Finances
Once you’ve decided you’re heading off to volunteer, it’s crucial to sort your finances out
well in advance. This may not be the most scintillating part of your preparations, but if
your affairs aren’t in order it could ruin your time away or leave you confronting a messy
situation once you return. It’s wise to get the ball rolling by discussing your affairs with an
independent financial adviser. Whatever financial arrangments you make, it's important
to keep some savings for when you get back, as that will make settling back in much easier.
A small number of volunteering organisations offer resettlement grants when you return
home but it’s a good idea to make your own provision too.
Below are some particular financial issues you may want to address.
Pension and Superannuation
Even if they don’t excite you, you must check how your pension or superannuation
scheme will be affected by your time out of the workforce. If you’re taking extended leave
to volunteer and you’re part of a pension or superannuation scheme at work, get all the
details in writing. If you’ve quit your job, ask your scheme trustee or financial adviser what
the options are – there are numerous different schemes and they all have different rules
and regulations.
In New Zealand, for instance, people with National Super and participating in recognised
volunteer programmes like Volunteer Service Abroad (VSA, see p124) can generally keep
their entitlements for three years if volunteering overseas. In the UK, personal pension
and stakeholder schemes are the most flexible for those volunteering, as you can often
reduce your contributions or take a complete pension ‘holiday’ without penalty. And in
the US, for breaks of two years or less, most employees with some seniority can easily alter
their contribution levels without incurring any penalties. If you’re considering leaving the
company permanently, rolling your 401(k) assets into a Roth IRA is probably your best
option. In any case, it’s essential to consult a financial adviser about your specific situation
and needs.
Company Share Save Schemes
If you work for a large company you may belong to a share save scheme. In the US these
are called ESRP (Employee Stock Retirement Plans) or ESOP (Employee Stock Ownership
Plans). If you are going away but intend to return, you should check how your scheme will
be affected by a break in employment and ask for the advice to be put in writing. You will
almost certainly have to opt out of the scheme while you are away, but your goal should be
to re-enter it as soon as you return. Many companies require employees to have worked
for two years before they qualify for such schemes, so you may decide to wait until you’ve
notched these up before volunteering overseas. Some also have set dates during the year on
which you can enter the scheme, so, again, take this into account.
Mortgage
See the ‘House’ section (p83) for details on the best way to deal with your mortgage while
you’re away.
Investments
Sometimes friend, sometimes foe, it is impossible to predict whether the stock market will
be up or down when you return from volunteering. If you own stocks and shares and are
counting selling them when you return, it may be prudent to transfer some of your money to
more secure investments. Again, it pays to consult your financial adviser when considering
the options. If you are likely to be away for more than three years, most financial advisers will
recommend that you invest in a mixture of bonds and cash as well as equities.
If you live in the UK and your volunteering placement is shorter than a full tax year,
think about buying a minicash ISA (individual savings account) up to the value of £3000
and you’ll get your interest tax-free. However, if you are going away for a full tax year, fill
in an R85 form, declare yourself a non-UK taxpayer with your regular savings account
provider and your interest will be credited gross into your account.Loans
If you have loans, make sure you have standing orders or direct debits in place to pay these
while you are away and that you have left enough funds in your account to cover the pay-
ments. You can try to freeze them but lenders are unlikely to allow this.
If you are a young volunteer with a student loan, check whether your student loan
lending agency has any special arrangements for international volunteers. For instance, in
New Zealand, legislation grants interest-free status to the student loans of New Zealanders
volunteering on specific programmes. Australians should check their HECS/HELP status
at http://www.goingtouni.gov.au or contact the Australian Taxation Office (www.ato.gov.au).
UK volunteers should download an Overseas Assessment Form from the Student
Loans Company Ltd (www.slc.co.uk) or ring %+44 0870 240 6298. In the US, federal and
many private student loans allow principal and interest deferment during periods of
unemployment (and self-funding volunteer trips fall into this category) or public service
(such as work with the Peace Corps and other qualifying organisations). Click over to the
Department of Education (www.ed.gov) or check with your lender for details.Bank Accounts
You might want to allow a family member or friend to access your account while you’re
away. To do this, you need to nominate them as a signatory to your account by filling
out forms held by your local bank branch. However, to be on the safe side, you probably
wouldn’t want this to be your main bank account with your entire worldly wealth in it.Telephone & Online Banking
Thanks to online banking, tracking your finances from another country has never been
easier. Online banking lets you check balances, pay bills, transfer money between accounts,
set up direct debits and standing orders, and increase an overdraft. Most banks also have
a telephone backup service which you can ring 24 hours a day if you experience any
problems with online banking. Check if your bank can text you your bank balance – this
could be useful, particularly if you have limited access to the internet and you’re in danger
of becoming overdrawn.
Security, however, may be a concern. There are email scams directed at banks’ online
operations designed to trick users into disclosing their online banking password, so beware
of any suspect emails. If you receive an email purportedly from your bank that links you
to a site asking for your full security information, treat it with suspicion and contact your
bank directly. Do NOT divulge any personal information. Internet cafés are notoriously
insecure environments to do your banking in, so consider using your own laptop with
internet access or telephone banking instead. Also, ask your bank for its international
helpline numbers in case something goes wrong.
If there’s no alternative to an internet café in the middle of Mali or Madagascar, be cau-
tious. Even if your memory is the size of a pea, think of different passwords to access your
bank account: using the same one increases the chances of fraud.Bills
If you are keeping your house and car, think ahead and make advance payments for items
such as insurance, tax or registration and other ongoing bills. Alternatively, set up direct
debits online. For more details relevant to house and car owners, see ‘Mortgage’ (p84) and
‘Vehicle’ (p86).04: Tying Up Loose Ends:Finances