Easy Financial Wins for Expats: Today, This Month, And This Year
Imagine yourself in a hot air balloon floating over rolling hills. But your balloon is full of holes and leaking out hot air — slowly reducing upthrust and lowering you to an inevitable crash. Now imagine the balloon is your net worth, the air money, and the holes are your lack of control over your finances and your missed opportunities.
This is the reality for many expats. A lack of strategic long-term financial planning leads them to be unprepared for oftentimes massive expenses like school fees, weddings, or purchasing property abroad. This article will give some quick and easy financial wins for expats to improve their money situation. If you want professional advice, then feel free to reach out and book a consultation.
Easy Financial Wins for Expats: Things You Can Do Today
You’re not looking to faff around so we’ll get right into it. First I’ll list some things you can do today, then things you can do this month, then things to do this year. First off, today:
- Cancel unnecessary subscriptions.
- Simplify what you eat.
- Create an income/expenditure statement
- Set up a new bank account dedicated to an emergency fund
→ Financial Win #1: Cancel unnecessary subscriptions
This is an obvious one. If you don’t use it, then don’t pay for it. A lot of apps will offer you a month or two at a steep discount to avoid having you cancel. Take advantage of this, or set up new accounts with free trials with your spare email addresses. Consider sharing a Netflix account, or just generally finding ways of replacing app services.
→ Financial Win #2: Simplify what you eat
Make a vague menu and focus on re-using items. There’s no need to have a full fridge of condiments and 12 different types of pasta. Keep things simple and shop at local markets where possible. Consider bulk-buying items like nuts online raw and then roast them yourself. Anything you can do to simplify your diet. You’ll tend to find this leads you to eat much healthier as well. Obviously limit eating out if you’re serious about cutting down on spending.
→ Financial Win #3: Create an income/expenditure statement
This is common practice in business and allows you to track what is being spent where over the course of a year. It’s different to a budget as it shows you what is actually happening as opposed to what you’d like to happen. You can find templates for personal income/expenditure statements online and fill in the blanks. Many of them will show you your debt ratios as well, which is useful to indicate how good you are at managing credit.
→ Financial Win #4: Open a new bank account for an emergency fund
Your emergency fund should cover at least three to six months of your outgoings. This is only to be used when absolutely necessary, for example, if you lose your job, become sick and cannot work, or have to fly home on short notice for a funeral.
Keeping these funds in a separate bank account (and hiding the card…) ensures you don’t just spend it on frivolous rubbish. This fund must be built before any other savings or investments and you should keep it liquid in cash so it can be accessed immediately when needed.
Easy Financial Wins for Expats: Things You Can Do This Month
Now the easy stuff is out the way. This part involves more commitment. Some quick wins for you to start working on today:
- Sell unused items
- Stop drinking alcohol for 30 days
- Automate your savings
- Check your State pension and consider top ups
- Review insurance policies
- Make sure you’re not overpaying on tax
→ Mid-Term Financial Win #1: Stop drinking for a month
Alcohol costs rack up and tend to lead to spending elsewhere (late night food, taxis, online shopping, anyone?). This is just the immediate costs. If we’re being honest with ourselves, excessive drinking makes us less energised throughout the week and reduces your chances of long-term financial and professional success. Sure, moderation often balances this, but successfully taking a month off makes you feel good and will motivate you to push through other positive changes.
→ Mid-Term Financial Win #2: Automate your savings
There are plenty of ways to automate your savings and investments. Whether it’s setting up a monthly standing order or signing up to a regular savings plan, or just having a system of saving cash at home — whatever it is, it should be a pre-planned amount and consistent. And it should be done before you spend on anything else for the month. Don’t pay your landlord first, pay yourself first.
Talk to a professional financial planner for help regarding options for automated savings and risk-appropriate investments.
→ Mid-Term Financial Win #3: Check your State pension
Many countries allow their citizens to top up their State pension while abroad. This can be a great deal, especially in the case of British citizens, who can qualify for much cheaper national insurance contributions when working abroad.
→ Mid-Term Financial Win #4: Review insurance policies
Check how much you’re paying for medical and life insurance, as well as other policies you have in place and see if you can get a better deal. Policies taken out in your home country often don’t cover you when you’re abroad, so call them and check whether this is the case for you. A professional independent financial planner can often help you to find a better deal on your insurance policies.
→ Mid-Term Financial Win #5: Make sure you’re not overpaying on tax
Taxes are a big one when it comes to financial leakage. Plugging any necessary tax holes can save you a lot of money. Common examples I see are:
- People investing back in their home country (and paying tax) instead of utilising tax-efficient offshore structures
- Ensuring you’re properly utilising tax treaties to avoid double taxation
- Using relevant tax allowances where possible
- Not seeking professional tax advice to ensure you’re on top of things
Easy Financial Wins for Expats: Things You Can Do This Year and Beyond
Building habits takes time. It’s not enough to just save and optimize things a bit — you also need to be thinking about investing long-term to build wealth. This takes years, not months.
- Build a plan for long-term investing
- Plan for future large expenses now
- Write a will
- Plan your retirement now
→ Long-Term Financial Win #1: Build a plan for long-term investing
Investments should be for a minimum of five years. Even that is not long enough to build real wealth. Decades are a more suitable unit of measurement. You should go into this with a plan that considers your goals, your risk profile, your ethical considerations, and when you need the money for, and how you’ll take income from the eventual amount in a tax-efficient manner.
Hiring a professional financial planner can deliver real value here.
→ Long-Term Financial Win #2: Plan for future large expenses now
Whether it’s international school fees, flying family out for weddings, or just moving into a better part of town — there are plenty of huge expenses faced by long-term expats that take forward planning. Starting plans to save for these events now will give you more time to benefit from compound interest, making the amount you need to save less than if it’s left for later.
→ Long-Term Financial Win #3: Write a will
Probate for expats sucks and it often takes a long time and costs a lot. Do you really want your loved ones going through that while also mourning your passing? Having a will makes things much easier when you finally hit the deck. You should aim to have a valid will in every jurisdiction you hold assets in. These will usually need to be translated and notarised. Use a licensed professional.
→ Long-Term Financial Win #4: Plan your retirement now
Retirement might seem like a long way off, but you need decades to allow your wealth to compound. If you leave it until 10 years before you retire, you’ll lose out on the magic of compound growth and you’ll have to save WAY more than if you’d just started earlier.
- Make use of tax efficient structures for saving
- Invest according to your risk profile and time horizon
- Seek professional assistance from a financial planner
- The best time to start this was yesterday, but the next best is today.
Thanks for reading.
I hope you found this content useful. If so, please share it with someone else you think would benefit from it. Also, feel free to book a free consultation using the button below if you’d like to learn more about your options for financial planning as an expat.
Bye.
