Want to improve your finances in 2018? Here is a list of simple action points, not resolutions (they are normally forgotten by the end of January), that you can use in the year ahead.
You don’t need to do them all at once. Simply tick off the ones that are relevant over the course of the year and you will end 2018 on a firmer financial footing.
1) Make sure you have an emergency fund. If you don’t already have one, this should be one of your first priorities. Unexpected things happen to all of us; job loss, illness, forced repatriation, loss of expat benefits.
My rule of thumb is to keep 6 months’ worth of expenses easily accessible in order to cover such eventualities.
2) Get your documents in order. As expatriates, it is not uncommon for us to have our important documents scattered across multiple locations. We have some in our office, we have some at home, we have some stored for safe keeping with our parents or other family members, some might be in a safe deposit box.
Make life simpler for yourself, and for anyone who would survive you in the event of your sudden death, by keeping all of these documents in one place.
3) Minimise the cost of sending money overseas. Instead of transferring money internationally via your bank, use a service like Tranferwise. You will get a much better deal.
4) If you pay taxes here in Poland, you have the opportunity to take away 1% from the state and donate it to a charity or NGO. All you need to do is choose the charity/NGO that you wish to donate to and include the details in your tax return (ask your accountant to do this, if you have one).
5) Contribute to your employers pension plan. This can be one of the best deals out there if your employer contributes too.
6) Review your insurance coverage. Review your need for insurance as well as any existing policies that you have in place (either personally or through your employer).
Look at health, life and disability policies. Make sure that any existing policies are still valid. Don’t forget to ensure that your spouse is sufficiently covered too, even if they are not employed.
7) Find/track down any lost or forgotten about bank accounts, pensions or investments. According to figures from the UK’s Department for Work and Pensions (DWP), for example, there is currently GBP400 million sitting in unclaimed pension pots.
8) Review your investments (including any you find as a result of action point #7 above). It is not uncommon for funds to have been purchased piecemeal over a number of years. While an investor may own a number of good quality funds there is not always a coherent strategy in place, with some funds focusing on the same criteria and other important areas or asset classes missing altogether. It is a worthwhile exercise to take a step back and reassess each holding in your portfolio. A good test is whether you would still buy that fund given the choice today.
In addition, if one particular asset has outperformed the others, it may be time to rebalance your portfolio and lock in some of those gains.
Finally, are you overexposed to your employer stock? You already rely on them for your monthly pay cheque.
9) Get a will or update it if your circumstances have changed. Too many people don’t have a will, and for those who do, it is often out of date. This is especially important for expats who may have assets in multiple jurisdictions or be involved in dual-nationality marriages.
While you are at it, review the beneficiary nominations on all pensions and life insurance policies (personal and employer).
10) Seek financial advice if/when you need it. OK, this last one may seem a little self-serving. However, the level of complexity and sophistication of financial products has increased enormously in the 20+ years since I started out as a financial adviser. At the same time, the marketing has become slicker and slicker.
You don’t have to do it all by yourself. It can often be cheaper in the long run to get qualified, impartial advice when you need it. I found this out the hard way recently when I tried to save a few Zloty by trying to fix the kitchen sink myself instead of calling a plumber.
If you have any financial tips for the New Year that I may have missed, do please drop me a line.
Wishing you a healthy and prosperous 2017.
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