The trailing spouse: financial advice

Living in Canberra, many of my friends and public servants.  And many of them head off for overseas postings.  It is exciting and adventurous, yet there is a downside -what about accompanying spouses?  How do they manage financially on posting?

A good friend has just shared the good news that she expects to go on posting in early 2016.  She has recently moved in with her boyfriend, and he is going along o posting, too.  She and her partner have always been astute with money – but suddenly they will be going to one income and will have different considerations.  So she asked me for financial advice in preparation for leaving.

With C going without an income or super over the next few years while we are on posting, we are going to have to get smarter about how we arrange things I think – we are at a bit of a loss as to where to start… there must be lots of accountants in Canberra who have dealt with this before, but I’m no sure how to find one.

I was on posting to Taiwan for three and a half years, and my ex husband was a trailing spouse.  My work suggested I go to see a financial planner, but it would have been an expensive visit.  And I was so crazy busy before I left. Strangely I didn’t have many recommendations for financial planners or accountants who specalise on giving pre-posting advice.  I am sure there must be some good ones around, and if so, I would love to hear about them.

These are some of my top tips about managing your finances while on post:

1. The Australian Taxation Office still provides a super co-contribution for low income earners.   I am a bit confused about how this works, but essentially if you make a voluntary contribution to your super while as a trailing spouse overseas, you may be eligible to receive up to $500 from the government.  Some government funds such as the CSS and the PSS don’t always allow personal contributions, so do your research.  And make sure you still lodge tax returns annually, even if you are not earning any income.
2. The expat lifestyle seems glamorous, but it can be expensive.  It takes a while to get local knowledge about where to go to buy things cheaply.  Well meaning non-frugal colleagues will probably direct you to the nearest department store or international supermarket rather than the local wet markets or cheap barber shop.  The most frugal way to live is to adapt to local conditions – think doujiang (soy milk) and shaobing bread for breakfast instead of coco pops.  Of course, sometimes you DO crave those hard to get foreign items – while I rarely ate out at foreign restaurants, I had pregnancy cravings for tinned peaches and it took a little while to find in Taiwan.  As a trailing spouse, get connected with other expats and locals and ASK them where to shop, where to get bargains, and how they save money.  In Taiwan the big thing was group shopping where people in an office would combine to make a bulk order to get discounts.  But you had to be in the know to know.
3. An investment property can a good investment to have while on posting.  But understand all the ins and outs, and for this you will need a good tax accountant. Before you do any pre-posting renovations, check if you can claim them on tax.  And check if you can defer any tax losses to future years – a trailing spouse can’t easily take advantage of any negative gearing if he or she is not working.  And if you rent out your home, it could still be considered a main residence for tax purposes for up to six years for capital gains tax.
4. Research whether or not the trailing spouse can work on posting.  In many cases, the trailing spouse is unable to legally work in the country of residence.  But there may be exceptions such as working for a foreign company.  Plan for the worst case of the trailing spouse being unable to work, but consider doing things that upgrade skills (such as studying) or develop a platform for interests (such as blogging).  Celebrated French food writer Julia Child began cooking and writing while a trailing spouse of an American diplomat posted to Paris.  Sometimes a trailing spouse can use his/her time to advantage, but it is sometimes difficult to know what direction an interest will take off in until you are actually there.
5. Understand how bank accounts work in country, and how to access your cash.  When in Taiwan, we were unable to open joint banking accounts as it would have contravened the law.  We (then) banked with HSBC, which had branches in Taiwan.  We could not link accounts directly, but we could transfer funds easily from our Australian account to our Taiwanese accounts. I was paid in Australian dollars into my nominated Australian banking account.  At first, I relied on work to deposit a nominated amount into my Taiwan bank account.  But after my ex researched it, we realised that we got a better rate through HSBC and, even with the $20 fee per transfer, we were ahead.
6. Get smart about monitoring exchange rate fluctuations.  Watch what the exchange rate is doing, and transfer more or less money across when the rate is right.  You will probably need more money at first as you set up house, but once you get into the flow watch the rate.
7. A trailing spouse is financially vulnerable.  The less sexy side of a posting is the fact that a trailing spouse does not have his/her income, and might not be able to access an account of a main income earner.  There needs to be a high degree of trust in the relationship for a posting to work.  Think about how to create conversations about ‘our’ money and possessions, and find ways to give greater economic independence to the non working spouse.

Have you worked overseas on a posting, or have you lived/travelled overseas for long periods?  Do you have other tips for my friend?  If so, she would really appreciate them.