As you decide to return, you will need to consider how this will affect your financial situation. There are several things to consider here:
- What does your financial situation look like now: Do you have savings? Debts? What about assets back home and in your host country?
- How will your financial situation change when you return home? Will you have more or fewer expenses?
- What would be the best way to reintegrate financially into your life back home? Do you have a plan in place?
Assess your finances
The first thing you will need to do before planning your return is to realistically examine your finances. Check your bank accounts, retirement funds, investments, and any real estate and other assets you may own at home or abroad. This will give you a clear snapshot of where you stand financially and how you can move forward.
Consider how your financial situation will change
Next, consider how your finances will change after you move back. Most likely, you will be looking at a different level of income and expenses. For instance, if you were relocated abroad by a company back home, you may have been offered a salary increase and the company may also have covered some of your living expenses abroad. Moving back to work in your home country will probably mean that you will need to manage your expenses on your own.
Another thing to take into account is the difference in the cost of living. Look into the costs of housing, healthcare, transportation, and even daily necessities like groceries. Will you still need to rent accommodation when you move back? What about a car or public transportation? Are all these costs comparable, or are there significant differences that will affect your budget?
Look into tax obligations
When returning home, the next important thing to consider is how you will manage your taxes. Many countries, though not all, have residency-based taxation. This means you are only required to pay taxes if you are considered a tax resident in the country. For most countries, you will need to reside in the country for over 180 days to become a tax resident. So, if you've been living abroad for several years, you will need to re-introduce yourself as a tax resident in your home country. The exact process for doing so may vary from place to place, so it may be best to consult the relevant tax authorities when you return.
For instance, if you are a resident of England, you will not pay taxes in England if you are a tax resident abroad. If you are a citizen of France, you will also not pay taxes in France if you reside abroad for the majority of a fiscal year—though you may still be taxed on your income from French sources.
However, this is not always the case. For example, if you are a US citizen, you will be filing income tax returns and other taxes abroad the same way you would be if you were residing in the United States. In this case, upon your return, you will need to update the IRS on your change of address.
Budget for the first steps in your return
Returning home may feel like the most natural thing ever. But after you've lived abroad for a while, it may actually require quite a bit of planning.
First, consider how much you will need to spend on moving expenses. This will include shipping your belongings, possible storage fees, transportation costs, etc. Here, you will also need to decide whether you will use a relocation company or arrange the move on your own. Going with a relocation company can make everything much easier and also give you a clear understanding of how much everything will cost. Doing this on your own can be less expensive (on the one hand) – however, if you are not experienced in moving across borders, you may also run into a lot of unforeseen expenses.
Once you are all set with the move, you will need to evaluate the initial expenses you will run into upon your return. You may need to find a new place, which would be the biggest expense to consider. How will you be getting around - do you need a car or can you use public transport?
Even the best-laid plans may go awry. This is where you will need to invest in a buffer for unexpected expenses. This could be set up to cover anything from emergency repairs to unanticipated medical costs. A good rule of thumb is to set aside around 10-15% of your total "coming home budget" as a cushion.
If you are being relocated back by your employer, some of your relocation expenses may be covered - and you may get help settling back in. However, this depends on your contract. For example, employers in the UK are not legally obligated to cover any relocation expenses – unless it has been otherwise stated in the contract. So, make sure to check with your employer about their relocation policies.
If you are moving back on your own, you may be looking at the pressures of finding employment and a source of income back home. If this is the case, the best course of action would be to secure a job offer (or at least a few interviews) before you relocate. If this is not an option, make sure you budget enough time to job hunt. Consider keeping your expenses to a minimum when moving back without employment. For instance, could you stay with friends or family during this transition period to avoid paying rent?
Update your insurance plans
Depending on where you are returning to, medical costs could be the biggest potential expense. In this case, it's essential that you have continuous health insurance coverage. When living abroad, you were most likely using a local healthcare provider. Now that you are back, make sure to renew or update your health insurance coverage back home. If you will be moving from an international plan to a local one, make sure there are no gaps in your coverage.
Health insurance should be your number one priority. But it's also important to keep up to date with other insurance paperwork that could help you avoid additional spending. Home insurance, renters insurance, and auto insurance are also important to keep updated and valid.
And let's sum up. Returning home after having built a life abroad can be just as much of a transition (if not more) than moving abroad in the first place. There will be lots of things you will need to re-adjust to. To make things easier for you, it's important to get the financial planning for your return out of the way as soon as possible. Have a clear plan and a detailed budget ready – this will help you step into your new life back home with a calm head, without worrying about unexpected expenses lurking in familiar places.
