How to avoid common expat financial mistakes

Published:  25 Apr at 6 PM
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Wherever in the world you’re planning to go and whatever your financial status, there are common money-related mistakes made by almost all expats when they move overseas.

Obvious financial must-haves and must-do’s aren’t included here, as most expats are aware of the need to save as well as spend, plan for retirement and allow for unlooked for medical emergencies by having private insurance. Unfortunately, ignoring the less obvious errors of judgement can easily lead to money problems for even the most careful expatriate.

The first suggestion involves keeping a separate emergency cash account with a balance which covers between three and six months’ everyday expenses. A sudden job loss or illness can mean anything from returning home for medical treatment to losing your work visa and having to move elsewhere in the short term. Having a separate cash account for such emergencies gives peace of mind and time to consider your options.

The cost of sending remittances back home is another expense which tends to be ignored, although charges for regular remittances can add up to large amounts over several years. Standard bank exchange rates are, to put it mildly, uncompetitive, and using a Forex broker can save considerable amounts. Watching your debt levels is boring but extremely important in the long term, especially if you’re maintaining a mortgage whilst working overseas. Overpaying by even a small amount can knock years off your mortgage debt and, of course, clearing your credit card bill monthly is essential in avoiding high interest charges.

Watching your broker or IFA like a hawk is an absolute necessity, as ‘conflicts of interest’ are par for the course once you’re outside your home country. Ask whether he or she works on a commission basis and make sure you’ve clarified fees due for switching investments and other such activities. Saving money on fees and extra charges is essential for keeping your investments on track and, if you’re at all doubtful about the service you’re getting, dump the IFA and find another one.

Checking your life insurance covers you where you are resident as well as in the home country is another often-ignored essential. Relying on your employer to provide cover isn’t a great idea as, should you lose or leave your job, your insurance cover will end. Having a goal for leaving your present country should be part of every expat’s financial plan, as however much you’re earning in your present job, it’s simply too easy to spend it all.

Source: Expat Living
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