I recently gathered the information needed to file my New Zealand taxes. This was a multi-week task that required downloading documents from family financial accounts spanning three different continents. It was as exciting as it sounds, and if it were the only tax experience I had to endure each year, it would be bearable. However, as an expatriate (expat) US citizen, I must also file US taxes annually because the US is one of a handful of countries that taxes its citizens no matter where they live. An additional complication is that the New Zealand and US tax years do not match up. Hence, the information I gather for one regime is not complete for the other. All of this leads me to the conclusion that as an expat US military retiree family, we lead a complicated financial life.

Suppose you’re considering becoming an expat, expat retiree, or expat military retiree (like me). In that case, your financial life need not be as complicated as mine. Don’t get me wrong, if you want to be an expat, you are accepting a significant amount of financial friction in your life. However, I’ve logged below several engaging lessons learned from my complicated financial life that should help you navigate that process more efficiently. Those lessons include the importance of paying for expert tax advice, as well as finding a money tracking program that can access all your accounts in their various currencies. There are several more, all of which are worth considering before making that move.

Defining the Problem: A Family Affair

Let me start by emphasizing the fact that our complicated financial life is a family issue. Mrs. Grumpus is a naturalized US citizen and has bank and retirement accounts in her European home country, the US, and New Zealand as a result of working and living in all those places. Our kids also have savings accounts in all three countries since grandparents like to contribute in local currency, and some savings options (like 529s in the US) are only available in certain countries. Additionally, I now have retirement accounts in two countries by virtue of returning to work in New Zealand to obtain a residence visa for the family. All in all, between banking, investment, and retirement, Grumpus Familias has 31 financial accounts spread across 12 institutions in three different countries!

The complications continue beyond the number of accounts. Occasionally, we need to move money between the accounts, which means we need a cost-effective and reliable method of transferring money. Additionally, as mentioned in the introduction, determining tax liabilities in different locations is paramount. Understanding the tax implications of any money move (before we make it) is crucial to avoiding unintended penalties. The demands from our complicated financial life can stack up quickly if we don’t pay attention. Fortunately, we do pay attention, but with varying degrees of success. It’s from those varying degrees of success that I drew a lot of the lessons that I share below.

Lesson Learned #1: Track Your Accounts

Here on the Golden Albatross website, I advocate that tracking your money is the first step in achieving financial independence (FI). In numerous articles over the years, I have discussed the financial planning superpower that stems from knowing where your money comes from and where it goes. Thus, it should not surprise you that my number one tip for managing the complicated financial life of an expat is to track your money. To do that, though, you need the right tool.

No lie, but this article originally started as an update on my and my wife’s current money-tracking program of choice, Pocketsmith. As detailed elsewhere on this blog, I originally started tracking my money with Microsoft Money in 1999. It was an all-time favorite program of mine, but Microsoft sun-downed support for it in the late 2000s, and by the mid-2010s, I had begrudgingly moved on to Quicken. In the late 2010s, around the time I started this blog, I began to experiment with Mint. While my wife liked it and kept at it, I did not and (begrudgingly) kept using Quicken. I was still using Quicken, and my wife was still using Mint when we transitioned to Pocketsmith in 2023.

Much like Quicken, Pocketsmith is not perfect, nor is it particularly cheap. Among its drawbacks are its lack of investment tracking beyond total values and its limited reporting capabilities. It is far more of a budgeting tool than a holistic piece of financial tracking and reporting software like Quicken. However, once you get past its moderate learning curve, it is definitely easier to use daily than Quicken. This review of Pocketsmith from Moneywise accurately sums up my feelings on its strengths and weaknesses.

That said, Pocketsmith offers one thing many other top-quality money-tracking programs do not: It allows the (almost) seamless automated downloading and tracking of totals and transactions across internationally denominated accounts. This feature is particularly beneficial for us as it saves a significant amount of time and effort in manually tracking and converting the values of our accounts in different currencies. It also takes those various denominated accounts and automatically calculates their value into the base currency of choice for your Pocketsmith dashboard. Thus, your net worth is always on display, accurate, and in your preferred currency.

As a timesaver, it’s a big one for this expat family living a complicated financial life. The automation in tracking international accounts was what attracted me to the program in the first place and is what keeps me using Pocketsmith despite its drawbacks. And, no, I’m not receiving paid endorsements or any other compensation from Pocketsmith to say that. However, they are a New Zealand-based company, so I may be slightly biased towards wanting them to succeed.

Lesson Learned #2: Consolidation

Given that Grumpus Familias has 31 financial accounts spread across 12 institutions in three different countries, readers could point out that some consolidation may be in order. I wouldn’t argue against that point and would instead advocate for account consolidation as much as possible. Fun fact: I consolidated a number of accounts when we were stationed in my wife’s home country back in the mid-2010s, and if I hadn’t, we’d have even more than we do today. Furthermore, even in writing this post, I’ve identified at least one account I can wind down in the US.

