Financial Planning 101: It’s More Than Just Numbers!
Dion Angove, ACSI
???? EU-Regulated Financial Planner | Specialist in UK Pensions & Tax-Compliant Investments for UK-Connected Professionals in Europe | Author of Expat Wealth Weekly
Personal finance is more personal than it is finance.
In today's globalised world, many financial service providers—from international brokers to global mutual fund companies—claim to offer "financial planning" for UK expats. They promise a comprehensive “financial plan,” but often deliver nothing more than an investment review. Let’s set the record straight: an investment plan is not a financial plan. Confusing the two is like thinking a single ingredient makes the entire dish.
The Common Misconceptions
If all you receive is a portfolio review, that’s not financial planning.
If all you get is an insurance analysis, that’s not financial planning.
If all you obtain is a retirement assessment, that’s not financial planning.
Each of these components plays a role in financial planning, but presenting any one as the entire picture is both incorrect and misleading.
The Bigger Picture
Why does this distinction matter? Because without a comprehensive view of your entire financial landscape, advice on specific aspects can be diluted or even dangerously misguided. When someone at a social gathering asks me, “Should I invest in Tesla or Bitcoin?” I often use this point to steer the conversation towards a more holistic approach.
What True Financial Planning Involves
So, what does true financial planning for UK expats look like? Let’s explore, section by section, what it truly entails:
Investment Planning Investment planning isn’t just about picking stocks, bonds, mutual funds, or ETFs. It’s about analysing how all your assets—be it stocks, real estate, commodities, or entrepreneurial ventures—work together to help you achieve your goals. For UK expats, this also involves navigating different tax laws and regulations across countries. Crafting a strategy that aligns with your risk tolerance, time horizon, and financial objectives ensures that your investments are effectively working towards your aspirations.
Insurance Planning Insurance planning isn’t about buying insurance products on a whim. It involves understanding and managing risk. First, you avoid risk where possible, reduce it where you can, and assume it when appropriate. Only then do you transfer the remaining risk through carefully selected insurance products. This ensures your coverage is tailored to your specific needs, providing peace of mind without unnecessary expense. For expats, this often includes international health insurance and expatriate life insurance.
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Cash Flow/Budget Planning Cash flow and budget planning are crucial, not just for those living paycheck to paycheck, but for every household and business. Effective cash flow planning involves tracking income and expenses, ensuring you live within your means while still saving for the future. For expats, it’s also important to consider currency fluctuations and the cost of living in different countries. Creating a budget that allows for financial security and life’s little pleasures ensures your money works for you, not the other way around.
Tax Planning True tax planning goes beyond filing your taxes or using online tax software. It involves strategising for the present, mid-term, and long-term, considering all types of taxes—income, payroll, capital gains, gift, inheritance, and estate taxes. By proactively planning, you can minimise your tax liability and maximise your wealth. UK expats must juggle tax obligations in multiple jurisdictions, making this aspect even more critical.
Education Planning Throwing money into an education savings plan every month isn’t enough. Real education planning starts with creating a Family Education Policy, outlining how much you’re willing to contribute and under what conditions. Developing a strategic plan to meet those goals, possibly savings vehicles etc, ensures your children’s educational needs are met without jeopardising your financial stability. For expats, this might involve navigating international education systems and funding.
Retirement Planning Retirement planning isn’t about slogging away at a job you hate just to fill your pension pot. True retirement planning starts with finding a fulfilling career, ensuring you remain employable—the best safeguard against running out of income in retirement. It’s about saving wisely for financial independence while also allocating funds to enjoy your life today and in the near future. UK expats should consider options like SIPPs (Self-Invested Personal Pensions) and ISAs (Individual Savings Accounts) to build a robust retirement strategy.
Estate Planning Estate planning isn’t about snoozing through a pricey meeting with a lawyer to draft incomprehensible documents. It involves reflecting on the legacy you want to leave and implementing tangible plans to achieve it. This includes creating wills, powers of attorney, advance directives, and trusts. For expats, dealing with estate laws in multiple countries ensures your wishes are honoured internationally.
Putting It All Together
Financial planning for UK expats is an intricate blend of these elements and more. It encompasses investment, insurance, tax, estate, retirement, and cash flow planning, but it transcends a narrow focus on any single one. At its core, financial planning is about you—your hopes, dreams, fears, concerns, priorities, goals, values, and aspirations. This personalised approach ensures that every aspect of your financial life is working in harmony towards your future.
So, there you have it—a whirlwind tour of what true financial planning for UK expats should look like. If your so-called “financial planner” is only giving you investment tips, it’s time to show them the door. Your financial future deserves a holistic approach that’s as dynamic and adventurous as your expat life. Remember, financial planning isn’t just about crunching numbers; it’s about crafting the life you want, no matter where in the world you call home. Cheers to planning wisely and living fully!
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial advice. Any opinions expressed are the author's own and do not necessarily reflect the views of their employer or affiliated companies. It is recommended that you consult with a qualified financial advisor who is regulated by the Financial Conduct Authority (FCA) before making any financial decisions. The author and publisher are not responsible for any financial losses or damages incurred as a result of reliance on the information provided in this article.