Nowadays, when the scale of globalisation is unprecedented, it has become much easier for people to migrate and search for a new way of life in regions other than their homeland. These people, who reside in countries other than their homeland, are often called expatriates or expats, in short.
The life of an expat can be quite stressful, mostly because of a lack of knowledge, resources and connections in the new place. Therefore, it is crucial for expats to manage their budget effectively. Even though many commonplace practices could prove to be useful (such as monitoring your spending habits, knowing the right places to shop etc.), there is some advice specifically related to expats:
The fact that in the UAE both personal income and, in most cases, corporate profits remain tax-free, is a clear win for many expats.
1. Making connections with other expats as well as citizens
Making connections can be crucial when moving to a new location. Not only will this satisfy one’s social needs but it will also be a great opportunity to get new knowledge about the new location. Other expats can share their experience in almost identical situations and citizens, obviously, know better where to shop and how to save money.
2. Saving on utilities and considering small spaces for rent
The cost of utilities can vary quite a lot between different countries and cities, so it is a good idea to first examine the situation and then analyse how to optimise the costs. For example, renting a sunny apartment can drastically reduce the cost of electricity and so on. In addition, renting in city centers is often very expensive, so an expat should prepare to consider small spaces for rent.
3. Integrating into the country’s culture
The integration process can sometimes take years, but the more an expat understands the local culture, the more he/she will understand how to spend money effectively. Not only does this include knowing certain shops and places, but also buying local products and services, eating local cuisine, participating in local entertainment. Even though a bond to your homeland can sometimes be necessary, buying imported cheese all the time can be just a bit too much.
4. Exploiting government subsidies and other programs
It is a good practice for expats to understand how the state can help them. This totally depends on a specific government, so these programs vary quite a lot around the world. One of the benefits can be possible tax reduction, however this can also work the other way. Expats should watch out for tax rules not only in their new location, but also in their homeland because they are still citizens of that country. The fact that in the UAE both personal income and, in most cases, corporate profits remain tax-free, is a clear win for many expats. With the current government programs to promote entrepreneurship, the UAE supports companies and business founders to a great extent.
5. Live a simple lifestyle. Know your goals in life.
The UAE is a great place to make money, but also to spend money. Shopping malls, restaurants and great events tempt you to spend money quickly. Even though we do strive for greater comfort and, sometimes, luxury in our everyday life, the first expat’s steps may call for different needs. Oftentimes this way of life does not allow errors – this is why an expat should clearly know his/her goals and how to reach them. This is the first step for creating a successful plan and monitoring your budget and costs accordingly. An expat must be prepared that this may call for tightening one’s belt – but it will all pay off in the long term.
- Count Oliver of Wurmbrand-Stuppach is the founder of GWS Group, which is an international tax advisory, corporate service provider and leading trust company with offices in the UAE & Europe.