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By: Simon Danaher

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August 11th, 2015

Expat guide to living and working abroad 

Financial Education

Five simple steps to get your finances into shape

Managing your money doesn’t have to be hard. Here are five very simple things you can do to get your money into shape today.

1) Review your spending

Until you are really on top of what is coming in and going out of your account, you will never be able to implement an effective savings or investment plan. Simply put, the key is to spend less than you earn and save or invest the difference.

Expat guide to living and working abroad

Also look at your borrowing. Keep short term borrowing, such as personal loans, credit cards and overdrafts, to a minimum as these tend to be expensive.

It may also be worth checking to make sure you have the best available mortgage as rates change over time and you may be able to negotiate better terms. This could help save you money which may be put to better use elsewhere.

2) Open an offshore private bank account

This is imperative for expatriates. We advise people to adopt the “ABC” rule to banking when living as an expatriate – that is, ‘if you come from country A and live in country B, then you MUST bank in country C. 

There are myriad benefits to opening an offshore private bank account – ranging from increased security, convenience and service to tax mitigation, highly competitive lending facilities and foreign exchange services (see our Expat Guide to Offshore Banking for further details).

3) Simplify your investments

If you have an existing investment portfolio, you may not be getting the most out of it because you could be paying too much in fees and other hidden costs. We also generally advise clients against using Unregulated Collective Investment Schemes (UCIS) and other esoteric, specialist funds which are often extremely high risk (albeit not universally).

Review your portfolio, consider weeding out any UCIS or highly specialised funds, and selling them, unless you are completely happy with them and their place in your portfolio. Working out whether you are overpaying in fees can be difficult – a good indication is on the returns you are getting. If the amount going into your portfolio doesn’t match the reported returns of the fund, then you are probably paying too much.

4) Reinvest in cheaper, higher quality investment funds

Once you have stripped your portfolio of any funds giving you concern, you need to put that money to work.

To help guide you in your choice, our dedicated Centralised Investment Team produces a White List of both passive and active recommended funds which are constantly updated and monitored. These are what we believe are the best funds from a universe of more than 2,500 and, what’s more, we have negotiated substantial discounts with the asset managers, so you get more bang for your buck.

5) Know when to pay for international financial advice

This is vital. We can’t all be experts at everything, and understanding when we need help is an integral part of good financial planning. There are points in your life when it makes sense to seek advice from a professional, qualified financial adviser. As Shakespeare wrote in As You Like It: “The fool doth think he is wise, but the wise man knows himself to be a fool.”

A fully qualified financial adviser, who has your best interests at heart, can be invaluable – helping with everything from providing technical advice on complex issues, to keeping you on track when markets become testing. Think of them as your personal trainer – there to help push and support you when you need it.

If you would like to get your finances into shape and would like to learn more, click the form below to download our guide to becoming an Expat Millionaire.

About Simon Danaher

Simon Danaher previously worked for AES International, in marketing and communications.