Mastering Your Money in 2024 - Crafting and Crushing Your Financial Goals
Welcome, Australian expats! As we venture into 2024, it's time to recalibrate our financial strategies, especially in a world that's constantly evolving. This year brings its own set of challenges and opportunities, particularly for those of you living and working abroad.
So, let's dive into how you can master your money and achieve your financial goals this year. Let’s ensure it’s not just another year where our new year goals disappear into the bottom drawer by Australia Day, not to be looked at again until we're setting new goals for 2025.
Understanding the 2024 Global Economic Landscape
As we step into 2024, the global economy is navigating through a period of uncertainty and transition. While inflation rates are expected to stabilise somewhat, they still remain a key factor in financial planning. The global inflation rate is projected to be around 5.8% in 2024, with significant regional variations. For example, advanced economies might see inflation rates of less than 3.0%, such as the United States, Australia, Western Europe and other regions, while emerging markets could experience higher rates of around 7.8%.
The economic slowdown in China, the world's second-largest economy, is also a critical factor to consider. This slowdown could have widespread effects on global trade and economic dynamics, however it is clear we will see updated policy from the CCP throughout 2024 to stimulate domestic demand.
Additionally, geopolitical events and elections in various countries could reshape global business, trade agreements, and economic policies. These factors combined indicate a year where flexibility and adaptability in financial planning will be crucial for Australian expats.
Let’s dive into some key tips to ensure that you can crush your financial goals this year, irrespective of what global markets may do, or when interest rates may be cut.
Affirmation #1 – I will set realistic goals
Setting financial goals as an Australian expat involves more than just aiming for an end target. It's about crafting a pathway that aligns with your lifestyle and financial realities abroad. For instance, Emma, an Australian expat in Singapore, sets a goal to save $5,000 per month for a down payment on a property back home within two years. This goal is specific (saving for a property), measurable ($5,000 per month), achievable (based on her income), relevant (investing in her future), and time-bound (two years).
To set realistic goals - first, assess your income and expenses to determine a realistic savings target. Next, break down this target into monthly or quarterly goals to make it manageable and trackable. If a goal can't be tracked, in most cases it won't be achieved. Finally, monitor your progress regularly and adjust your plan as needed, considering any changes in your income or expenses.
You may find that you receive a pay rise and can accelerate your progress towards achieving a financial goal for example.
Affirmation #2 – I will set a budget and monitor it
Budgeting in a foreign currency requires understanding the impact of exchange rate fluctuations on your purchasing power. Take the case of James, an Australian expat in the U.S., who budgets $1,500 monthly for living expenses. When the AUD/USD exchange rate shifts, he adjusts his budget to ensure his expenses in Australia remain covered, and takes advantage of weakness in the AUD when it takes place, such as has been the case over the past 12 - 18 months.
To set your own budget - first, make a list of each of your expenses on a monthly basis. This should include everything from your SP Services bill, to Rideshare trips, and even holidays. Your next step is to calculate your net income each month, which you can use the Singapore IRAS Tax Calculators to work out. By subtracting your regular expenses from your net income, you can determine your available income for savings, investments and ensuring that your financial strategies align with your financial goals. Finally, use budgeting tools specifically designed for expats to manage multiple currencies seamlessly.
Affirmation #3 – I will invest in a diversified group of assets
As an expat, diversifying your investment portfolio across various asset classes and regions is crucial. Sarah, an expat in Singapore, invests in a mix of stocks, bonds, and real estate across Asia, America, Europe and Australia. She also consults a tax adviser to understand the tax implications of her investments in different countries.
Start by researching different investment options and how they fit into your overall financial plan. Consider consulting a financial adviser with expertise in Australian expat finances. Regularly review and adjust your portfolio to respond to market changes and personal circumstances. Avoid trading in and out of asset classes, or panicking when you experience volatility in a particular asset class.
Affirmation #4 – I will not put off planning for my retirement
For Australian expats, retirement planning involves navigating different currencies and tax laws. For example, David, an expat in the UK, contributes to his superannuation in Australia while also investing in a UK pension scheme, balancing his retirement savings across both countries. He also seeks professional advice to understand his options with his UK pension when he decides to repatriate and eventually retire in Australia.
Evaluate your retirement needs and research the retirement savings options available in your host country and Australia. Consider factors like currency risks, tax implications, and accessibility of funds. Regular consultations with financial advisers in both countries can help align your retirement plan with your long-term goals. If you’re utilising CPF or SRS in Singapore, then ensure you have a plan with your Financial Adviser for when you repatriate to Australia.
Affirmation #5 – I will ensure I have a financial safety net
The global economy's uncertainties underscore the importance of being prepared for unexpected financial challenges. Lisa, an Australian expat in Japan, faced sudden medical expenses and overcame this challenge by having an emergency fund equivalent to six months of her expenses.
Start by creating an emergency fund that covers at least 3-6 months of living expenses. Regularly contribute to this fund and review it annually to ensure it aligns with your current living costs. Additionally, consider insurance options like health and life, TPD, critical illness and income protection to safeguard against unforeseen events.
Tying it all together
2024 is a year for Australian expats to be vigilant and proactive with their finances. Understanding the global economic landscape, setting realistic goals, budgeting effectively, and planning for retirement are all crucial steps in mastering your money this year.
Stay informed, be adaptable, and don't hesitate to seek professional financial advice if needed. With the right approach, you can not only meet your financial goals but exceed them, paving the way for a prosperous future. It is often the times of the greatest uncertainty that prove to be those of the greatest opportunity.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner 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
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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.
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