💸 Are You Losing Money Moving to Portugal?

Happy Sunday, beautiful people 😎

It’s one week into the new school year, and things are going better than expected.

Our daughter has started middle school and seems to be loving her classmates, teachers and new environment, which feels worlds apart from the scared, English-speaking little girl we threw in at the deep end five years ago into the Portuguese public school system.

We’ve made plenty of mistakes moving continents, but luckily, her journey through the Portuguese school system seems to be a win, for now. 😉 She speaks the language with near fluency and, more importantly, she seems happy.

This alone makes up for most of the other balls we’ve dropped along the way, like the money we lost exchanging our South African rands for euros.

And thankfully, in today’s article, we might be able to save you this particular headache while you get on with the things that really matter: finding your place and making it feel like home. There are plenty of things I would do differently if we were making our move to Portugal all over again, and how we handled our money is definitely one of them.

So this week, we’re taking a closer look at the currency side of moving abroad, with Prem Raja from Currencies 4 You sharing six expensive mistakes worth avoiding.

I’m excited for this one.

So, without further ado, let’s get into it, shall we?

Rota das Faias is one of Serra da Estrela’s most enchanting walking trails, winding through a beautiful beech forest near Manteigas. In autumn, the trees transform the route into a spectacular tunnel of golden, copper, and russet leaves—but the peaceful mountain scenery makes it worth exploring in every season.

Hindsight is 20/20… especially when it comes to money.

When we were first moving money from South Africa to Portugal, I don't think we gave enough thought to the currency side of things. We were laser focused on getting here, finding a home, learning how to order our wine and ask for the bathroom in Portuguese, getting our daughter enrolled in school…. and figuring out everything else that comes with moving countries. Looking back, there are definitely things I would have done differently.

So when I started chatting to Prem Raja from Currencies 4 You, I knew pretty quickly that he'd be a great fit for The Expat Hustle. He's based in the UK but spends a lot of time in Portugal, and works with families, retirees and professionals moving money across borders. He's seen a lot of the same currency questions come up again and again and he’s learnt a few things along the way that he thinks we should know when it comes to turning our pounds, dollars, rands and other currencies into euros.

We're kicking things off with 6 expensive mistakes to avoid when moving money to Portugal. If you're moving savings, buying property, receiving a pension or just transferring money regularly, there's some super useful stuff in here.

Over to you, Prem… 👇

💱

Moving and living in Portugal involves a long list of financial decisions. Where to live, whether to rent or buy, tax, residency, banking and insurance. Currency often ends up near the bottom of that list.

But if your money starts life in Dollars, Pounds, Rand or Canadian Dollars, and your costs are in Euros, the exchange rate can materially change what your move actually costs.

After working in the FX industry for over 15 years, I have worked with clients across multiple jurisdictions, all with unique situations and requirements, here are the 6 most common mistakes I have seen people make when making cross border payments and managing that exposure, and how you can solve them easily.

Commonly, and understandably, when we are looking at exchange rates, we will log onto Google or onto our favourite AI chat bot and find out the current exchange rate, most online feeds only show what is called the “mid-market” exchange rate, unfortunately, this is not going to be the exchange rate that you actually receive through your bank or currency provider.

I recommend finding out beforehand what the margin from the mid-market rate is going to be from your provider, so you have a clear picture of how much they are charging, and what exchange rate you can expect to receive. On a transaction of €300,000, just a 1% difference is €3,000, so it is worth working out exactly what rate you can expect to receive so you can plan your costs properly.

Time and time again, I speak to clients who are in the process of buying a property in Portugal, they have instructed lawyers, removals companies, organised a mortgage loan, and even figured out how to transport their beloved pet to Portugal, but are not planning to exchange their funds until the day before completion- this can unfortunately become a very costly oversight.

When you agree to purchase your property, you will of course mentally fix a price in your home currency at the same time based on the exchange rate on that day, but the problem is, the property price is only fixed in Euros, not your home currency. Between your deposit date and completion date, if there is a move of even 2% on the exchange rates, which is not uncommon, this could end up costing you more than you anticipated.

There are many tools that you can use to help manage your transaction through the process such as stop loss, limit orders and forward contracts, which can minimise the volatility effect.

I’ve worked in currency markets for over 15 years, and I still can’t tell you where GBP/EUR or EUR/USD will be next month with certainty, nobody can, which is why it is very dangerous to try and “time” the market when it comes to a currency purchase, especially a large one, where even a 0.2% move on the market could be costly.

