Expat Savers Encouraged to Start Small Rather Than Not at All

Moving abroad, setting up a new life in a new country and building a fantastic international lifestyle (!) are expensive undertakings – which is why many expatriates end up in debt as soon as they arrive overseas.  Some are in such a dire financial state that they never recover, and we at Shelter Offshore always try and encourage anyone who’s thinking about moving abroad to get their finances in order first.

If you’re moving to live somewhere in Europe at the moment you’ll already be aware that your British pounds are buying you less, but no matter where you relocate to in the world, you will take a major financial hit – unless of course your company is paying for your emigration!

So, to suggest that expatriates immediately embrace their expatriate advantage and start squirreling away millions into offshore investment solutions is perhaps a little over optimistic – at best!  But actually, expat savers are being encouraged to start saving small amounts as soon as they become tax resident in a new nation, rather than not saving at all.  And we’ll explore why in this report into expatriate finance and making the most of the money you have.

Tackle Debt Head On First

If you get into a lot of debt by moving abroad – or indeed, if you’re in debt and have moved abroad to try and earn enough to pay it off – the sensible advice is to clear your debt before you do anything else!  Ironically, the more you borrow the less you will have in life.  This is because your debt will eat up your money in interest repayments and mean that you have less money each month than someone who was never in debt in the first place.  This is true even if that person was simply saving to get the same things or to get to the same point in life as you who borrowed to get there or to get ahead.

Some schools of thought argue with this and say that if you have debt for an investment – such as a loan for your business or a mortgage for your house – that this is an ‘acceptable’ form of debt.  This is fair enough, but debt is debt, and debt is money ‘wasted’ in interest payments.  So, if you’re in debt when you move overseas, work hard to clear it down and then you can really get ahead in the savings race!

Why Starting Small is Okay

Far too many expats think that because they can’t afford to put hundreds of pounds/dollars/euros away into an offshore savings account each month that it is not even worth them bothering to start saving.  The school of thought seems to be, when I earn more or when I get my bonus, then I can afford to start saving.  However, the reality is that by putting off saving you are losing out, even if you can only afford to save a few pounds each month.  The longer you save for, the better.  Which is why no one in their right mind thinks that it is realistic to start saving for a pension at 60 when they know they will retire at 65!

The longer your money is in a savings account earning interest, or the longer your money is in an investment and perhaps riding the waves of the stock market, the better in real terms. 

For savings attracting interest, even a tiny bit of interest on a tiny amount of money is money for nothing, and money that next month will mean you earn a tiny bit more interest.  And so it goes on.  As for investments, there’s a concept in investment terms called ‘dollar cost averaging’ – and basically this is a strategy whereby you save equal amounts over a long time no matter what the market is doing.  Sometimes you buy more shares, sometimes fewer, but over time it averages out, and the price you pay for each share will likely be less than if you kept trying to time the market and have all your money lined up at the ‘right’ point to buy in low.

Money invested earlier tends to go far further – fact!

Which Offshore Savings Accounts Suit Small Savers?

There are so many different types of savings vehicle available offshore for expatriates – however, not all of them are suited to smaller savers, and some are only really suitable for those who want to save a large lump sum.  So which offshore savings accounts suit small savers?  The answer is…that depends on you and your personal circumstances such as the nation you’re living in, where you’ll be funding the account from, which currency you want to save in and how much access you need to have to the money.

So, to determine the best method of approach for your money – no matter how infrequently you can pay in and no matter how small the amount you have to save – is to speak openly and honestly with an expat financial adviser.  These individuals know only too well how important it is for their clients to save something rather than nothing, and they would far rather you contact them today and made arrangements to put something away, rather than putting off meeting up and putting off getting on the right road with your money.

If you can’t find a financial adviser to assist you, please do .(JavaScript must be enabled to view this email address), we have preferred partners and those whom we trust in various locations around the world, and we will gladly put you in touch with them.  You are under no obligation to use their services or follow their advice.