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Expat Money Management Series: How To Manage Your Money As A British Expat?

September 17th, 2019

Expat Money Management Series: How to manage your money as a British expat?

Relocating to another country can be an interesting and exciting proposition. However, it means moving out of your comfort zone and acclimatising to an entirely different environment.

One may choose to be an expat to further one’s career, to do business, for retirement, etc. Whatever the reason, as an expat, you will have to preserve your wealth so that you can secure your financial future. If you are a British expat, then these money management tips can come in handy while you manage your finances.

Here’s what you should keep in mind.

1. Banking: Before leaving Britain, you should open an international account with your bank if it has the option. This will help you to settle your transactions in a selection of currencies. Besides, with a multi-currency account, you will be able to foil exchange fluctuation risk as well.

2. Currency management: Keep an eye on the charges and expenses that you incur in currency conversions. If you have remittance requirements, it is all the more important to minimise the costs related to the exchange rate.

3. Contingency fund: Once you leave the country, it is evident that you won’t have a comfort zone as you’ll be away from friends and family. You have to be prepared to meet contingencies on your own and build a fund towards it. For example, savings made in the form of treasury deposits with your bank account for a suitable time frame.

4. Tax status: After becoming an expat, your tax liability with your home country may eventually change. Whether you are liable to pay tax to HM Revenue and Customs will depend on your residence status for the previous tax years. Profits and pensions earned in the UK could continue to be liable for tax. Understanding the expat tax of countries can be difficult, and some tax regimes are harder to comprehend. It is worthwhile to seek the help of a professional to understand your taxability in the host country.

5. Insurance coverage: In most countries, the employer is likely to give you only medical insurance coverage. You have to ensure you have other essential coverage, such as life insurance and disability insurance. However, you may not qualify for coverage under local insurance plans. Even if you do, it may be very expensive. Or you may not be able to port it later to the UK. The best thing to do might be to retain your existing insurance while moving out of the country.

6. Savings: Here’s a dilemma you might face: would it be better to have savings in your host country or in Britain? There are offshore pension funds where you can save for retirement, but these can be expensive. Another option is to buy a house back home and lease it out. Rental income of British expats who are non-resident is not liable to tax on rental income. You can invest in stocks on a monthly basis and diversify it to spread the risk. There are restricted access savings that are good for post-retirement usage. Choose your methods of saving based on your lifestyle, needs and location.

7. Cost of living: We are subconsciously programmed to understand costs in our home currency almost instantly. But with a new currency, it is like reinventing the wheel. Paying £1 for a loaf of bread may seem fine in the UK, but if you are paying the same value in another country with a stronger currency value, you may be overpaying. You will have to develop the instinct of knowing the right price in your host country, apart from keeping an eye on the cost of living you incur.

Read also: How to manage your money efficiently when you plan to move abroad

We hope that by considering these aspects, your money management during your expatriate life outside of Britain is successful.