Money Abroad
Supporting people at home is a commitment with a currency attached
Money sent back regularly is one of the most common financial features of a life abroad, and it is a long-running obligation exposed to an exchange rate that nobody in the arrangement controls.
By Varun Krishnan3 min read
It is a commitment, and it should be recognised as one
A great many people who move abroad send money home, and for a large proportion of them it is the main financial fact of the arrangement rather than an occasional gesture. It pays for a parent’s costs, a sibling’s education, a household that lost an earner, or simply the difference between two economies.
What distinguishes it from other spending is that it is expected. Once a monthly amount has been sent for a year it has been budgeted for at the other end, and reducing it is a conversation rather than a decision. That is worth understanding at the start, when the amount is being set.
None of that is an argument against doing it. It is an argument for treating it as a standing obligation with the same seriousness as rent, rather than as whatever is left at the end of the month.
The amount is set once and inherited for years
People tend to fix a figure in the first months, often generously, because arriving in a higher-earning economy makes the sum look small in local terms. The figure then becomes the baseline, and the local costs it was measured against rise while it stays where it was.
The result is a slow squeeze in one direction or an unsustainable commitment in the other, depending on which economy moves faster. Neither is anybody’s fault and both are avoidable by agreeing at the outset that the amount will be reviewed on a stated date each year.
A scheduled review also makes a reduction discussable. An unscheduled reduction reads as a withdrawal of support and frequently as a judgement about the recipient, which is why so many people continue sending an amount they can no longer comfortably afford.
Two currencies mean the amount is never quite fixed
A commitment made in your own currency and received in another is exposed to the rate between them, and over the years of a long stay that rate can move materially. If you promise a sum in the currency you earn, the recipient absorbs the variation. If you promise a sum in the currency they spend, you absorb it.
That is a real choice and it is usually made by accident. It is worth making it deliberately, and worth saying out loud which one has been chosen, because a household expecting a fixed local amount and receiving a fluctuating one experiences the shortfall as a broken promise.
The general principle from the mechanics of transfers applies here too: the rate applied to the conversion matters far more than any visible charge, particularly on a payment repeated every month for years. Setting the arrangement up carefully once is worth considerably more than watching it monthly.
The expectation can grow beyond the original request
A pattern many people describe, without much enjoyment, is that regular support becomes a category rather than an amount. What began as help with a specific cost becomes a general assumption of availability, and requests arrive for things outside the original understanding.
The mechanism is not usually greed. It is that distance makes your circumstances invisible, and a family that knows you are abroad has no way of knowing what the rent takes, what the taxes take, or what the setup year cost. In the absence of information they estimate, and estimates in this direction are generous.
The remedy is information rather than resistance. People who talk plainly about what their own life costs, in terms the other household can picture, report far fewer difficult conversations than those who let a comfortable impression stand.
Protect your own position while you do it
The thing that most often goes wrong is not the sending. It is that the sender builds no reserve, because everything above their own costs goes home, and then meets a deposit, a lost job or a flight for a funeral with nothing behind them.
A modest emergency fund in the country where you actually live is not selfishness, and it is what prevents the support stopping abruptly at the worst possible time. The same applies to whatever contributions or savings you would otherwise be making towards a future, which are easy to defer indefinitely and difficult to recover.
Where the sums are substantial or the arrangement is long term, it is worth asking a qualified adviser how such payments are treated in both countries, since the treatment of gifts, support and transfers is a matter of national law and varies. Check the current official guidance too, because assumptions here are exactly the kind that go unexamined for a decade.
Common questions
Should I promise an amount in my currency or theirs?
Whichever you choose, one side carries the exchange-rate variation, so the useful step is to decide deliberately and to say which it is. A household budgeting in local terms usually prefers a fixed local amount, which means you carry the movement.
How do I reduce what I send without a rupture?
Agreeing at the start that the amount is reviewed annually makes a reduction part of a process rather than a withdrawal. Explaining the change in terms of your own costs, concretely, works better than a general statement about affordability.
Are regular payments to family taxable?
It depends on the countries involved, the amounts and the relationship, and the rules differ and change. Check the current official guidance in both places and take qualified advice where the sums are significant or the arrangement is long-standing.
Editor, Globetrotter Talks
Varun has been reporting on arriving, visas & paperwork, money abroad since long before it was fashionable and is happiest when a piece answers the question completely.
