Expat Financial Advice Spain
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EXPAT FINANCIAL PLANNING
WHY IS IT DIFFERENT?
Being an expat can be a very rewarding experience. The joy of overcoming the language issue, the mixing with like minded individuals of other nationalities, for British expats – the improved climate and the opportunity to see a different culture and way of life are amongst these rewards.
Of course, some things are more difficult including dealing with officialdom in a foreign language, not knowing all the local customs and more.
Other things are just different. In this category comes expat financial planning. There are more things to think about and a need to allocate your investments in a different way. Perhaps you can save more? You will most likely have to think about your pensions more rather than relying upon an employer.
Here is a list of elements that make expat financial planning different
Currency
One of the first financial steps when leaving your home country and relocating abroad involves exchanging currency to that of your new country. It is important that you search around for the best deal as many banks are expensive. It is worth looking at specialist currency dealers.
If you are going to be receiving an income from your home country, it will need to be exchanged into the currency of your new country. You are then exposed to regular currency conversion. The impact of a change in currency could leave you exposed. Currencies move quickly and often. You may need to “forward book” some of your currency exchanging to fix the rate of exchange.
When it comes to arranging your savings and investments different currencies also need to be taken into consideration. As a principle, if your investments are generating income for you to live on you need the investments in the same currency as your expenditure.
Emergency Cash Fund
Regardless of the country you live in, we all need an amount of cash that is instantly available for emergencies. For the expat however, this fund needs to be higher than if you were in your home country. This is because inevitably you will be required to take additional trips back home. Trips back to see ailing and infirm relatives is a good example of this additional requirement. The amount will depend on your individual circumstances and any good, independent financial adviser will take this into account when financial planning.
Bank Accounts
It may be necessary to have a bank account in more than one country as an expat. This could be because you need local bank account in your new country and in the local currency and you may need to retain a bank account for your residual issues in your home country. Do you use the same bank in both countries (Barclays and HSBC for example) or do you choose a new bank with perhaps a branch and cash machine close to where you live? Banking regulation differs from one country to another so one should remain vigilant.
Tax Planning
The tax situation can be, well taxing!! With double taxation agreements between, for example, the UK and Spain, in which country do you pay your tax? And what about residence and domicile? In your home country these are likely to be the same. But overseas, these are often different. Inheritance tax is different and it is easy to be caught in two tax regimes.
Retirement Planning
A recent survey found that the highest concern for expats is to ensure that they have enough for retirement. If you are planning on retiring in your home country you will need to save sufficient (and currency comes into play again here). If you are going to retire in your new country there are many factors to take into account such as what to do with your pension from home (see our QROPS page)
Health Care
Many expats state that the health care in Spain is as good as the UK. However, despite this many people return home in later years due to health problems. It is worthwhile looking into the state health care of the country you are moving to and you may need to consider additional health care cover.
International Schooling
If you have a family when you move to your new country schooling is a concern. Many countries have a requirement to pay towards education costs. You may have to pay school fees in order to educate children at an international school. Or you and your children may wish to use a boarding school but this is an expensive option, a fact I know from personal experience.
To make sure that your expat life is without worry and that your future is taken care of, you should have a financial adviser who will provide you with regular reviews and support. As an expat your circumstances are likely to change more often than if you were in your home country.
Do you have a concern about your financial planning as an expatriate? If so, to discuss your concerns click on Find an Independent Financial Adviser .