Being an expat can be a very exciting and rewarding experience. The enjoyment of learning and
communicating in a new language, meeting and interacting with individuals of different nationalities, for
British Expats a climate which includes sunshine and the chance to see different cultures and a way of
life are amongst the benefits.
Some things are more difficult including dealing with legal matters in a foreign language, not knowing all
the local customs and perhaps being away from your family.
As an expat, some things are just different. In this category of "just difficult" comes financial planning as
an expat. There are many more factors that will affect your financial planning and there will be a
requirement to allocate your money to different priorities. However, you may be able to save more too?
Your pensions will require more planning and you are less likely to be able to rely upon your employer
for pension provision.
Here is a list of the elements that make expat financial planning different
Emergency Cash Fund
Regardless of where you live, we all need some cash that is instantly available for emergencies. As an
expat however, this fund needs to be higher than if you were in your home country. Inevitably you will
be required to make trips back home. A visit to see ailing and infirm relatives is a good example of this
requirement. The amount depends on your individual circumstances and a good, independent financial
adviser will include this in your financial planning.
Exchange Rate and Currency issues
As soon as you leave your home country and relocate abroad you will need to exchange currency to that
of your new country. It is very important that you search for the best deal; many banks are expensive.
You should see what specialist currency dealers can offer, they are often the best place to exchange
If you will receive an income from your home country, such as a pension, it will need to be exchanged
into the currency of your new country. You are then exposed to fluctuating rates. The impact of a
change in exchange rates could leave you without sufficient income. Currencies move quickly and often
and so it is easy to be caught "short". However, some currency companies allow you to "forward book"
your currency which means that you can fix the rate of exchange for future transfers, sometimes for up
to 1 year in advance.
Similarly, currencies need to be considered for your savings and investments. As a principle, if
investments are generating income for you to live the investments should be in the same currency as
Taxation - In more than one country
The tax situation can be, well taxing!! Double taxation agreements between, for example, the UK and
Spain, mean you have to be clear about which country will be the controling country in tax
terms and therefore where you will pay your tax? And what about residence and domicile? In your
home country these may be different definitions. But overseas, these are often the same. Inheritance
tax is calculated differently and it is easy to be caught in two tax regimes.
A recent survey found that the largest financial worry for expats is the provision of a big enough pension
pot for retirement. If you are planning on retiring in your home country you will need to save sufficient
to meet the standard of living in your home country (and currency comes into play again here) for, as an
example, the cost of housing which may be greater in your home country than in your new country. 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. 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.
With children comes the added responsibility of their education. Not all education systems acheive the
same standards. Many countries have different systems for paying for 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; something I know from personal
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.
This article has been provided by Barry Davys MBA of the Spectrum IFA Group. He is an expatriate
himself who has lived in Spain for 5 years.
Expat Financial Advice Spain is run by Barry Davys of the Spectrum IFA Group. Originally from the UK
Barry became an expat following the successful sale of a business. He has 26 years experience as an IFA
but still loves being in a career where he can make a difference. Barry has an MBA and professional
qualifications in investments, taxation and trusts.