So instead of trying to figure out the unknown, focus on what you do know with certainty, which is your budget, your deadline, the exchange rate at which the transaction works for you, and the known economic events ahead.

With this information you can make a plan which can limit your exposure if the market were to fall, but also put you in a position to take advantage if the market were to gain, there is a big difference between planning and predicting, and working with the right currency expert can definitely help you sleep better at night knowing you have a credible plan for your transaction.

This is both relevant for people moving lump sums and people relocating their savings, if you have a large amount of funds to move with a pretty open time period, it can be tempting just to buy everything at once and finish the matter, but actually, staged conversions can be a very intelligent way to move funds instead of banking on one transaction to get the timing right. You can review which dates you have fixed liabilities and plan ahead, and then transact in smaller sums to average into the market to reduce your risk, very similarly to how we would average into a stock or investment purchase.

For many, you will be receiving regular income, perhaps a pension from your home country, or even your salary being paid in a different currency. This doesn’t mean that every month you simply have a “transfer to make”, you now have ongoing currency exposure.

Getting a different rate every month can become risky, and carries the risk of your earnings having less purchasing power in Portugal. If you wouldn’t renegotiate your salary/pension every month, it makes little sense to ignore how much of that will be converted every month, and plan ahead to ensure you don’t have any surprises when making your conversions.

For many of us, we may be in a position where we have used a particular bank or currency provider for the past few years and are now in a habit, without regularly reviewing the costs.

I would recommend periodically comparing exchange rate markup, transfer fees, limits, speed, the ability to speak to a human and support for larger transactions, to ensure you are always getting the most for your money. I tell people that I’d love for them to use us, but my first piece of advice is simpler, understand what you’re being charged before deciding who to use. The right solution for sending 500 EUR for a weekend in Lisbon may not be the right solution for transferring 500k EUR for a property, and this is why it’s always important to compare.

The biggest mistake is often not choosing the “wrong” day to exchange. It’s making a large financial decision without knowing the answers to a few basic questions first.

You don’t need to become a currency trader to move money to Portugal, and you certainly don’t need to predict where exchange rates are going next. But before making a transfer, particularly a sizeable one, I would make sure you can answer the following.

If you can answer those questions before pressing send, you’re already approaching the transfer very differently from someone who simply checks today’s exchange rate and hopes for the best.

Moving money to Portugal doesn't need to become another complicated part of the relocation process. The important thing is simply to think about the currency before the day you need to make the transfer.

You won't know with certainty whether the euro will be cheaper next week or whether the dollar or pound will be stronger next month. Neither will I. What you can control is the rate you're being offered, how much you're paying your provider, when you need the money and how much currency risk you're prepared to take while you wait.

For larger transfers in particular, a little planning can make a significant difference. Ask questions, compare the amount that will actually arrive, and don't be afraid to challenge a rate or fee you don't understand.

If you've transferred money previously and want to understand how the rate you received compared with the market at the time, you can contact me at [email protected] and I can break down the numbers for you.

And if you're planning a move to Portugal and would rather talk through the numbers with someone before deciding what to do, I'm always happy to have that conversation.

Sometimes the best decision is to exchange now, sometimes it's to wait, and sometimes it's to do a bit of both. The important part is understanding why you're making that decision.

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A big thank you to Prem Raja from Currencies 4 You for collaborating with The Expat Hustle on today’s article.

What are the different meanings of POIS in European Portuguese?

“Pois” is one of those Portuguese words you’ll hear all the time, but its meaning can change depending on the context and how you say it.

It can be used to show agreement, understanding, disbelief and much more. You’ll even hear Portuguese people saying “pois, pois…” during conversations.

Learning little words like this can help you better understand natural, everyday European Portuguese.

🗣 Want to learn more phrases like this? Check out Mia’s free Portuguese course “Kickstart Your Portuguese - The Basics”.

💡 Mia from Mia Esmeriz Academy is a Portuguese teacher from Porto with more than 15 years of experience teaching foreigners. She helps expats become fluent in Portuguese in a clear and practical way. Alongside her courses, she also shares free content on Instagram, Facebook, and TikTok.

Thanks for reading! 💌

Hustle on!

Angelique

PS — got an expat friend who's one bureaucratic form away from booking a flight home? Forward this newsletter their way. We're all just trying to figure it out together.