Adroitin Consulting Services: Step by step guide to financial planningfor expats

Step by step guide to financial planning

Many expats find themselves with more disposable income when they work abroad. Financial planning is essential if you want to make the most of your money - to grow it, protect it and use it to achieve your financial goals.

You also need to consider how living or working abroad could affect your plans for the future. Has your tax position changed? Will it cost more to send your children to a good school? Does your life insurance still provide the cover you need? And could local inheritance laws alter the way your wealth is passed on to your family when you die?
A lot of people put off financial planning because they think it's complicated. But if you break it down into steps, it's a simple process. To help you get started, we've highlighted the main things you need to consider at each stage.

5 steps to financial planning

Step 1: Set some clear goals

First, write down all the things you'd like to achieve - in the next few years and over the long term.

Depending on what stage in life you've reached, your goals could be to:

pay off your property early
make your savings and investments tax efficient
buy a property - at home or overseas
get married and start a family
make sure your children get a good education
retire early, with enough income to enjoy life.

Planning experts say that when you write down your goals, you're more likely to achieve them. So it's worth spending time making a list - and prioritising your actions.

Step 2: Assess your current situation

Looking at what's happening in your life now will give you a good reference point - especially if you're going to talk to a financial planning adviser.
The key areas to consider are:

Your household budget - by calculating your monthly costs, you can work out how much you've got left to save or invest
Savings, investments and protection policies - what do you already have?
All your financial commitments - back home and where you're living or working abroad
Your family commitments - are you married, do you have children, are you a grandparent?
Your tax position - is it different now you're living or working abroad?

You also need to think about how your financial situation could change:

Do you need to plan for any significant costs in the future, such as a family wedding or a property purchase?
Do you have an emergency fund to cover the costs you can't predict, like the boiler breaking down in the property you're renting out back home?
If you have protection, does it cover you abroad? How would your family cope without your income if you lost your job, fell ill or died suddenly?
Are you expecting your current income to increase, maybe with a bonus from your company? Or are your children about to fly the nest, leaving you with lower monthly costs and more disposable income?
Are you planning another move? Do you know where you're likely to retire to?
Are your assets spread across multiple jurisdictions? Or are any local laws/regulations likely to impact your financial planning?

Want to check your finances are in good shape?

Our financial planning calculators will tell you if your plans for the future are on track.
Use our financial planning tools

Step 3: Put a plan together

If you've got about 30 minutes to spare, that's all it takes to start creating a basic financial plan - giving you a good foundation to build on.
At this stage you need to look at how you're going to achieve the goals you listed in Step 1. There are many different ways to save and invest - from deposit accounts and bonds to property, shares and investment funds. To find out what options are available to you, you could do some research online. Or ask your family and friends how they manage their finances.
If you're thinking about building an investment portfolio, a financial adviser could recommend savings, investment and protection strategies based on your current situation, your plans for the future and your goals in life.
When you're looking at your options, there are some key issues to think about:

How much risk are you prepared to take?
With deposit rates low and inflation high, could there be a shortfall in your savings when you retire?
Can you take advantage of any potential tax benefits* of living and working abroad?
How would a life insurance policy be affected if you moved to a different country?
If you're thinking of retiring abroad, have you checked how the cost of living compares with where you're living now?

When you've written down all your options, you can weigh up the pros and cons of each one. Be realistic about how much you can afford to save each month - and think about how much you're happy to keep in long term investments.

Now you've assessed your financial situation and your goals for the future, you may want to meet with someone to discuss different strategies and approaches. Or you might feel confident enough to start implementing your plan yourself.

*The value of tax treatment will depend on your individual circumstances and may be subject to change in the future.

Step 4: Put your plan into action

This is one of the hardest steps for some people. But even the smallest changes can make a big difference over the long term. The most important thing to remember is that the longer you leave it, the harder it will be to grow your wealth - and you could be faced with a shortfall in your savings and investments when you retire.

Step 5: Review your plan regularly

It's unlikely your financial situation will stay the same throughout your life, especially if you're an expat. Key events such as moving to a different country, starting a family or buying a property should prompt you to check your financial plan to see if you still have the same goals - and if you need to change any of your saving, investment and protection strategies to fit your new situation.
You should also review your financial plan annually. (January is a good time for most people.) Even if nothing has changed in your life since your last review, it's worth making sure your plans are still on track - and your savings and investments are on target.

Importance of financial planning as an expat

You'll feel more positive about the future, especially your retirement.
It helps you find opportunities to grow your wealth - and make your savings and investments tax efficient.
It encourages you to save and invest for the most important things in your life.
It enables you to ensure your family is protected, wherever you are in the world.
You'll worry less about your family's financial security if you fall ill and you're unable to work.

What next?

Check your finances are in good shape? - Our financial planning calculators will tell you if your plans for the future are on track.

Use our financial planning tools

Ready to start planning? - Book a financial review with one of our wealth managers - and get expert advice from a specialist in financial planning for expats.

Book a financial review today

Want to know more? - Find out how our wealth managers help expats grow and protect their wealth.

Meet our wealth experts

Prefer to build your own portfolio? - Take a look at our range of investments, including best in class funds, ready-made portfolios and dual currency options.

See all our investment options

Apply online today - Log on to online banking and choose from a range of ready-made investment portfolios that invest in global markets and a broad range of asset classes.

Find out more about our World Selection portfolios

Want to invest in multiple currencies? - Our foreign exchange solutions make it easy for expats to manage their international finances.

See all our foreign exchange solutions

Please remember that the value of investments, and any income received from them can fall as well as rise, is not guaranteed and you may not get back the amount you invested. This could also happen as a result of changes in currency exchange rates, particularly where overseas securities are held or where investments are converted from one currency to another. We always recommend that any Investments held should be viewed as a medium to long-term investment, at least five years.

Please note that contributions to UK pension policies, cannot be accessed until retirement and not normally until age 55.

Tax obligations: Whilst banking offshore may have potential tax benefits for you, tax rules differ from country to country. If you are unsure about your personal tax obligations, you should seek professional advice. It is your responsibility to disclose your income to the tax authorities.