That said, account proliferation isn’t always under your control. If you want to open a checking account at a bank, you often need to open up a savings account with them. Similarly, if you want a credit card from a bank, you often need to open a checking account. Not only that but some investment accounts can only be opened up for a specific person and a specific type of investment. For example, a Roth IRA and a Traditional IRA are two different types of accounts that a person must open if they want to save in them separately. Thus, some accounts just can’t be eliminated.

Consolidation from an institutional level is a more useful exercise. For example, earlier this year, we consolidated our kids’ savings accounts and our NZ government-mandated retirement savings accounts under the same NZ bank that we use for everyday checking and savings. Now, when we log in, we see all those accounts in one place. This further synergizes with our use of a money-tracking program like Pocketsmith, which only cares about the number of separate institutional data feeds you use rather than the number of accounts within those data feeds when determining your pricing plan. Thus, the lower the number of institutional feeds, the lower the pricing plan a person qualifies for.

The bottom line here is that fewer accounts are better, but this is not always possible. However, having fewer websites to log into when attempting to track your money in your accounts is also good!

Lesson Learned #3: Pay For Tax Advice Before Major International Moves

As chronicled in my 18 Months of Kiwiarbitrage article, I was on the cusp of transferring the bulk of our taxable investment account wealth from the US to NZ when a friend advised me of a US tax law I’d never heard of with the acronym of PFIC. PFIC is a tax for US citizens invested in overseas mutual funds and ETFs, which is what I would’ve invested my money into if I brought it to New Zealand. As a result of the complexities of the tax rules surrounding PFIC, I decided to pay for some US-based international tax advice. Sure enough, that advice showed that I was about to make a major tax mistake.

Oddly enough, I was attempting to bring my US-taxable wealth over to New Zealand to avoid their wealth tax on foreign investments, known as FIF. I knew from previous New Zealand-based tax advice (which I paid for prior to moving) that I had a four-year window to move my money over prior to becoming subject to the FIF wealth tax. Thus, I was caught between a rock and a hard spot. Either I keep our taxable investments in the US and get taxed by New Zealand or move them to New Zealand and get taxed by the US. Ultimately, I decided to keep my investments in the US, but not before using a large chunk of that money to pay for a house in New Zealand in cash.

Why did I do this? Well, as I chronicled in my article about buying our New Zealand house, beyond paying property taxes to the local council for roads, schools, and services, real estate wealth isn’t taxed in either country. As a result, I saved thousands of dollars in potential annual tax liabilities through this canny move. How did I know this? You guessed it, I paid for tax advice.

If you’re thinking this all sounds complicated, it is. In fact, it is so complicated that when readers and prospective clients approach me with expat tax questions, I refer them to the professional accountants I use. While I’m happy enough to answer New Zealand cost of living questions for readers or take on paid work for people who want me to stress-test their ideal New Zealand retirement budget through modeling software, I am not a financial professional. I’ve paid probably close to $5K US for international tax advice since my wife and I got serious about moving to New Zealand. While I always regret spending money, I don’t necessarily regret spending that money because I know it saved me more in the end.

Lesson Learned #4: Exchange Rates and Apps

Here’s an expat tip for making a little extra money. Assuming you’re aspiring to be a US expat retiree like me who chooses to keep the majority of their family’s (retirement or other) wealth invested in the US, then start watching exchange rates daily. There are plenty of money exchange apps, like Wise, that allow you to do this on your phone. I get daily notifications and emails on the USD to NZD exchange rate, so I always have a feel for the norm and, more importantly, when things are out of the norm.

Tracking the exchange rate will allow you to transfer money at a time that’s most advantageous to your in-country bank account. In other words, if you have the luxury of time, move money when your home currency (for me, the US dollar) is historically strong in comparison to your new country’s currency. This will give you extra pesos, pounds, or euros in your new bank account for nothing more than good timing. It also effectively means that your rent, groceries, and dining out experiences are cheaper than the sticker price since you got more native currency from your last exchange. Consider it an inflation hedge, if nothing else.

Next, get comfortable with exchanging large amounts at once. I’m talking about the equivalent of three to six months of expenses. Why should you do this? In my opinion, it alleviates the psychological burden of transferring money constantly since exchange rates can be volatile. In my 18 Months of Kiwiarbitrage article, I stated that the fear of missing out on a better exchange rate is just like the fear of missing out on a better stock price. Anyone who’s ever sold an appreciated investment probably understands this feeling since there is that psychological tug to wait to sell until the investment price rises even higher than it is right now. However, by doing so, you also run the risk that the price of the appreciated asset drops, making it even harder psychologically to sell.

Thus, I provide this seemingly contradictory counsel. Use your new-earned knowledge about historic exchange rate norms from your daily tracking sparingly. Don’t worry if the exchange rates go up or down after you make your exchange; rest easy that, at the time, you got a rate that was higher than the norm and locked it in by exchanging a good chunk of money in one go.

