you're investing $5,000 to $10,000 into your superannuation on an annual basis, that in retirement, if retirement's 30 years off for

you, which probably is if you're still planning on moving overseas, because that sounds like young people stuff, that's hundreds of thousands of dollars, Bec, that you're missing out on in retirement by going, oh, it doesn't matter too much. But what if you move overseas and then it extends out and it extends out? Like I have had ex-financial advice clients come to me after returning from living in the UK for 12 years. They have not paid any super. Their super has basically been eaten away because they left at like, let's say 24. They were babies. They didn't have a whole heap in super to begin with, but it's been eaten away by not, you know, paying attention to it. They might've had multiple super funds when they left. Fees have eaten it.

Not all of it. Insurance, premiums maybe. Exactly. Like everything just compounds and adds up. Sure. But I just think it's so important to be across it. And if you're moving overseas, maybe still contributing to super should be part of your financial plan. Even if it's not the sexiest thing ever, I just think probably a good idea to make sure that financially future you is prepared and well looked after.

Future you will thank you. I know. So, yeah, it's a bit of a downer. Yeah. Because you do still have to pay it and it will have to be a post-tax contribution, obviously. But that's okay. That's okay. I still think it's sexy.

Yeah, definitely. If not now, eventually it will be. Yeah. Now, I want to know what happens to our HECS or HELP debt. Oh, so this is a spicy, I don't know if it's spicy, because historically, if you moved overseas and you weren't earning an Australian income, you didn't have to pay HECS. Gotcha. So people would like yeet off overseas and be like, yolo, like, I don't have to pay for

my education. Not anymore, Satan. Sadly, moving overseas does not mean you get out of paying your HECS. Maybe for the best. I don't know. I like the idea of being able to skip the country. It sounds real cool, right? That's true, actually. Like, oh, skip the country. Don't have to pay my nearly $100,000 worth of HECS back. Like, that is calling my name. Yeah, yeah. Turns out that's not the case. And if I did move to the UK, I would still have to pay it. So long as the income you're making when you're abroad is above the minimum payment threshold, then you actually still need to make repayments on your HECS or HELP debt as you were if you were home. And this is something that, as I said before the break, I was like, we're going to talk about it. This is something

that stings a lot of people who decide to move overseas because they go, whatever, I'll move back in 12 months. They come back in 12 months. Maybe they've dragged their feet a little bit doing their tax return. They get their tax return and they're told that they have to pay $8,000 in hex. You've just come back from an overseas trip. You don't have eight grand. What are you going to do? What the heck? That would suck. It does. So obviously, again, this is for people who are moving overseas long term, not just like a couple of months or a whole day. But I think it's important to note. It is. Because, Bec, if you talk to your mum, she might go, oh no, if you're overseas, you don't have to pay hex. Yes, you do, Satan. How long ago was it that you didn't have

to do that? Do we know? Maybe like five or ten years. I can't remember. Obviously, don't quote me on that. I haven't looked it up. And to be honest, I haven't looked it up because it's irrelevant because it's not going to still stand. It's like when I used to go to financial advice conferences, Bec, and like I was relatively new to the industry. Like, as you guys know, I'm not exactly like, you know, a stoic feature in this industry. And I'd go and people would just talk about what the industry used to be like, like how rogue conferences would be, how, you know, all these financial institutions used to pay advisors like astronomical bonuses and like give them like flights to like Monaco and stuff while they were there so that they could impress them

so hopefully their product would be used and like right that's now illegal for good reason but they used to be like oh the industry used to be so good and I'm like why are you telling me this yes are you just flexing on something I'll never have it's good to know that it could have been a lot sweeter than this it's good to know you used to take the absolute mickey and now we have more regulation woohoo royal commission but also older white men used to be the ones that were far more across this than yeah and you know what i said the females in the industry oh yeah but it was always very interesting hearing their takes and i feel like that's the same with you know oh you used to not have to pay it like okay sure cool story bro that doesn't apply anymore it doesn't

And ignorance is bliss sometimes. Is it? Yeah, nah, it is. It always is. Nah, it definitely is. B, my last question to you. Yes. Is what happens to our investments?

Can we still invest? Yes, yes, yes, yes. So that's actually a really good question. And again, it's going to depend on how long you're moving overseas for. If you're listening to this going, I'm moving to London forever, well, that's a different situation than I'm moving to London for 12 months, two years, three years. because if your ultimate intention is to come back to Australia and base yourself in Australia and retire here, then it would make the most sense to not invest in an international environment

because one, there's going to be currency exchange issues that you're going to run into, transfer issues, like if it's overseas, like how are you going to manage it when you come home? But also it makes more sense to either invest while you're away in Australia, which you can still do. Or, you know, put it on hold for a little while while you're overseas and maybe put that money towards, you know, living overseas because it's much more expensive than when you're home. So completely up to you. Yes, you can still invest, but I would probably not go and invest in an international market in international currency and like open a whole new share trading platform internationally if the intention isn't to stay long term. Okay, that makes sense. That's all

I've got for you on this topic at this point in time though, Bec. Oh, thank you. Well, that was fantastic actually was it yeah i don't think i'll please don't leave but oh good good well we lost our last co-host to london so i wouldn't surprise me if you were like i'm gonna follow suit i'm not gonna do it now no i'm not gonna do that so kind you are so kind all right i think that is unfortunately all we have time for today we will see you guys on friday have the best week bye guys 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 if you do choose to buy

a financial product read the pds tmd and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN 321 649 27708 AFSL 451 289.