Managing your finances in multiple countries
The cost of immigrating, part 2
Hi friend,
We read about it in books. We see it in movies. We watch real people do it on social media, through their blogs, YouTube channels, etc. Moving to another country looks and sounds like an experience of a lifetime—and in many ways, it is. You get to see new places, meet new people, and experience a new culture every day, in big and small ways. And, the thing we don’t see often enough is what all the life admin looks like—specifically, the financial life admin.
If you think managing your finances in one country feels complicated at times, trying to manage things in two (or in my case, three) countries can quickly become overwhelming. I would go so far as to say: it’s not for the faint of heart. There’s a lot to learn and a lot to manage… and potentially, a lot more to pay for (in terms of hiring people to do some things for you, like taxes or immigration stuff).
There’s a reason we don’t see it featured in most stories: financial life admin is probably the least sexy part about moving abroad. It’s not glamorous. In many ways, it’s tedious and sometimes stressful. You probably won’t be surprised to learn that I actually felt excited about some of it. I remember telling Tall Man, “I can’t wait to learn how things work here!” But the more time that passes, the more I’m beginning to see how complicated my decision to stay could be. Or at least, how much more research I need to do.
I want to share what some of this has looked like for me, and what I am still trying to navigate, as well as what it could look like in the future. As you read, please remember that I am designing this life for myself. I am not complaining. I am choosing and designing this experience every single day (and even like some of this financial stuff!). And, like any financial topic, I think the more we share about what’s true for us, the more we all learn—and the more informed decisions we can all make.
Here are some of the things I have to navigate as a Canadian who is living in the UK, and also working with people in the US…
Note: This is the second post in a three-post series on the cost of immigrating to another country. You can read part one here, which outlines the costs of applying for my visa, moving over, and getting setup in my first home. Even if you’re not thinking of immigrating or making any big moves, reading through a post like this might make you think about a few financial tasks you want to add to your list! As you’ll see, just writing this out reminded me of one I’d like to do soon…
Banking in three countries
Let’s start with the basics—and in many ways, the easiest thing to manage: bank accounts in multiple countries. Here’s what I have in each country and what purposes they fulfill:
I have a chequing account + a savings account in Canada, and get a few things deposited into them each year. I also use them to pay off my Canadian credit cards, one of which I still use when I’m over there (see below).
I have a current account (the UK’s name for a chequing/checking account) + a business bank account here in the UK. I do not have any savings accounts (yet), but rather use something my bank calls “pots”.
I also have a checking account in the US, because that’s the country my literary agent and publishers are in (so this is where my book advances and royalty payments get sent to).
And I use Wise to transfer money between these countries.
Back in the day, I used to only use accounts that were free (aka had no monthly fees). This isn’t an option for me anymore, and hasn’t been ever since I got my first book deal (2016). So one other thing I have to do is make sure I always have the money for my account fees. I always have money in my accounts, so literally never have to think about this, other than sometimes with my US account (because I use it so rarely, making maybe 4-6 transactions/year) total.
Building a new credit score from scratch
I’d been building my credit history in Canada for nearly 20 years, by the time I left. I don’t know what my last credit score was (above 800, for sure), but I know I’ve never missed a payment in my life and had access to nearly $80,000 of credit across 4 accounts. The banks/creditors liked me enough.
When I moved to the UK and applied for my first credit card, they gave me a limit of £200. At an interest rate of… drum roll, please… 39.99%! (And they offered me others at 49.99%!) I wanted to decline the card, because it felt so outrageous. But I knew I had to start somewhere, and it would be fine because I wouldn’t carry a balance on the card. (I made this one my business credit card, and have just a few expenses get charged to it, then pay off the full balance each month.)
Moving to a new country means you have to start building your credit score from scratch again. This could probably be a post of its own, where I share exactly what I’m doing to build mine up… but it’s just worth noting that this process has been humbling. When they offered me that £200 limit, I felt like I was 19 again. Being able to access credit is a privilege, and not having access to it can hold you back. (See: one of the many reasons I don’t care if you have debt.)
I have access to £5,000+ of credit across 2 accounts now, and have an “excellent” credit score, which really just means I’m doing an excellent job at playing the credit score building game. (They keep reminding me the best way to boost my score is to register with an electoral roll, but I can’t vote here! Womp womp.)
It’s also worth noting that my UK credit score is my main focus now. I don’t really think about what might be happening to my credit score in Canada. I do know that I’ve closed 1 of the 4 accounts I used to have, and I’d actually like to close 1-2 more. (*adds to financial task list*) I really only want to keep 1 card, which is the first credit card I ever got. I use it to pay for things when I’m over there, and it holds a lot of history, should I ever need to move back.
Filing taxes in two countries
If you think leaving a country means you don’t have to do taxes there anymore… you would be wrong. At least, that’s not true of my two countries. I have to file taxes in both the UK and Canada. Thankfully, they have a double taxation treaty, which ensures you don’t pay tax twice. For me, on a practical level, this means that the first country I file and pay tax to is the one I live in (the UK). But I have to share those numbers with Canada, when I file with them, so they don’t tax me twice. Though, they can claim a little more from me…
I file/pay UK taxes first.
I file/pay Canadian taxes. As part of this return, I have to let Canada know how much I earned in the UK (all my self-employed income), as well as how much tax I paid here. Canada won’t double-tax me (aka, double-charge me). However, if there were ever a year where Canada calculated they would’ve taken more tax from me than the UK did, my understanding is that they can charge me the difference.
