With the decline in the pound’s buying power having considerably worsened since sterling first began its significant slide back in 2008, some British expatriates have become acutely aware that you need to be careful with your money if you want to make sure it will go far enough to allow you to remain living abroad.
Expat retirees living on a fixed income paid to them pounds are probably the one group most affected by the currency’s decline – but if you too are in a position where your money’s tight or you’re worried about your long-term employment or even financial position, don’t panic because we have some excellent expatriate money saving tips to help you afford a good life abroad.
We’re going to cover saving ‘dos’ as well as saving ‘don’ts’ so that you can get a good handle on your financial position and ensure you’re doing the very best for your wealth so that you can remain overseas, living the good life that you should remember, many people ‘back home’ can only dream of.
5 Expatriate Saving Tips – What to Watch Out For
Whilst there are many ways to boost your savings pot as we will discuss below, there are a number of factors that you need to watch out for when you do begin saving your money away for a rainy day. These traps and tricks catch many savers out, and prevent them from getting the very most from the money they have squirreled away.
1) Back to Basics – it’s a fact that banks and financial institutions are paying as little as possible on your savings at the moment, but you need to ensure you are getting as decent a rate of interest on your money as possible. If needs be, speak to financial adviser, shop around, find the institutions onshore and offshore that will pay you more interest for your money.
2) Bonus Rate Blues – despite the fact that they give you as little as possible, banks do still want your business, and to get it they will offer you some fancy incentives to ‘hoik you in’ – these incentives are often bonus rates of interest, fixed for a set period. Subscribing to such an account is absolutely fine, but set a reminder in your diary/calendar to review your savings as soon as the bonus rate comes to an end because you can bet that on that day your savings will fall right back down to earning little more than 0%!
3) Lock and Load – if you lock in to a given account for a given period in order to enjoy a better rate of interest you need to bear in mind that within that period interest rates could improve over and above what you’ve locked in at. If you try and move your money you could be heavily impacted – so don’t lock in for too long unless you’re very confident that the rate you’re getting really is ‘that good.’
4) The Savings Trap – some accounts offer you limited access to your money, i.e., perhaps you can’t access it for 12 months, or maybe you can only make 1 or 2 penalty free withdrawals in your fixed term – don’t forget to factor these points in when planning how you will work your money, because you never know, there may come a time when you have to have access to your cash, and in so doing you inadvertently subject your savings to a financial penalty.
5) Limited Choice – some accounts will only pay you the higher headline rate of interest if you commit to topping up that account by a fixed amount every month, or if you keep the balance above (or sometimes even below) a given limit. Know about these limits if you commit to them, because if you get it wrong you could be financially penalised again!
5 Expatriate Saving Tips – How to Build Your Savings Pot
With the bad aspects of savings covered, let’s look at what you can do to boost your savings every single month.
1) Nobody Does it Better – Oh Yes They Do! – Your bank will be trying to convince you that nobody does it better than they do. I.e., no other financial institution will offer you more for your money – but chances are they’re wrong! They can only advise you about their products, they can’t tell you anything about any of the amazing savings and investment offers available offshore to expatriates like you. You need to explore and find where your money will be earning more for you as you save into your pot every single month, or whenever you can. If needs be call on the services of a professional and experienced expatriate financial adviser to help you explore the financial marketplace and get you more for your money. After all, the more your savings earn, the more you will have to play with!
2) Budgeting Basics – you need to draw up a fixed and limited, tight and efficient budget and you need to stick to it! That way you will be able to free up cash and squirrel it away. If you don’t know where to start, enlist everyone’s help in the family and have a spending diary for a month. At the end of each day everyone needs to note down what they spent on what. If you can’t commit to this you need to take all your bank and credit card statements for a month and go through each looking where money went. Where cash has been withdrawn you need to identify what it got spent on. You will very quickly see where money is being frittered away, and you can knock that habit on the head first and foremost. You can then work right back to the basics of what you need to live on each month and try hard to stick to spending just that sum – all other monies need to be put away in a savings account well out of reach of every day spending.
3) Cut Away – cutting back on basics can actually be fun. As one leading supermarket puts it - ‘change your supermarket not your lifestyle’ – or as we put it, change your shopping habits full stop! Learn how to shop like the locals, if they use the market and local food suppliers rather than the hyped up and over priced hyper market, perhaps you should do the same?
4) Sniff Out the Competition – in the UK everyone uses price comparison websites to get the cheapest everything nowadays – and whilst these sites may not exist where you are yet, you can still do your own legwork and shop around and sniff out the competition. Why buy your insurance from the only broker in town, get the phone book out and look for cheaper alternatives – the same goes for any big ticket item, don’t buy the first one you see – oh, and haggle! Who pays full price nowadays for anything?
5) Can’t Save Won’t Save? – If you really cannot save anything from the amount you earn each month I do understand – however, if you’re in that position you need to earn more. Simples! If you have a spare hour or two a day get a job in a bar, a shop, cleaning or doing odd jobs for someone. Give language lessons or take in ironing. Not enough hours in the day? Then sell some of the junk that you have probably accumulated over the years and get more cash that way. Ask your boss to send you on a course so you can skill up – then you will be more valuable to the company and you can ask for a pay rise! Think outside of the box to find ways to bring more money in to your household to enable you to save more for a rainy day.
