As an expat, your circumstances are likely to change more often
than if you were in your home country. Clear financial advice and planning
means that expatriate life is without worry and that your future is taken care
of.
Financial planning requirements vary from country to country and
expatriates living in Spain may need to allocate their investments in a
different way. These are the elements that make expatriate financial planning
different.
CURRENCY
One of the first financial steps when relocating abroad may
involve exchanging currency to that of the new country. It is important to
search around for the best deal at both banks and specialist currency dealers.
If an income is received from another country in another currency,
it will need to be exchanged into the currency of new country. The impact of a
regular currency conversion can leave a person exposed. Currencies move quickly
and often; it may be necessary to “forward book” some of the currency
exchanging to fix the rate of exchange.
When it comes to arranging savings and investments, different
currencies also need to be taken into consideration. In principle, if the
investments are generating income used to live on, they should be in the same
currency as the expenditure.
EMERGENCY CASH FUND
Regardless of the country of residence, an amount of cash should
be instantly available for emergencies. In the case of expatriates, this fund
needs to be higher because inevitably additional trips back home are required
(for example, trips to see ailing and infirm relatives). The amount required
depends on individual circumstances and a financial adviser takes this into
account when financial planning.
BANK ACCOUNTS
Expatriates need a bank
account in more than one country; a local bank account is required in the local
currency. It is also often necessary to retain a bank account for residual
issues in the home country.
Choosing a bank
Some banks are available in
Spain and other countries (for example Santander and HSBC) which could make it
the preferred choice; a bank might be chosen because it has a conveniently
located branch and cash-machine. Banking regulation differs between countries
which require extra vigilance (the Spanish Cajas and the German Landesbanks may
be examples of this in the future).
TAX PLANNING
With double taxation
agreements between, for example, the UK and Spain, it must be determined in
which country tax is paid. This involves definitions of “residence” and
“domicile”. In a home country these are likely to be the same but after
relocating, they may be different. Inheritance tax is different and it is easy
to be caught in two tax regimes.
RETIREMENT PLANNING
A recent survey found that
the highest concern for expatriates is to ensure that they have enough funds
for retirement. If retiring in a new country there are many factors to take
into account such as what to do with a pension from another.
HEALTH
CARE
Many British expatriates
state that the health care in Spain is as good as the UK. However, despite this
many of them return to the UK in later years due to health problems. It is
worthwhile to look into the Spanish state health care; additional health care cover
may be required.
INTERNATIONAL SCHOOLING
If children are involved in a
family move to a new country, schooling is a concern. Many countries have a
requirement to pay towards education costs. School fees might be required to
educate children at an international school. There is also the option of
boarding school (this is an expensive option).
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