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Financial New Year’s Resolutions

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4 Ways to Improve Your Finances as a U.S. Expat

Are you making New Year’s resolutions to improve your life in 2025? Don’t forget about your finances! The following tips can help you improve your financial outlook as a U.S. expat.

#1 – Update your financial plan.

When was the last time you reviewed your financial plan to make sure it continues to keep up with your ever-changing goals? The new year serves as a great opportunity to check in on your plan. As a U.S. expat, you face unique investment, tax and estate planning issues that U.S. citizens living stateside don’t encounter. That’s why it’s important to work with an international wealth manager who has experience incorporating all aspects of your financial life into a comprehensive financial plan that clearly lays out how your investment, tax and estate planning needs are being addressed across multiple jurisdictions.

However, it’s not enough to have a plan in place. Because your needs and financial situation are constantly evolving, it’s important to review and update your plan on a regular basis.

#2 – Review your tax situation and any tax law changes that may impact you.

Tax planning as an American citizen living in the United States is a complex undertaking. As a U.S. expat, it’s even more complicated. Keeping up with two countries’ ever-changing tax laws and how they interact with one another is key to helping ensure you don’t make a mistake.

That’s why it’s important to consistently review your tax situation and make sure you’re optimizing your taxes across multiple jurisdictions. Some of the most common tax issues include Foreign Bank Accounting Reporting (FBAR) requirements, tax filing status, pre-country move planning, retirement income optimization, country specific tax considerations, foreign tax credits and double-taxation treaties.

#3 – Plan for the specific risks you face.

U.S. expats face unique risks. The new year is a great opportunity to review your risk management strategies to help ensure they continue to meet your needs. Some common risks faced by U.S. expats include:

  • Inadequate emergency savings – Aim to save at least three to six months of living expenses in a liquid account, held in your local currency.
  • Unexpected medical expenses – It’s important to maintain adequate health insurance coverage. Depending on your country of residence and employment situation, you may be eligible for public health insurance. If not, you may need to purchase a private policy.
  • Financial challenges for heirs – Typically, U.S.-based life insurance policies don’t provide benefits to your heirs once you move overseas. If you wish to leave a life insurance benefit to your loved ones, it’s important to have international coverage.
  • A disability – If you’re working overseas, it may make sense to consider an expatriate disability insurance policy. These policies provide assets to support your family’s living expenses should you become disabled and unable to work for a period of time.

Long-term care expenses – U.S.-based long-term care (LTC) insurance policies typically don’t pay benefits in foreign countries. Be sure to carefully review any existing LTC policy to determine whether it will continue to meet your needs while living abroad. The “Exclusions and Limitations” section of your policy should provide details on international coverage provisions and restrictions. Unfortunately, if you do have a need for LTC coverage, it can be difficult to find a policy that provides benefits to U.S. citizens living abroad. Consider working with a qualified expat financial advisor who can help evaluate your options and make a plan to cover potential long-term care expenses.

#4 – Diversify your investment portfolio.

Is your portfolio still significantly skewed toward U.S.-based investments? If so, it may make sense to diversify. A smart approach for many U.S. expats is to maintain a broadly diversified multi-currency portfolio with additional exposure to the currency in which they spend money. For example, Americans living in Europe may wish to invest a bit more in European stocks and bonds.

But be careful when diversifying! While it’s important to hold a variety of investments across countries and regions, try to avoid investing in passive foreign investment companies (PFICs), as these investments are taxed very punitively by the United States when purchased by U.S. citizens.

The best approach for most U.S. expatriates is to work with a qualified U.S. wealth manager who has experience working with U.S. citizens living overseas. Your wealth manager can help you establish a comprehensive expat investing and financial plan that includes a diversified portfolio of both foreign and domestic investments while also managing currency risk.

Could you use help implementing these New Year’s resolutions? Creative Planning International is here for you. We work with Americans living abroad and cross-border families to help them maximize their wealth and avoid costly mistakes. As expat fiduciary advisors, we understand the complex interaction of multi-jurisdiction tax and regulatory regimes and take into account currency, diversification, tax and other portfolio considerations as we help you plan and invest for the future.

If you’re an American living abroad who could use some help optimizing your financial life, connect with a member of our team.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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