Financial Planning: In simple words, financial planning is a process that helps you make good decisions about your money. It helps you in achieving your financial goals.
It is important to remember that financial planning does not merely cover your retirement or property-buying plans but the entire range of your financial life. When you think about financial planning, don’t look at any aspect involving money in isolation but fit everything into the more significant financial plan of your life.
Financial Planning
Being an ex-pat living in Dubai, comprehensive financial planning includes a few important aspects:
Cash Flow Planning
Cash Flow is simply the money that comes in and goes out of your life at any point in time. To create an efficient budget, having a plan for your cash flow is essential. It acts as a guide that helps you make saving and spending decisions in an informed manner.
Typically, a cash flow plan takes the income, expenses, assets, etc. into consideration and predicts the possible cash flow in the future. This helps you foresee possible expenses in the future and plan yourself accordingly.
A well-thought-over cash flow plan helps you demarcate money that you can use all through your life by managing your costs, increasing your savings, and planning investments. It also highlights any shortfalls before they can affect you.
Insurance planning
This is a problematic aspect to think about, but if you are the sole person managing the financial responsibilities of your loved ones, then planning for the eventuality when you can no longer provide for them is critical.
You work hard to earn, save, invest, and grow your wealth. However, ensuring the protection of your loved ones using insurance products requires your attention too.
Property Insurance
At times, you might want to ensure that you provide insurance coverage to your family even before you start investing. Whatever the case, insurance planning helps you approach this methodically.
Investment Planning
Investment planning forms a significant part of financial planning. All through your life you have different financial goals like marriage, children’s education, buying a home, retirement, etc.
All these goals need the fuel of well-planned finances. It is essential to keep the following aspects in mind to create a good investment plan:
Clear definition of financial goals
The amount of money that you want to invest (either every month or every year)
The total time horizon of investment.
Do you want to invest for 5 years or 15 years?
Your risk preference. Usually, higher risks to the invested capital are associated with higher chances of earning good returns. How much risk are you willing to take?
Choosing the right investment instruments will help in achieving your goals keeping the above-mentioned points in mind.
Retirement Planning
While retirement planning can be seen as a part of investment planning, we decided to address it separately since it is a long process and requires years of consistent investments.
We all want to retire with dignity and not have to be dependent on our families (at least financially). Therefore, it is imperative that you spend time planning your nest egg.
If you start at a relatively younger age, create a plan, and stick to it, by the time you retire, you will have a good corpus that can help you spend your golden years doing things that you like to do.
Banking Planning
When you are living and working in a different country, one of the most important financial decisions that you have to make is where you keep your savings. Do you keep it in a bank in the country where you are currently residing? Alternatively, should you open an account with a bank in your country of origin?
Many experts suggest that as an ex-pat, you should follow the A-B-C Rule. According to this rule, if you come from a country ‘A’ and live and work in another country ‘B’, then you should bank in the country ‘C’. Why?
Because, it keeps your money out of your origin country’s tax net, safeguards your savings against the potential threats (political or economic) in the country that you currently reside in, and saves you from the trouble of shifting your accounts if you move to another country.
