Five common financial planning mistakes to avoid when moving overseas
Written by Carl Turner on March 01, 2017.
So you’ve been posted abroad and are looking forward to a new lifestyle in a new country and the chance to make the most of a higher salary, lower taxes and a great standard of living. Many have gone before you and mistakes have inevitably been made. The good news is that you can benefit from the errors of others to make sure that you really take advantage of your situation to get ahead with your financial planning.
1. Failing to save
It’s all too easy to expand your spending in response to a higher salary, especially when you are exploring a new country and forging a new social life. That’s why you have to make a conscious effort to save each month by working out just how much you will put away and sticking to it. When you have savings, you remain in control, without them circumstances control you.
2. Unsuitable banking arrangements
I have seen all too many expats fail to adapt their banking arrangements to their new circumstances, running everything through accounts back home. I appreciate that banking regulations mean that there are always hoops to jump through when opening new accounts but it is definitely worth having a local account to manage the day to day such as paying utility bills and buying groceries to avoid paying excessive bank charges. Most of my clients also benefit from offshore bank accounts which offer advantages such as flexibility if you are moving country and multi-currency banking.
3. Paying for invalid insurance policies
If you are moving abroad it is absolutely essential that you review all your insurance policies and check their validity. It is all-too-common for expats to continue paying for life insurance policies back home which have actually been rendered null and void by their move. Review all your policies and take out life, health and critical illness cover tailored to your new life.
4. Misunderstanding tax liabilities
Depending on where you have come from, you may still have tax liabilities back home. Make sure that you are absolutely clear on your situation and where you have to declare and pay tax. Cross-border tax is a notoriously complicated area so seek professional help. An expert will also be able to advise you on legal ways to mitigate your tax liability.
5. Omitting to plan for your child’s education
This is a really important part of any expat’s financial planning. Most expats look to the private sector for primary and secondary education, whether they go local or send their children to boarding school back home. That doesn’t come cheap and nor does the university education which will likely follow. Forward planning will help you spread the cost of school and university fees and enable you to build it into your overall financial plan.
Here at Infinity we have the solutions to all your financial planning needs from offshore banking to education fee planning. If you’re a rookie expat, I’d love to hear from you and help you make the most of the unique financial planning opportunities offered by your posting abroad.