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Financial planning for expats – why is it different?

Updated 20 Apr 2020

Being an expat can be a very enjoyable and a most rewarding experience. The joy of conquering a new language; living and working with individuals of different nationalities; for British Expats, a better climate; and the chance to see different cultures and a different way of life are amongst the benefits of being an expatriate.

Some things about being an expatriate are more difficult (and some MUCH more difficult), including dealing with officials in a foreign language, not knowing the local customs and norms, and being away from one's family.

Some things are just different. In this category of 'just different' comes financial planning. There are many more factors that affect your planning, and require you to allocate your money to reflect these differences. Pension planning will require more thought and flexibility, and you are less likely to be able to rely upon your employer for pension provision.

Currency and exchange rates

As soon as you leave your home country, you will need to exchange currency to that of your new country. It is very important that you search for the best deal: many banks are expensive. You should see what specialist currency dealers can offer.

If you will receive an income from your home country, such as a pension, it will need to be exchanged into the currency of your new country. You are then exposed to changing exchange rates. The impact of these fluctuations in exchange rate could leave you short of money some months, and flush at the end of others. Currencies move quickly and often, and you as an individual cannot influence the rate of exchange. Basically, you have to live with the market rate. However, some specialist currency companies allow you to 'forward book' your currency exchange to fix the rate of exchange for future transfers, thereby eliminating some of this uncertainty.

Similarly, currencies need to be considered for your pensions, savings, and investments. As a principle, if investments are generating income for you to live, the investments should be in the same currency as your expenditure.

Emergency fund in a bank account

Regardless of where you live, we all need some cash that is instantly available for emergencies. As an expat, however, this fund needs to be higher than if you were in your home country. Inevitably you will be required to make trips back home, probably unexpected ones. A visit to see ailing and infirm relatives is a good example of this requirement. The amount of cash you need to keep in the bank will depend on your individual circumstances, and a good, independent financial adviser will include this in your financial planning.

Two-tax systems

The tax situation can be, well, taxing! Double taxation agreements between, for example, the UK and Spain, means that you need to be clear about which country you will pay your taxes to. And what about domicile and residence? In your home country the tax authority may use different definitions. But overseas, the definitions are often the same. Inheritance tax can be calculated differently, and it is easy to be caught in two tax regimes.

Pension planning

A survey found the biggest financial worry for expats is the provision of a big enough pot of money for retirement. If you plan to retire in your home country, you will need to save sufficiently (and currency comes into play again here) for, as an example, the cost of housing which may be greater in your home country than in your new country. If you are going to retire in your new country there are many factors to take into account, such as what to do with your pension from home.


Many expats report that the state healthcare in Spain is as good as the UK. However, despite this many people return home in later years due to health problems. It is worthwhile looking into the state healthcare of the country you are moving to, and you may need to consider additional healthcare cover.

International Schooling

If you have a family when you move to your new country, schooling can be a challenge. Many countries have different systems for paying for education, and the quality of the education system may be different to what you are used to at home. You may have to pay school fees in order to educate children at an international school. Or you and your children may wish to use a boarding school, but this is an expensive option: something I know of from personal experience.

To make sure that your expat life is without worry and that your future is taken care of, you should have an independent financial adviser who will support you with regular reviews and updates on, for example, legal and economic changes. As an expat, your circumstances are likely to change more often than if you were in your home country.

If any of the issues above are a concern to you, to discuss your requirements click here for help on finding an Independent Financial Adviser.

by Barry Davys, MBA, of Pan European, Independent Financial Advisers, The Spectrum IFA Group. He is an expatriate himself who has lived in Spain for many years. For more Barry's writing see

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