There are several common financial planning steps that we all should take, regardless of whether we live in Singapore or elsewhere in the world. These include having a financial plan, saving money, setting up for retirement, having life insurance – especially where there are dependents – and so on. However, a few additional steps that are particularly important for expats can sometimes get pushed to one side. We asked Andrew Talbot of Expat Financial Planning, part of Globaleye Group, to talk us through eight of them.
#1 Keep an emergency cash account
You should have a separate bank account (away from your main current account) that includes three- to six-months of expenses. If you lose your job or suffer an illness, then generally you don’t have long to stay in Singapore. Access to this cash is therefore essential.
#2 Consider the cost of sending money home
Look at using an FX broker rather than the standard bank exchange rate, which tends to be uncompetitive. Even if you are sending money back for mortgages, using a dedicated broker can save thousands in better exchange rates.
#3 Identify any conflict of interest with your adviser or broker
There may be a potential conflict of interest with the person you seek advice from. For example, they may accept a commission payment from institutions or fees to switch investments. They may be able to offer only their own products rather than the whole market. Also check the fees and charges, and know how much your plan or investment costs. Saving money on these fees and charges is the biggest factor in the return you make on your money.
#4 Don’t assume maternity is covered under employee insurance
It’s very unlikely that it will be included in the insurance offered by a company, and generally it has to be a separate addition on most comprehensive health insurances. There will likely be a period before you can claim for the pregnancy – this can be from 10 months to two years. If you’re pregnant and need to buy health insurance, then the insurer will not cover it.
#5 Have a goal for when you leave the country
These short-term goals are good to have as part of your overall financial plan. For instance, do you want to pay off your mortgage, have a lump sum in the bank or buy another property? Generally, expats earn more than in their home country but it can be easy to spend everything that is earnt.
#6 Watch your debt
Overpaying a little on your mortgage payments each month can knock thousands of years off the debt. Paying off credit cards at the end of the month is essential as they have eye-wateringly expensive interest rates!
#7 Check the details of your life insurance coverage
Find out if you’re covered when you’re away from your home country. Also, don’t rely on your employer for insurance. Employee cover should be an addition to rather than the basis of family protection. If you were unable to work and had to leave your employer, then the life cover would no longer be available.
#8 Understand estate planning in different countries
Being an expat generally means having assets in different locations around the world, and each will have a different local tax or probate rule. These cross-border assets will complicate an estate on death. Make a will or use will substitutes for every asset you have. Complete your guardianship form if you have children. Having a list or file of where all the assets are can help your dependents access them if you’re not around.
Need advice on any or all of these issues? Contact Andrew today.
Read on for more financial tips for expats.