We’ve said it time and again, but still people don’t heed the warning! The number one reason why most failed expats have headed home is because of financial disaster. If you want to avoid being one of the sad statistics, you need to know about the 7 warnings signs that could signal you’re on a path for financial disaster.
The good news is that expats are often in a much better position than their peers back home to leverage their overall position and get ahead in the great financial race. However, you need to know the pitfalls, work to avoid the problems, and ultimately take direct action to become a financially successful expat.
Here are the 7 warning signs to watch out for, and how to mitigate risk to achieve monetary success – whatever that means for you as an individual.
1) When it comes to the management of your money, don’t keep doing the same thing and expecting to get different results now that you’re living abroad. That way madness lies!
Not only do you as an expat have a whole new world of financial opportunity open to you, but you have to know that everything changes when it comes to money matters as soon as you become non-tax resident in the UK.
Be informed about your expat financial opportunities and know how to leverage them. Don’t assume that your banking, saving and investing activity should necessarily carry on in the same way as it did before you moved abroad.
2) Don’t think that non-resident in the UK for tax purposes means you don’t have to pay tax! Don’t assume that you’ll be better off taking on the tax regime of another nation either!
Once again it comes down to being informed. You need to know the tax reporting and liability requirements upon you now that you’re living abroad. You may need to report certain activity back in the UK for a number of years after you move abroad.
What’s more, your entire estate may still remain liable to UK inheritance tax even if you live abroad for many, many years before your demise.
Be properly informed about everything to do with taxation as an expat – as well as any legal and legitimate options that may be open to you to reduce your tax burden now that you’re living overseas.
For example, in some countries you only have to pay tax on money you remit to that nation, so by keeping all your wealth offshore you can become a legal tax exile!
3) It’s never too soon to get to grips with money matters. In fact, it really makes sense to take control of your finances before you become an expat. If you don’t know how much money you have to play with to get set up abroad you could fall short and have to return home before you’ve even made a life for yourself abroad.
Alternatively, if you don’t properly research how much it will cost you to live abroad you might not make the right decisions about employment.
Be open to the problems and opportunities, the questions and potential answers. Don’t bury your head in the sand when it comes to money matters as an expat. The final word on this is that if you move away from the UK you also move away from any social support safety net offered by the British benefits system. So, be prepared properly.
4) If you’re living abroad in a bid to leverage your position financially speaking, you’re not alone – however, having clear financial goals will help you to make the most of your time abroad and achieve financial success.
If you fail to plan, plan to fail!
5) Don’t assume that your lifestyle prior to moving abroad will be financially sustainable when you move abroad. You may need to rethink your spending habits when you relocate. Keep a close eye on your budget and spending until you’re well established abroad and know how much things could cost in your new nation. You don’t want any nasty surprises that could undermine your financial stability.
6) Stay on top of any decisions you make about your money’s management, and keep informed about any changes to financial rules, tax rules and even economic conditions that could impact your financial position or even your overall position as an expat.
You will need to be wise about these matters in your old home nation as well as your new home nation, and anywhere where you have money invested.
7) Remember the old saying ‘look after the pennies and the pounds (dollars, euros – delete as applicable) will look after themselves.’ Well, as an expat there are many ways that your wealth can be stealthily eroded little by little, and these little corrosive events can stack up and really cost you big time.
Things to watch out for include moving money between countries, currencies and accounts – you can be charged by banks, you can lose out on exchange rates and you can end up out of pocket. If you are careful as an expat about how you manage your money, every penny of it, you will reap the dividends over the long term.