11 Unexpected Costs of Expatriation

Moving overseas can make life cheaper, but it's not without its costs. Here are the top eleven to keep an eye out for before planning the big move.

Author:: Eric Reed
Publish date:: Jul 30, 2016 11:40 AM EDT

Editors' pick: Originally published July 29.

How much cheaper is it really to live abroad?

Moving abroad has gone from moving abroad has gone from a niche adventure for grown men who still pull off cargo shorts to a realistic option for just about anyone. With more and more careers going location independent, increasingly you don't have to choose between being productive member of society or some dude who lives on a beach in Argentina.

You can have both.

A lot of this movement is driven by costs of living. For Americans who get paid in dollars it's often cheaper to live abroad. So much so that it has spawned entirely new careers and business models that could never exist at home. In cities like Bangkok, the expat communities are filled with Internet workers living happily on salaries that would bankrupt them back home.

Meanwhile on the other side of the spectrum, an increasingly healthy cohort of retirees are looking at those $1,341 Social Security checks and realizing how much further they'd go in Delhi.

Yet while American expats can save quite a bit of money by moving to the right countries, that doesn't mean life is cheaper across the board. Moving overseas actually can come with quite a few unexpected expenses. Adventurers and expats-to-be alike would do well to prepare for things like...

Before leaving home, budget for this not-inconsiderable expense.According to research published by the website Best Places in the World to Retire, a full third of expats cut their costs of living in half by moving abroad. The trouble is that most countries with bottomed out costs of living struggle with issues of poverty and development. It's what makes them cheap for Americans; the local economy is weak enough for the dollar to have outsized purchasing power.Unfortunately many developing nations continue to struggle with diseases that have been mostly wiped out back home. Add that to the local bugs that inhabit the (often tropical) destinations most expats choose, and the result is a doctor's note for quite a few prescriptions before you leave home. Some vaccines are routine (rabies), some urgent (hepatitis) and some profoundly unpleasant (malaria pills), but they all add up to a hefty pre-trip bill.

Distance means different things in different countries. Cities can be separated by water. Roads can be rougher, flight routes harder to find and rail lines... well, actually most countries improve upon Amtrak.Take Greece, for example, hardly a developing country but one defined by mountains, islands and a disruptive, stormy-wracked winter. It can take a while to travel across the country's narrow, switchback roads or by its lengthy ferry lines. As a result expats have to be careful where they choose to live, taking into account the hours to get from Athens to Paros."We have to redefine remote to include the concept of quality of transportation," said Chuck Bolotin, editor of Best Places in the World to Retire. Plotting where to live is tricky, and requires budgeting for the fact that transportation might just be a little rougher.

One of the hottest commodities in Cambodia is bottled water. As a young NGO worker in Siem Reap, I once believed that this was fueled largely by western paranoia; how bad, I thought, could the tap water really be?Then I saw the look of horror on a local friend's face the day I popped a can of Coke at lunch. The ice it sat in, she explained, is made from frozen tap water. You need to clean the can off to make sure nothing drips in, because the local water and sewage lines often seep into each other.To answer my question: that bad.Most of our preconceptions about the big, bad, dangerous world are inaccurate or exaggerated, but sometimes there's a good reason to take care. In some places the water really is unsafe or the electricity unreliable. Prepare to budget for fixes, because there's no sense in getting dysentery from a toothbrush.

Internet access is increasingly important for many expats. While some are happy to cut their cord with the world back home, most people have family and friends that they want to keep in touch with. Even more urgently, many expats depend on the web to keep their jobs. There's only so often that your boss or clients will accept "my wifi was down" as an excuse for late or missing work. Sooner or later, they'll simply go with someone less complicated.To keep that from happening it's important to get a reliable connection. As frustrating as that can be in Chicago, it can be even harder in India. Solutions are there, but not always cheaply. For those who want to make sure their homes are wired up, prepare for a big line-item in your monthly budget.

"Here's how it works. The cost of living where you move will be a function of many things, including how much you're willing to live like a local. The more you're willing to live like a local, the cheaper it will be."Bolotin has had no small amount of experience living overseas and is consistent in his advice to future expats: the trouble with the comforts of home is that they're expensive. Whether it's a jar of peanut butter, a box of macaroni and cheese or a pair of Levi's, anything that has to come from far away is going to be expensive."If you want to have us imported goods," he said, "you're going to pay not only the same but more than you paid in the U.S. So the key is, when you're in Belize, eat the local fruits and vegetables. Same in other places.""If you've got to have that French wine or Skippy peanut butter, it's going to cost you," he added.That said, prepare for at least a bit of import shock. Moving overseas isn't easy, and sometimes you need something that makes home seem a little less far away.

