Living abroad can be exciting and can truly broaden your horizons. As an expat, however, you face the unique challenge of dealing with finances in a way only a fellow expat can understand. How do you pay taxes efficiently? Which should you prioritise, investing or saving? In this blog, we provide a guide that would be helpful for you to live a comfortable life, provide financial security for your loved ones and build a nest egg for retirement.
Understanding your financial goals
The first step to start adeptly managing your finances is to understand what your goals in life are and align your financial planning with them. In this way, you can decide the amount of money you would need to attain these financial goals.
Write down a list of these financial goals, whether it’s buying a property back home or supporting your children in their higher education. Categorise these goals into short-term (less than 3 years), mid-term (3 to 5 years) and long-term (more than 10 years) goals. Short-term goals could include a trip to Australia, while a mid-term goal, to generate wealth, and a long-term goal, to retire comfortably with a certain amount of savings.
Short-term financial goals, saving and emergency funds
Once you’ve determined and categorised your financial goals, it will then be clear to you how to go about saving and investing. Keep the money you would like to save for your short-term goals in a savings account that you can easily access when you need to.
Be prudent about using this money for items not included in your budget. With higher interest rates than a savings account, and more flexibility than other types of investments, fixed deposit accounts are a great alternative when putting away cash.
It’s also wise to have an emergency fund that can help you weather through financial difficulty like in the event of a retrenchment. Ensure that this fund covers you for at least 6 months. We also advise you to purchase basic health insurance that will have you covered if you meet with an unfortunate accident.
Long-term financial goals and investing
After setting aside this emergency fund of cash reserves and money for your short-term financial needs, you now can think about investing the rest in order to grow your wealth and make the most of your capital. Keeping idle cash in the bank is never recommended due to low interest rates and inflation. Ask yourself a few questions: What’s my appetite for risk? What types of investments do I want to make?
You then determine if you should invest in shares, property, bonds, bitcoin, foreign currencies or commodities. As an expatriate, you have a wider range of investment options available to you, like offshore investments, which allow you to diversify your portfolio. Determine the best investment based on your long-term gain strategy and risk tolerance.
Taxes and foreign exchange currencies
As an expat, you might have an advantage when it comes to taxes. Your tax situation can vary depending on your nationality and whether you’re employed by a local company or a foreign one. Make your taxes work in your favour by understanding your tax obligations and deductions that let you save and reduce your final tax liability.
Where you choose to finally settle for the long-term or retire has a part to play in which currency to invest and save in. Currencies can fluctuate dramatically and if you’re investing in a particular currency but will convert to another currency when you retire, foreign exchange currencies can significantly alter your final saving sum.
Singapore Expat Advisory partners you on your financial journey
Financial planning can be particularly complex and challenging for expats. Whether you’re an expat from New Zealand, UK or Australia, Singapore Expat Advisory works with you to plan your finances and manage your wealth. Get in touch with us to learn more about our suite of financial services, including education fee planning and retirement planning. Being able to realise your goals and be in a strong financial position to live the life you envision, can be gratifying.
Singapore Expat Advisory is an advisory platform for Promiseland Pte. Ltd Pte Ltd and are authorised and regulated by the Monetary Authority of Singapore (MAS).
General Information Only This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products (including funds, stocks) mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment