As an expat, managing your finances presents a unique set of opportunities – and considerations.
Some expats find they can save more than they did before they moved – especially if they’re receiving a higher income and have lower living costs or potential tax efficiencies.
But there can lots of things to juggle, such as:
Here, we look at how to manage your money and reach your financial goals.
For short-term goals, a savings account remains a great way to maintain access to your money while keeping it separate from your spending account.
Depending on the type of savings account you have, you may be able to add to your savings in one-off or regular payments. Some savings accounts also allow cash to be deposited and withdrawn at any time, meaning it's always available for emergencies.
Perhaps the biggest benefit of having a savings account is that it's safe. Savings accounts offer a secure place to store your capital while earning a fixed rate of interest.
HSBC Expat is part of the Jersey Bank Depositors Compensation Scheme, which offers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100 million in any 5-year period.
Full details of the scheme and banking groups covered are on the Government of Jersey website.
Not exactly. Interest rates can go up and down, and there's a risk that inflation could mean the spending power of your savings is eroded over time. In other words, your money could buy you less, the longer you save it.
It's worth keeping an eye on inflation rates as they could have a big impact on any savings you have in a particular currency. Make sure the currency you save in has low rates of inflation or your money could lose even more value over time.
For expats in particular, exchange rate fluctuations can also have a big impact on your savings and investments. To avoid any adverse effects, make sure you have a savings account in your most frequently used currency. If you travel a lot or live in several places, consider saving in a range of currencies.
Building an emergency fund of around 3 to 6 months’ worth of living expenses can help cover any unexpected costs. Saving for emergencies should be a priority because it's hard to predict when you might need this money.
Make sure the money's kept in an account you can get to easily if you need to. And avoid the temptation to dip into it for non-emergencies - like a holiday, for example.
Once you have your emergency fund, look at what else you want to save for, whether that's moving back home or buying property – and think about when you'll need the money.
If you're planning to achieve your goal within 5 years, it makes sense to keep your money in a savings account.
It's important to consider that not all savings accounts are the same. Compare the interest rates on different savings accounts and the fixed period you want to put your money away for.
Investing your money may also not be suitable for a short-term goal. You could potentially suffer short-term losses and not be able to access your money as quickly and easily as you may need to. Investing should always be seen as a long-term strategy of 5 years or more.
If you have an adequate emergency fund in place, you might consider switching some of your monthly savings contributions into an investment fund.
Investing should be for the long term as the value of your investment can, and will rise and fall. The longer you invest, the more time you have to potentially recover from any dips in the market.
Over the long term, investing offers the potential to earn better returns than simply saving. However, there are no guarantees. The value of your investments can go down as well as up, and you could get back less than you invest.
Our wealth growth calculator can help guide you, whatever – and wherever – your goals may be.
A common issue faced by expats is paying into a pension scheme. You might not be able to pay into a scheme in your home country, but you'll want to avoid creating small pension pots in numerous countries around the world. So, you may need help working out how you can achieve the retirement you're aiming for.
Saving for your children's education is even more important for expats. If you're moving country, school fees may differ and you need to be prepared for that. It's worthwhile researching the costs of international education – sending your child to an international school, or paying for international university student fees – and seeking financial advice to help meet those costs.
As an expat, you may plan to live somewhere for a couple of years and then return home, but life is full of surprises. Just as you think you're approaching the end of your posting, a new opportunity could arise and instead of going home, you move to another new country.
As you move round the world, you could end up with several pots of money in different countries – and currencies. Look at whether your financial service provider offers the flexibility to continue with them if you move to another part of the world.
Explore: What is offshore banking?
It's important to understand your tax situation as there may be advantages to working away from your home country. Also, currency fluctuations can affect your savings and investments. Saving or investing in the currency linked to your long-term plans – if you're buying a property outside your home country, for example – makes sense to potentially avoid the impact of adverse foreign exchange movements.
It's really a question of which combination is right for you. The chances are you've got more than one goal you'd like to put your money towards. The golden rule is to save for what's around the corner and invest for the future.
Sort your financial goals into short-term and long-term aspirations to help you decide the best way to manage your money.
Short-term goals (Less than 5 years) |
Medium-term goals (5 to 10 years) |
Long-term goals (10 years or more) |
|---|---|---|
For money you'll need within the next 5 years, such as moving costs, saving makes sense because if you invest for under 5 years, your investment may not have enough time to make up any fall in value. |
If you're planning to put money away for 5 to 10 years, for example, to pay for a child's school or university fees, saving could still make sense. However, if you're prepared to take some risk, investing could earn you a greater return on your money.
|
For money you're not going to need for 10 years or more, such as your retirement, taking a degree of investment risk could earn you a greater return – in comparison, the value of savings gets eroded by inflation over time. |
Short-term goals (Less than 5 years) |
For money you'll need within the next 5 years, such as moving costs, saving makes sense because if you invest for under 5 years, your investment may not have enough time to make up any fall in value. |
For money you'll need within the next 5 years, such as moving costs, saving makes sense because if you invest for under 5 years, your investment may not have enough time to make up any fall in value. |
|---|---|---|
Medium-term goals (5 to 10 years) |
If you're planning to put money away for 5 to 10 years, for example, to pay for a child's school or university fees, saving could still make sense. However, if you're prepared to take some risk, investing could earn you a greater return on your money.
|
If you're planning to put money away for 5 to 10 years, for example, to pay for a child's school or university fees, saving could still make sense. However, if you're prepared to take some risk, investing could earn you a greater return on your money.
|
Long-term goals (10 years or more) |
For money you're not going to need for 10 years or more, such as your retirement, taking a degree of investment risk could earn you a greater return – in comparison, the value of savings gets eroded by inflation over time. |
For money you're not going to need for 10 years or more, such as your retirement, taking a degree of investment risk could earn you a greater return – in comparison, the value of savings gets eroded by inflation over time. |
Our award-winning services for expats will help keep your money working as hard as ever. We've got plenty of options for managing your wealth, whether you're a seasoned investor or you're new to investing.
HSBC Bank plc, Jersey Branch has prepared this article based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information.
The HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for any loss, damage, liabilities or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this article. The contents of this article are subject to change without notice. HSBC Bank plc, Jersey Branch and the HSBC Group give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this article.
This article is not investment advice or a recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. This article should not be used as the basis for any decision on taxation, estate, trusts or legacy planning. You should not use or rely on this article in making any investment decision. HSBC Bank plc, Jersey Branch and the HSBC Group are not responsible for such use or reliance by you.
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