Speaking of which, budget travel expenses to fly and call home, as well as to bring people out to you.Connections back home to family and friends are important. It's one thing to leave everyone behind for an extended stay in Paradise, it's another thing entirely to say goodbye to all the people you know and love for a permanent change in location.Build in plans to travel home or fly relatives out to you. Not everyone can foot the bill for airfare around the world, so it's worth chipping in for a family member's trip to help keep relationships alive. Prepare for extra expenses around the holidays or heightened phone and Skype bills. Keeping in touch with everyone won't come cheap, but it's important.

Oddly enough, be prepared to spend a little bit more than expected on medicine, but not because it costs more.Because it costs less.Medical expatriation is a booming industry, with many people in America and Europe discovering that they can get the same quality of care for far less money by traveling abroad. As Bolotin explained, the result is not only reduced costs but vastly increased access to care."You have people leaving the United States because of health care concerns," he said. "Not so much quality of health care but costs. When you have costs so high that people can't afford it, that effects quality of health care."Back home, he said, "you're extremely reluctant to go [to the doctor] if it will cost you a fortune."When quality care is cheaper, though, patients will often have procedures they might not have considered back home. It's a nice problem to have, just keep it in mind when plotting out the budget spreadsheet.

The same leverage that gives you extra spending power also will impose a constant low-grade tax: exchange rates.Although the rules change from bank to bank, almost every financial institution will impose something for translating your dollars into local currency. Sometimes it's nothing more than ATM fees, while others will charge a percent of the conversion rate. Regardless, it's a small drain that will hit almost every transaction you make.Admittedly, this is a hard item to budget for, because it exists in small percentages and the magnitude of costs scales with number of transactions. It will make a difference for very few expats, and if it does, you're probably living too close to the bone anyway.

Going to a foreign country costs money.Sure, that's obvious enough. There's airfare to consider, the moving costs of bringing important items, setting up a new home -- that all matters. What most expats fail to consider is that there are administrative costs to consider, too.Your host country will probably have visa and entrance fees and may well want you to pony up some taxes too. It's not completely crazy; you will be consuming local services after all. It's only fair to help pay for the local fire department if you'd like them to show up in a timely manner, but far too many expats don't take this into consideration.Too, remember that the United States will still enforce federal taxes, and escaping residency of any state at all can be a difficult process. Do your homework and know what the costs, taxes and fees will be in your new life.

Speaking of taxes, yours just got much more complicated.As discussed above, the IRS will still require you to file and pay federal taxes while states cling bitterly to every single resident on their tax rolls. Add in any duties you owe to your host country, and the whole process will become rather a lot for a layperson to handle. Do yourself a favor and hire an accountant. Good ones don't come cheap, but it's a lot less hassle than having the tax man come knocking.

Travelers like to drink.That much is true whether you're hitting the resort for a poolside vacation or moving permanently. Expats hang out at the bar, and whenever a group of them get together it's usually over beers (or something harder).Prepare for the bar tab.As we've written about before, alcohol can be one of the biggest budget killers of any trip. Keep an eye on how many rounds you buy when hanging out with new friends. On the road, the guy who drank away the rent money with new, global friends is a common tale.

11. Vaccinations

Before leaving home, budget for this not-inconsiderable expense.

According to research published by the website Best Places in the World to Retire, a full third of expats cut their costs of living in half by moving abroad. The trouble is that most countries with bottomed out costs of living struggle with issues of poverty and development. It's what makes them cheap for Americans; the local economy is weak enough for the dollar to have outsized purchasing power.

Unfortunately many developing nations continue to struggle with diseases that have been mostly wiped out back home. Add that to the local bugs that inhabit the (often tropical) destinations most expats choose, and the result is a doctor's note for quite a few prescriptions before you leave home. Some vaccines are routine (rabies), some urgent (hepatitis) and some profoundly unpleasant (malaria pills), but they all add up to a hefty pre-trip bill.