The civil unrest in Libya and Egypt and the tsunami in Japan are tragic examples of the unexpected dangers faced when traveling abroad. Whether you are a career expat or taking that long planned trip around the world, when sudden events cause a country to plunge into chaos and instability to the point where the infrastructure of the country, including the banking system is impaired, the financial lives of all those living overseas is impacted.
In Libya and Egypt, not only was the internet shut down periodically, but also cell phone service was sporadic, and in parts of Egypt, banks were closed for several days. Forget trying to access Facebook, Twitter or Skype. How do you conduct banking activities without phone or internet service? Also, if banks are closed for days, ATMs begin to run out of money as customers hoard cash and the central bank and money suppliers can’t make deliveries. It’s not hard to imagine what it is like trying to find a bank or ATM in Sendai, Japan and other areas in Japan that have been literally washed away.
However, in the backdrop of this chaos, life goes on. In other parts of the world it is business as usual. Tuition needs to be paid. Mortgages are due. Financial obligations must be taken care of.
These 5 financial tips can help travelers financially prepare for when danger and catastrophe suddenly strike.
1. Cash is and always will be King – Although most citizens of developed countries depend heavily on credit cards and cash in the form of plastic (ATM/Debit cards), most citizens of emerging, underdeveloped countries are underbanked and don’t always have access to banks. Also, in some cultures it is a negative to be in debt so they are less likely to embrace credit. These countries and their citizens still operate on a primarily cash basis.
Keeping a supply of cash on hand in the local currency as well as a mix of other, readily convertible currencies such as the U.S. dollar, Euro and Pound Sterling can help you secure hard to come by necessities such as food, water and personal hygiene items.
2. Keep a bank account outside the host country where you are living. Often when people move to another country they assume they will never again need a bank account in their home country and sever all ties and close all bank accounts. If you lead a global lifestyle and travel frequently, it is probably not a good idea to keep all your money in one country.
Have a bank account in another country that you can either access remotely (via internet or phone, when it becomes available) or enlist someone you trust as a joint account holder or signer on the account so they can access the money for you in an emergency. It does not have to be a large sum of money, just enough to buy a plane ticket and pay for expenses until you can plan your next step.
Also, having a multi-currency account is ideal as having access to more than one currency is beneficial especially once global financial markets start to fluctuate wildly as they often do after widespread civil unrest and a catastrophic event. HSBC, Lloyds TSB, Everbank and Barclays offer multi-currency accounts.
3. Build a toolbox of financial solutions. Having only cash or only credit cards can be a singular solution for a perilous, multi faceted emergency situation. At a minimum your toolbox should include several financial solutions:
Pre-Paid Cards – Banks and non-banks are offering pre-paid debit and credit cards. Travelex offers the Cash Passport TM a reloadable travel money card available in various currencies.
Virtual Credit Card – Some banks have offered these for years, but due to an increase in fraud and identity theft, they are gaining in popularity. A virtual credit card eliminates the need for having a physical card and is ideal for online transactions.
Don’t forget the less obvious financial solutions like Pay Pal and Western Union. A pay pal account will allow you to send and receive money and make payments online with a valid email address and can be attached to a bank account or credit card. Western Union is available in over 300,000 locations worldwide and you can also send and receive money online and in person.
Also don’t abandon your checkbook because you move overseas. Although becoming obsolete, checks are still recognized as a negotiable instrument. A check drawn on a global bank with branches in several countries might come in handy. True, transaction fees for exchange and clearing might be a bit steep, but an emergency is not the time to haggle over banking fees.
In some cases, even keeping a supply of Gold can be helpful, as in some regions of the world, especially South East Asia and the Middle East, Gold is easily exchanged.
4 . Make sure to fund your exit strategy pre-departure. Before embarking on any trip overseas, your exit strategy should be well funded and thought out in advance. Always have your own financial resources available to execute your exit strategy for leaving your host country. Even if you are working for a company or part of a study abroad program, don’trely solely on your employer, school or government.
Post 9/11, most companies have a BCP (Business Continuity Plan) as part of their corporate policy. Your company’s primary goal will be to execute this plan effectively and monitor daily operations. Use your own financial resources to allow for flexibility to make decisions for you and your family’s well being and security that best suits your needs.
Having travel insurance is essential, but make sure you are also enrolled in a plan with a crisis response company that can provide travel, security, medical and evacuation services, and if necessary repatriation of mortal remains. These organizations are usually staffed with medical and security personnel who have military backgrounds and are experienced in responding to disasters and medical emergencies on a large global scale. Most of these companies offer corporate and indivual plans for travelers, students, retirees and others not attached to a corporation. According to press reports, Global Rescue and On Call International are some of the companies that have provided advice and assistance on evacuating people from Egypt and Japan.
5 . Invest your money wisely. Usually travelers tend to operate on two speeds. Luxury or Budget. Try being extravagant but frugal. Invest in products and services that can help save your life and can provide comfort and access to the outside world. One of the best investments you can make is in technology. A satellite phone is a useful alternative when landlines and cellular service is not available. A two way radio, if permissible in your host country is a good option to have as well. A digital camera is not only for taking vacation photos, it can also be used for snapping pictures of signs in foreign languages to send via text and email in case you are stranded in area you are not familiar with. A portable scanner is useful if you need to upload receipts, pictures and important documents. For securing passwords and other sensitive data, ITunes sells a number of IPhone apps with some offering encryption as added protection.