Show me the Money! Making Dollars & Sense of Family Expat Life
Be it a larger base salary than you can earn in your home country or access to allowances that improve your lifestyle – or that you can pocket and save – your expat remuneration package will undoubtedly form a major part in your decision to move overseas and perhaps provide a better standard of living for your family.
A remuneration package is the benefits you will receive on top of the base salary on offer. Some will be continuous or annual payments whereas some might be one-offs on relocating or leaving.
The ability to negotiate your remuneration package will rest on a number of factors, such as whether you are being headhunted for a new position or moving internally with your current employer, the seniority of the role and whether you have a unique or specialist skill set, or whether it is a fixed term contract versus a permanent position.
If you are moving with an existing international employer this might give you beneficial access to roles that aren’t always advertised in the job market, but you are likely to find you have less flexibility in your ability to negotiate a package as they will have global relocation policies to adhere to. The more senior the role, however, the more likely you can negotiate.
Regular items in an expat remuneration package
Wherever you live in the world, housing is usually your largest living expense. The first thing to check is whether your employer will be providing you with accommodation, giving you an allowance (and is that allowance “use it of lose it” or can you keep the balance if you do not spend it entirely), or expecting you to cover this yourself from your salary.
Employers might be able to provide you with temporary accommodation or serviced apartments. However, these aren’t necessarily the best solution for families who might find they need to live further from town to get the space and community they need. It might be tempting to try and live in a smaller accommodation than your family needs, or live in a more remote out of town location to save some cash, but do not over compromise as this could lead to your family being cramped or feeling isolated from their new community. This is especially important during the extremes of the summer or winter months which can impose the need to stay inside.
Try to scan housing advertisements; look for what your money can buy you in a given location and join local discussion groups or expat pages to ask questions. Listed prices might be negotiable, or certain areas cheap for a reason if they lack facilities, schools and public transportation that families will require. You will need to consider the difference between furnished and unfurnished accommodation as well in looking at the overall moving cost.
Excluding your housing, think about the cost of food, gas, electricity, water, phone and internet. Many expat sites have discussion boards and other expats are usually more than willing to share with you average costs – see our Expat Money Matters homepage for some more helpful cost of living resources.
Also, consider the cost of a home help or cleaning service – these might be much cheaper in an expat location, check your ability to sponsor a full-time helper.
Many companies use “cost of living” calculators and research firms such as EUI and Mercer as discussed in my previous article The Cost of Expat Living to work out any uplifts that might be required to cover your day to day living costs. However, always do your own research to ensure you are adequately compensated and watch for surprises (like hefty deposits that utility companies might ask for, or internet and TV packages with enough speed/channels to be worth bothering)
How will you get to and from work, and how will your family travel around?
Inner city locations can be great as public transport can take you almost everywhere you need and taxis are plentiful, but if the city you live in is big and sprawling, or public transport is considered unsafe or unreliable you will need your own car(s).
Things to consider
- Do you need a city runabout or family car?
- Right or left-hand drive?
- Manual or auto?
- Can you directly import?
- Can you get a car loan?
- What is involved in registering the car and getting a drivers license? (in some countries women are not allowed to drive!)
- Alternatively, would you rather hire a local driver?
- How will kids get to nursery and school, will a parent be able to do pickups and drop offs or is a bus service required?
If you’ve never owned a car before you may need a driver’s licence which may be easier to obtain in your home country. You may also need an international drivers licence in order to transfer to a local licence. Check the requirements before you leave.
Health & Insurance
Will you and your family’s medical expenses be covered?
It is most likely that the employee at the very least will receive basic medical insurance, but be very carefully to look for shortfalls in this, for example,
- will all family members receive the same level of cover?
- does it cover maternity?
- what about optional procedures?
- are children with disabilities / special needs / pre-existing conditions covered?
- are you covered during periods of time out of the country?
Consider also what happens if you need to fly home in a medical emergency, or if medical facilities are limited even minor procedures may not be available. Also if you are considering having children will you be covered for pregnancy-related costs and what are the facilities like for giving birth and neonatal care?
Remember once you are relocated, you will likely need travel insurance for any separate trips that you make as a resident in a new location (depending on your Visa status). Most insurance policies only cover you being out of the country where your policy was taken out for a maximum period of time per year (eg 60 -90 days).
This can often be a make or break point in deciding whether your family can relocate with you.
What schools are available to expatriates? You might find local schools only take local citizens, therefore you have no choice but to use – and pay – for private international schools or send your children to boarding school. Wait lists can be long so it pays to have as much notice as possible before changing location to do your research and get your children on to wait lists.
Also, gain an understanding of what year/age formal schooling starts from, this may be different to your home country and it’s easier to get a position in the first year of schooling. If you are moving mid-year you may need to consider that your child has to repeat a year if they don’t have a transfer certificate.
Some more questions to ask
- Does you remuneration package include an education reimbursement or cash allowance per child?
- How many children will be covered and are their age restrictions that apply?
For younger children, also look at the availability of nursery places or will they be cared for at home by a nanny if you both work? In some countries, the employer may offer day care facilities or discounts if you use preferred providers.
Mostly this is referring to the packing and shipping of your household belongings. This will very much depend on the housing point above and whether you are being provided with furnished or serviced accommodation; or will need to take all your personal belongings with you, as well as the number of people in your family.
