There’s an article today in the Telegraph about the impact of currency fluctuations on British pensioners living overseas. The rate of exchange against the Euro has changed by as much as 30% in recent years. The article also mentions the issue of bank charges on money transfers.
These are both important issue for working expatriates, not just pensioners. A couple of years ago, while living in Dubai and being paid in local currency, I calculated my husband’s salary had lost 20% against the Canadian dollar in two years. These are big numbers, so how can you protect yourself?
When negotiating a contract, give considerable thought to the currency you want to be paid in. Many companies offer a choice, some will even divide your salary and pay portions in two currencies. Think about what you are going to be doing with the money. A certain amount you’ll need for local expenses – that is best paid in the local currency, but anything left over you may want to send overseas. Perhaps you have expenses back home that you need to cover, related to a property you own, or supporting a still-dependent child or relative. Or maybe you’re saving money to buy a property when you return, for your child’s higher education or your retirement. It makes most sense to save that money in the currency in which you intend to spend it.
So get out your pencil and calculator and start working on a budget. If you can be paid in two currencies, decide how much you want to be paid in each. If you can only choose one currency, then consider in which one most of your money will be spent and choose that. If you have no choice at all, then get out your crystal ball and plan if and when you’ll move money into another currency. At least keep in mind the possibility of currency swings when planning your overall budget.
As for bank fees for transfers, do your homework. Sending money overseas through online bank transfers is certainly the easiest method, but may be more expensive than you think. Check not only the fees but the exchange rate you receive. Local currency exchanges or even specialty exchanges, like the one quoted in this article, may give you a much better deal.