Welcome to my video series, where we explore the key personal finance topics for Australians living at home and abroad. Money mistakes – we all make them. Some we’re not going to notice terribly and some may very well bite us in the backside in the future.
Today, let’s explore the eight most common money mistakes that Australian expats make and how you can combat them.
1. Ignoring their superannuation
The first and most common mistake Australian expats make when it comes to money is ignoring their superannuation just because they’ve moved offshore. Firstly, superannuation is generally open to anyone with an Australian Tax File Number, whether they’re working abroad or they’re living and working in Australia.
It’s important to consider your own circumstances and look at whether you should be making contributions, or whether you should be saving money elsewhere. It’s also important to look at whether you should consolidate your super. Do you have insurance inside your superannuation? What fees are you paying? How much risk are you taking on? Remember to do your homework when it comes to your superannuation.
2. Putting off retirement savings to ‘next year’
The second common mistake Australian expats make is the old saying “I’ll start saving for my retirement next year”, and of course next year never comes. One of the great elements of life is that no matter how much money we earn, we’ll always find new ways to spend it, and Singapore certainly makes this a fairly easy task to accomplish.
So how do we deal with this?
It’s very simple. PAY YOURSELF FIRST. Set aside a certain percentage, whether this is the same as your superannuation contribution would be, or try and aim for a higher percentage and lock this away for your retirement savings. That way, as your income continues to climb each year, you’ll ensure that you’re making the most of your time abroad.
3. Spending too much money on drinking
The third common mistake Australian expats make is literally pissing away their money each week at the bars. One of the key elements of life in Singapore is that alcohol can be quite expensive. A bottle of Pinot Noir and some good Australian or New Zealand wine has declined in price over the years, and there’s plenty of happy hour specials, but it is very easy to quickly spend an awful lot of money on drinking each week.
Remember, coming back to point 2, pay yourself first. Ensure that your retirement and your savings goals are looked after, and then you don’t need to be terribly concerned about how much you’re spending on drinking and dining out each week. It’s also important to check out the happy hour specials. With so much competition in Singapore, it’s not terribly difficult these days to get a cheap drink after work with your friends and colleagues.
4. Ignoring their tax returns
The fourth common mistake is Australian expats ignoring their tax returns in Australia. Typically, if you don’t own any Taxable Australian Property, like an investment property in Australia, you don’t need to be filing a return back home. However, it’s important to check your own situation and circumstances.
If you do own a property back home in Australia however, whether it’s positively or negatively geared, or even cash flow neutral, it’s important to be filing a return each year. And ensure that you’re discussing with your accountant whether you should be filing as a resident or non-resident, because this can have a significant impact on both the tax rates that you’re paying and also implications on your investment strategies.
Be sure to seek appropriate advice when it comes to your taxes back home.
5. Not protecting their children
The fifth common mistake in Singapore that Australian expats make in Singapore is forgetting to ensure that their children are protected, and by this I mean putting in place both temporary and permanent guardianship.
If you’re not sure what these are, be sure to seek advice. Ultimately, these are the people that would look after your children and ensure that they’re cared for in the unlikely event that something were to happen to yourselves as the parents. It’s important to have these things in place. The efficiencies of Singapore ensure the children are put into the public system quite quickly, so make sure that you’ve got this covered.
6. Ignoring their personal insurance needs
The next common mistake Australian expats make is ignoring their personal insurance needs. By this I’m talking about Life cover, Disability cover including income protection, and Critical Illness or Trauma cover.
For many we simply ignore any form of insurance cover because we’re not sure where we’re going to be, or might think that we’re only going to be in Singapore for a couple of years, so we’ll deal with it when we get back home, or even worse think “well we’ve got cover in Australia and that’s enough”. When in actual fact we might find that the cover we have back home isn’t actually covering us while we’re living abroad, and we have in actual fact left both ourselves and our families financially exposed.
It’s important to do your homework, seek professional advice, speak to your insurance company, and ensure that you’ve covered all of the bases and protected both yourself and your family from any unforeseen events.
7. Becoming an FX expert overnight
The seventh common mistake that we see Australian expats make with their money is becoming foreign exchange experts or traders overnight.
Trying to pick the tops and the bottoms of the Singapore / Australian Dollar pair, trying to trade currencies, taking out multi-currency loans borrowing Singaporean Dollars to buy Australian property. There are a whole raft of products and different strategies on offer in Singapore and around the world, and it’s absolutely vital that you do your homework, consider your risks, and don’t create exposure that you’re not financially prepared for.
8. Wasting the opportunity of being an Expat
The eighth and final mistake that we see Australian expats make with their money, in today’s video, is wasting the opportunity to really accelerate their personal finances. Depending on your own situation, how much you’re earning, how much you’re saving, what your capacity is to accumulate wealth offshore, chances are it’s much higher than it was back in Australia, or at least proportionately higher.
How can we make the most of it?
The very simple answer is to start as early as possible. Seek advice, map out your goals, outline what you’re trying to achieve, set a budget but more importantly stick to the budget and review it on a regular basis, and truly make the most of your time in Singapore.
If you have any questions at all about your own financial situation, or any of the topics I’ve covered in this video, feel free to reach out to me on the contact details provided in the summary.
Likewise, if you have a personal finance topic that you’d like me to explore or address in a future video, reach out and let me know. I’d be more than happy to consider it. Thank you, and see you next time.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.