Other points to consider
- Are you moving into a smaller property where not all your furniture is needed?
- What is the length of the assignment, can you last without some of your personal effects if only short term?
- Do you have somewhere affordable and safe to store items left at ‘home’?
- Will you need to fully furnish down to the curtains and carpets? If something says furnished or semi furnished, what exactly does this mean? Check particularly white goods, light fittings and curtains.
- Check electrical voltage and plugs, this might render a number of your household items useless in your new location.
Relocation costs may also need to cover property costs at the location you are leaving; will you have a break clause with a lease balance to pay out? do you need to lease out or sell your existing property?
It is normal to include a flight for the employed person to and from their home country at the start and end of the assignment, and very common to be given an annual fly home allowance or flight (if you are fortunate in business class!). Do check whether your family is included as well and their class of travel. Will they book the tickets for you or pay you an allowance based on IATA rates for example? (these rates can be very generous and one of the ways we save loads of money every year – by using our business class fly home allowance we compromise to travel economy class all over the world!).
Additional factors to consider when negotiation packages
Check who is actually included as ‘family’
Some countries find it difficult to accept anything other than a nuclear family (mum, dad & kids) exist, so it pays to be upfront in considering whether your whole family unit can move and be legally sponsored.
For example, civil partnerships or defactos may not be able to receive spousal entitlements or sponsorship, or may possibly be illegal. Step children can also cause overseas authorities confusion if they are not formally adopted, or if children have different surnames to the parents who are sponsoring them. What about elderly parents who live with you?
Check if there are any upper limits on how many children an employer will cover you for; your family size may well increase during your posting!
Will you or your family members need to undertake any sort of cultural training as part of your move? Does your family speak the language in the location you are moving to? Do restrictions on clothing apply (especially for women)? Are their etiquettes and customs in doing business to be aware of?
A good employer should be able to provide these things in advance of a family moving, either by way of a booklet or a cultural training course, even mentors. Sadly, based on the many families I have spoken to and interviewed who have moved globally, it is still not a common enough practice. You may wish to ask for costs of undertaking a course to be covered for example.
Finances & documentation
The cost of visas, passports, passport photos (you will need a lot!), wills, powers of attorney and other documentation, along with international courier fees can stack up rapidly before you’ve even set foot in your new home.
Check which costs the employer will cover or reimburse – even better if they can help with a lot of the running around for you.
Don’t forget costs that can add up at home while you’re away, particularly tax affairs and property dealings.
And very importantly, what currency will you be paid in? Will you have any sort of currency protection? It is most common to be paid in the local currency, but if this is not pegged to the USD for example, you may suffer (or gain) from exchange rate fluctuations which can have a significant influence over the sort of lifestyle you can have and how much you can actually save.
Look to get yourself a good financial and taxation adviser at the outset and look into the most cost effective ways to transfer money home, we recommend using a currency specialist like Monrycorp.
Danger Money or Hardship premiums
In order to entice people to move to certain locations where dangerous conditions prevail such as in conflict or post-conflict countries, an amount of “Danger Money” and/or a “hardship premium” is added, usually as a percentage uplift to base salary (expect in the range of 15% -40%) but could go as high as 50% or more.
These locations may not be appropriate for young families but nonetheless, some people feel the financial benefit and experience can outweigh the dangers. Employers are looking more outside the box on these matters than simply providing cash, you may be provided with sureties on things like power supply, provision of satellite TV or in internet coverage.
End of service benefits
What happens when the show is over? Do you receive any sort of end of service benefit? In some countries part of your salary may be deducted but reclaimable on permanently leaving the country, or a service payout for each year of service. You may also be entitled to a form of pension later in life if you have been making contributions during your stay, even if you are not a citizen.
Will they pay for you to fly home and ending relocation costs (this might depend who terminated the contract.)
Summing it all up
Remember if you don’t ask you don’t get! It may be that the contract or offer letter you receive is mute on these subjects but they are included in the employer’s standard policies. Or they have simply never been asked before, therefore they are not included in the standard package.
If you have any exceptional circumstances then state them. A potential employer may well be willing to cover the costs to get the employees that they want. Be prepared with the facts and figures to put you on the front foot in your negotiations.
When initially made an offer or approached for an interview in a new country, don’t immediately dismiss the offer out of hand based on the location. Do your research, understand from other expats what you might be in for. The pros may well outweigh the cons but also set out what your ‘deal breakers’ are (eg no suitable schooling, security concerns, unable to bring pets).
Don’t forget “money isn’t everything”
Aside from family and lifestyle choices (see The Worlds Most Liveable Cities), don’t forget to consider what else the position has to offer in terms of:
- learning and development
- ability to further your career (promotions) and mobility opportunities
- furthering your personal studies
What will work conditions be:
- your commute
- office facilities
- workplace flexibility
- holiday entitlement
- access to wellness facilities
- childcare facilities?
These all add up to reflect the ‘total reward’.
Are there any other factors – monetary or non-monetary – that you consider essential in your family salary package?
Make sure you stop by our Expat Money Matters home page for more posts and helpful resources in planning your expat family move, and see our Global Parenting page for some real life examples of the factors that matter most in a family expat posting.
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