Non-Resident Indians or NRIs, as they are known, think of themselves as global citizens. However, whilst the world may be one to them, once you step out of your own country, everything changes. Apart from adapting to social and cultural changes, your approach to money management should change completely too, especially if you are planning on settling abroad. When you move to a new country, there are a lot of things on your plate. You need to actively manage your bank accounts, investments, assets, and taxes in order to stay financially well-off on all fronts.
Here are a few things to be done before you leave the country:
- Open a bank account that is customized for NRI’s:
Once you are an NRI, the rules pertaining to your finances change, even in your home country. You can no longer keep your money in a normal savings account like a resident Indian. There are rules pertaining to what monies you bring in, and what you can take out. Once your status changes from resident Indian to NRI, you will have need to open an NRO/NRE savings account. Many banks offer tailor-made money management programs for NRIs, that help them leverage the benefits that they are eligible for, owing to their unique tax residency status. This is useful across a wide variety of needs ranging from where to deposit your local income viz. rent etc., making investments in stocks, depositing your inheritance income etc.
- Assign a custodian for your tangible assets:
This is a crucial step before migrating. Nowadays, people trespass vacant properties and claim it as their own. You need to officially assign a resident Indian as a custodian to keep an eye on your property. You will need to give them the power of attorney to be able to do so, on your behalf. Even if you decide to give your house on rent, you will need to hand over the power-of-attorney to somebody who acts as the signing authority in the lease agreement, on your behalf.
- Get an insurance policy:
NRIs are allowed to buy insurance policies in India provided they fulfil certain terms and conditions. This is an important step because if you plan on coming back to India or you have a lot of attachments here, then it comes in handy.
- Manage your loans:
If you haven’t settled your loans before leaving, then you should consider checking the rate of interest in the country you are planning on settling down in. if the interest rates are lower as compared to India, then you can take a loan from there and clear the one in India. This is a great money management tip since you could save huge on the amount that you pay as interest.
- Beware of currency fluctuations:
One should be really careful about currency fluctuations when planning on investing or taking a loan in India. A minor change in the exchange rate of the Indian Rupee visavis the foreign currency of the country you are currently based in, can considerably impact your effective return.
- Manage your taxes:
As an NRI, you will have to meet the taxation obligations of both countries. In India, there are a host of tax deduction benefits available for NRIs and it is important that you are aware of them to be able to avail their benefit. These rules & benefits keep changing from time to time. Hence, it is important for you to clarify these with a tax advisor, on an ongoing basis.
- Keep a tab on the Indian economy:
If you have properties and investments back in India, you will have to keep a close watch on the rise and fall of the Indian markets, just to make sure that your investments do not suffer from any huge losses. Better still, you could have a dependable financial advisor who takes care of these for you, in India.
Given the complexity of taxation and other rules across your home country (India) and host country, a good way is to ensure that you enrol the services of a good money management program/advisor. This can help you maximise the opportunity that you have owing to your unique status, as well as minimise the risks (including taxation / other regulation) associated with it.