• Zach

Financial Literacy: What is it, how can it help you as an expat?


Odds are, if you're reading this, you're an expat.  The UAE is made up almost entirely of people with passports from other countries, and that can make dealing with money a whole lot more complicated than if you were "normal" and living in the country of your birth.   Before you get your pitchforks because I said you're not normal (you're Exceptional!), let me explain what I mean, and how you can still improve your Financial Literacy.


Financial Literacy is basically just knowing how to deal with money issues.  There are many different definitions of exactly what areas of knowledge comprise this topic, but for me, the five key areas are:

  1. Saving / Budgeting

  2. Investing

  3. Tax optimization / Estate Planning

  4. Avoiding fraud

  5. Increasing income

Just as a disclaimer, I'm not an expert in all of these fields.  I also come at this with an American experience, and yours may be totally different, which is actually one of the key reasons this is much more complicated for expats, and why you have to educate yourself so you don't get exploited or lose a ton of money you don't have to lose.  Let's break down each area to see what particular challenges expats have. 


Saving / Budgeting:  From what I've seen and lived, this doesn't change too much, no matter what country you're from.  If you want to save money or have money to invest for your future, you have to "grow the gap" between what you earn and what you spend.  Certain jobs may give you the opportunity to save more, but I know plenty of people who make a ton of money and spend it all, leaving them with nothing after their time here in the UAE.  I know others who make very little, but are still able to save money quite well.  


Investing:  This can be really tricky, depending on what country you're from.  Americans can access different investments than people from other countries, but then other nationalities can also have unique opportunities as well.  In general, most people can now do Index Fund investing through platforms like International Brokers (IB) or Swissquote, without needing the "help" of a financial advisor (who is probably just going to sell you whatever makes them the most money in fees and commissions).  There are great people out there who can help you get properly set up without exploiting you, like Mark Zoril and Steve Cronin, but you need to be VERY careful. 

Tax optimization / Estate Planning:  This is where it gets REALLY tricky.  This is probably the one where people need the help of a licensed professional the most, because not only does this vary from country to country, it depends on where you make your money, what you invest it in, what the current laws are in your home country, and gets even further complicated if you plan on retiring in a country that is not your place of birth.  If you're saving for retirement and that retirement is a long ways away, this can be almost impossible to optimize because you don't know what the laws will be like when you retire!  


Avoiding Fraud: This can be very hard to avoid, no matter where you're from.  This summer, someone hacked my Brokerage account, but fortunately didn't transfer any money out.  If you can, have two-factor identification on your financial websites and never give out your passwords or biographical information.  Make sure your passwords are very hard to crack, and use a password manager to boost your encryption.


Increasing Income:  Fortunately, this is another one that can apply equally to people no matter where they're from.  You may have to get new certifications and skills, preferably in things that are difficult and in high demand.  That may not be fun, but it can be extremely profitable.  Check out the book "So Good They Can't Ignore You" by Cal Newport for more great ways to do this.  This also can make your job more secure, as you're harder to replace.  You can use that knowledge to negotiate raises or find a new, higher paying job.  


If you want to learn more about these topics, there are lots of fantastic websites, youtube channels and organizations.  One that I can vouch for is SimplyFI on Facebook.  It's filled with smart and savvy expats based in the UAE and they aren't trying to sell you anything.  You can ask any question about any of these topics and get quick, pertinent, helpful responses.  They also have events and workshops for free throughout the year on all these topics.  


I know that this type of education can be daunting, but you're not alone.  There are lots of people out there who want to help, because someone helped them, and they want to pay it forward.  Getting a handle on a few of these areas can be incredibly profitable, you don't have to be an expert in all of them to get significant benefits.  


If you liked this post, come join the discussion over at The Happiest Teacher Facebook Group! I would love to have your voice added to the discussion! Also, if you're into that Twitter life, come follow me!

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Currently in Dubai, UAE