Lesson Learned 5: Credit Cards

My wife and I lived in New Zealand for nearly four years prior to obtaining a New Zealand-based credit card. Why? Well, NZ-based credit cards aren’t as good as US ones when it comes to air miles, points, or rewards. Plus, our US-based credit cards didn’t have foreign currency fees, so we were not getting charged extra to use them in NZ. While the exchange rate the credit card companies used wasn’t the best, they were competitive enough that, in conjunction with the awards we earned, my wife and I felt it was worth it.

That said, using a US-based card in NZ is not pain-free. For one, only some establishments accept American Express, which means only Visa or Mastercard work. For another, not every place uses chip and sign technology. Many only do chip and pin or pay wave. Thus, until we got our newest round of US cards with the purpose-built proximity chips for pay wave, we did a lot of education with younger store clerks on how to print and accept a signed receipt!

We finally got a NZ-based credit card four years after the move. Why? Well, we just kept running into situations where we needed one. It wasn’t an easy process because, without a credit history in NZ, I had to jump through a lot of hoops to prove we had the money and income to cover our credit card payments. To be clear, we’ve always paid our cards off every month and have sterling credit history in the US, but none of that mattered over here.

Not only that, but we ultimately had to go with a card offered by our NZ bank. Cards offered by other banks required opening a checking account with them, and as I just wrote about, I wasn’t looking to proliferate our number of banking institutions or accounts even further. Fortunately, our bank had a card with decent enough rewards that it seemed worth it, so that’s who we went with in the end. Still, we use it sparingly and rely primarily on our US-based cards to do the heavy lifting. Doing so eases our foreign exchange burden as well since we don’t have to transfer money to cover large credit card payments on a monthly basis.

Lesson Learned #6: Expect Financial Friction

This is my fifth article on moving and retiring to New Zealand. All my articles chronicle lessons learned from one financial perspective or another based on my and my family’s progress through the international move and immigration process. In re-reading some of those earlier articles, I realized that some things worked out as expected, while others went radically differently. If there is a common theme from all of those lessons, though, it’s that you should expect financial friction.

What do I mean by financial friction? It is the business cost of moving to a place like New Zealand. In my opinion, most things take longer and cost more as a US expat. While those costs may lessen over time as one settles into their new country, they never go away completely. The costs can manifest as time or money, but in the end, time is money, and it all adds up. Friction is the enemy of efficiency, and financial inefficiency can seriously impact things like retirement or saving for retirement.

For example, do you want a new credit card? Great! It’ll take you a month to gather all the paperwork to prove your financial history, and then a few more weeks to get the application approved. Want to file taxes? It’s more challenging when you have assets spread across the globe. Don’t even get me started on the tax complexities of owning retirement assets in something like a Roth IRA when your initial four-year NZ tax holiday ends; that’s an entire article in itself. And so on and so on.

If it sounds like I’m complaining, I’m not. I’m conditioned at this point. I expect it. You, the prospective expat, may not, though. Please take this as my warning because, at some point, it will feel overwhelming. More importantly, it takes time to study, remember, and apply everything in order to maximize your financial efficiency. Even then, you will inevitably forget to do something or make a mistake. There are just too many rules, regulations, constraints, and restraints. So don’t stress the slip-ups too much. Just do what you can to make your financial life easier and as efficient as possible.

Final Thoughts

I wrote in my initial Kiwi arbitrage article that I was unsure if our move to New Zealand for retirement would qualify as a geoarbitrage move (i.e., moving somewhere cheaper to make your retirement dollar stretch further). I also wrote that it didn’t matter because the move was motivated by a chance for an improved quality of life for me and my family. As long as we could afford to live in New Zealand without spoiling my Financially Independent Retired Early (FIRE) status, I didn’t much care that it might prove marginally more expensive than living in the US.

I stand by that assessment with one caveat. New Zealand, at least the part where we reside, is a great place to live and raise a family. The opportunities it offers for outdoor activities are some of the best in the world; the country is stable and peaceful; the public services are better than the US; and the overall quality of life is great. However, that financial friction impacts the quality of life for me. Not so much that I would reconsider living here, but just enough to take the sheen off of my decision.

I realize that some of these are first-world problems. My family and I are fortunate enough to have saved and invested to the point that it makes for a complicated financial life. However, a lot of the expat financial complications I point out in this and previous articles, like a lack of credit history or the costs associated with immigration, impact a person, whether they are moving from Bangladesh or the US. That means it will impact you too if you decide to make a move to a place like New Zealand. Don’t let these complications deter you. You can mitigate many to the point where they are annoyances, especially if you plan in advance. To that end, I will keep chronicling the financial lessons I have learned so you can keep learning from my mistakes and avoid them. I hope they serve you well. Please leave a comment or send an email to let me know if they do.

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