I do not have to file US taxes. Instead, I have to give updated W8-BEN forms to my literary agent and any companies I work with. This form lets the IRS know you promise to claim any income you earned from a US source in the country you live, so the world knows you will pay tax somewhere!
It is my assumption that I will be going through this process for the rest of my life, especially as I’ll be pulling from my Canadian investments in 30+ years time. And so far, I’ve done all of this myself… and it’s all been fine… but it still makes me feel anxious every tax season! Mostly because I want to get it right. I don’t ever want to make mistakes or have governments coming after me for money. I’m genuinely happy to pay my taxes in both countries! So if anything ever goes wrong, I would consider hiring tax specialists in the future.
Planning for retirement
So far, we’ve covered what’s true of managing your everyday finances (and annual taxes) in multiple countries. I think I have good systems in place, and feel fairly confident in everything (outside of a little bit of tax anxiety, which is only natural). But there’s one BIG financial consideration I… honestly hadn’t considered, before moving over, and that’s planning for the long-term. Specifically, planning for retirement (or at least, the years where I will work a lot less).
This is not something I beat myself up over. I came here on a 5-year visa (after which I can renew and/or apply to remain and settle). It was an idea… an experiment. Just something I wanted to try. So I knew I’d have to manage everything outlined above! But I really didn’t think about what would happen if I decided to stay. Now that I have made this decision, there’s A LOT more to think about and research—and I’m still in the “beginner” stage of that process.
One thing I will say first is more about my overall view of retirement: when I think about how much money I might need in the future, I don’t think about how much money might come from government benefits. I’m sure I’ll get some amount of money from one or both countries, and that’s great. But when I think about saving (investing) for retirement, I put the onus on me (because I’m self-employed). Anyway, here’s a little breakdown of all the possible sources of income Old Lady Cait might have…
Income that could come from employers/pensions:
$0 from previous Canadian employers. The only job I had that offered a pension was when I worked for the Ministry of Education in BC. When I left the government, I took the money out of my pension and invested it in my own RRSP, so I could be in full control of my retirement planning.
In the UK, it’s entirely possible I will get a job with a company that offers a pension in the future!
Income that will come from my own investments:
I have money invested in an RRSP in Canada, which should hopefully grow to $300,000-$400,000 CAD (£175,000-£225,000) by the time I retire/want to make withdrawals.
I have literally just started investing in the UK, but this will be my main focus now—and the main source of my retirement income one day.
Income that could come from the Canadian government:
I’ve been paying into the Canadian Pension Plan (CPP) since I was 18 years old. Will I still qualify to get some of that, if/when I retire in the UK? Based on what I’ve read, I think so!?? At least, a portion of it?
What about Old Age Security (OAS)? Apparently, in order to qualify, you must have resided in Canada for at least 20 years since the age of 18. Considering I left Canada at age 36, I might not get OAS! Or might only get a portion of it!? (F*ck! Didn’t know that, lol.)
I’ll have to keep researching, and checking updates over the next 20-30 years, but these are the kinds of questions I didn’t think about before moving here! Like I said, I don’t plan on relying on government benefits anyway, but it’s good to know what you could be eligible to access in the future.
Income that could come from the UK government:
??? I have read a little bit about this, but haven’t properly researched it yet.
Other bits and bobs (as the Brits would say)
Some other financial life admin things I’ve had to do/consider, since moving overseas:
I cancelled my life + critical illness insurance policies in Canada, and got new ones in the UK.
I still need to make some decisions/have some convos about estate planning, so I know what I need to do about my will, PoA, etc. (It’s on the list for 2024!)
One other random fact you might find interesting: when you apply to get a UK driver’s license, they keep your Canadian one. So… you can only have a license in one country? The one you reside in, I guess?
And I haven’t touched on medical/dental stuff at all yet, but only because I am finding the systems between our two countries to be so similar (with a mix of public and private options, and things costing similar amounts).
Finally, one BIG finance-related shift that comes from making this decision is that staying in the UK means it will cost me a lot more to visit my family (and means I can see them A LOT less than I’d like to). But I’ll say a little more about family/community in my final instalment of this series…
Have you ever moved to another country, friend? (Or even another province/state that had different rules from where you lived before?) What financial considerations/changes did you have to make? What was better? What was worse? What do you still feel confused about?
xx Cait
I have only lived in Canada! As someone who retired at 50...I would say over save for retirement! Is that a thing?! I only say this because I have a generous retirement pension that I paid dearly for while I was a full time educator. At the time, it was painful to see such a large amount going to my retirement, but now, living from that same pension, I am very grateful.
I love this series. I love learning the details of how other people navigate big life and financial transitions
My husband is Colombian Canadian and we have purchased a property in Colombia for future retirement and reside there for several months a year. There is alot to consider when moving to another country.
My husband has been in Canada since 25 so may not qualify for OAS either depending when we change residency.
Estate planning we have a Canadian will. But we spoke to a lawyer in Colombia and they have different laws. If I become a resident I will be subject to their estate laws. Which means if my husband were to pass away before me I have to split 50% of estate with his children or vice versa if I pass away first. But if I remain a resident of Canada my Canadian will would still apply to my Colombian property and we could continue our provisions we already planned for our blended family.
This is a concern for both of us as we don't want the insecurity of having to sell our home before we are ready.
I also don't want to rely Canadian benefits in retirement and I do have a future worry that the Canadian government may change what pension benefits Canadians may collect that reside outside of the country.