You may have already relocated or are planning to do so – either way financial planning and financial stability are essential elements to ensure your expat success and safety. Even when you move abroad to a supposedly “cheap” country, life abroad can be more costly than you realise. Here are 10 steps to ensuring you are financially comfortable and ready to make the most of your expat lifestyle.
Step one: Create a monthly budget
There is no way around it – if you are going to be financially successful, you need a plan. Create a monthly budget based on your expat living expenses and stick to it. Include budgets for both savings and monthly entertainment. If your expenses outbalance your income, you’ll need to reduce or eliminate them until your budget balances itself. It’s far easier to stop worrying about money when you can see on paper that your monthly income covers your monthly expenses.
Step two: Consolidate your assets
Take stock of all your assets and investments and look at their current value and what portions of them are liquid. Consider if your investments are working as hard for you as they could be and whether you are making maximum use of tax-advantage investments or tax-free savings accounts.
Step three: Explore your debts and credit
What are your upcoming expenses? Are you children approaching tertiary education? What are the costs like in your new country and have you planned for it? Do you have any outstanding loans – and have you factored them into your monthly budget? Explore if it makes sense to consolidate your debt. Debt consolidation involves moving all or as much as possible of your debt to one place so you only have one interest rate and one repayment term – which alleviates the headache of managing multiple different payments.
Step four: Start investing
If you want to make the most of your expat salary abroad, open up a dedicated investment account and start saving immediately. Create a savings goal – whether it is a down payment on a new home abroad or even a round-the-world-trip. Having a savings target makes investing a lot easier.
Step five: Automate your finances
Investing and making payments are a lot easier if your finances are as automated as possible. Set up debit orders onto your accounts for recurring payments like your rent/mortgage and any investments so they are taken care of automatically. Sign-up for electronic statements, so you will always have an email record of your finances. The less you have to remember financially, the better!
Step six: Establish your tax status
Are you aware of what your expat tax status is? Taxes for expats depend on a variety of circumstances including your country of origin and its tax system and laws, your residence for fiscal purposes, your marital status and your number of children as well as your individual finances.
Every country has different laws when it comes to international tax and South Africa has recently revised its laws when it comes to South African citizens living abroad. As a South African expat, you might qualify for double taxation relief. You may also be eligible for tax-relief on your South African pensions and annuity incomes.
At FinGlobal our tax specialists have extensive knowledge of SARS and SARB regulations and are able to discover if you are eligible for a tax refund. Our investigations can require a substantial investment of time and effort, but our clients are only charged if we successfully obtain a refund.
Step seven: Re-look your RAs
If you’re a South African living overseas, you can now turn your retirement annuity into cash and transfer your funds to your new home before the age of 55. The funds can be used for any purpose, wherever you choose – you don’t even have to reinvest into a local pensions. To make it happen FinGlobal offers a complete solution which thousands of South Africans living in over 105 countries have taken advantage. For a free, no-obligation assessment of how much you can transfer, how long it will take and how much it will cost, contact us today.
Step Eight: Update your last will and testament
As the saying goes: “nothing is certain except death and taxes”. Prepare yourself for the inevitable and draft a will. If you already have one drafted, re-look it every year to ensure it includes your latest assets. A will brings clarity and certainty and allows you to determine who will benefit from your estate – giving you the opportunity to dispose of your assets according to your wishes and ensure your family is well cared for.
Step nine: Maximise your currency transfers
To ensure you are financially secure in your new country, it’s important to maximise your foreign exchange transfers out of South Africa. All foreign exchange transactions in South Africa are subject to exchange control regulations, which are governed by the South African Reserve Bank.
As a foreign exchange intermediary approved by the South African Reserve Bank, FinGlobal is able to offer you a totally compliant solution that provides you with excellent exchange rates, low fees, unrivalled personal service, free exchange control advice, signature-ready documentation and secure processing.
Step Ten: Explore financial emigration
Financial emigration is the process where a South African resident changes their status with the Reserve Bank from resident to non-resident. It does not affect your citizenship or your right to retain your South African passport.
Financial emigration does not necessarily need to happen when you leave your home country – it is also a process that you can choose to undertake when you are settled abroad. Financial emigration brings with a number of financial benefits allowing you to transfer offshore:
- The proceeds of your retirement annuity, even before age 55
- South African source inheritance
- The proceeds of assets declared in your emigration application
- Passive income, i.e. rent, dividends, director’s fees, salary for services rendered in South Africa and income from discretionary or vesting trusts
- Proceeds from a third party life policy
Make the most of your expat finances
As South Africa’s first financial emigration company, FinGlobal has helped thousands of South Africans move abroad. We understand the South African expat community and assist them daily with accessing opportunities relevant to their cross-border financial portfolios.