We all have different reasons for leaving, now you must arrive

I have been in this region and industry for more than a decade advising the expat community, including many from India, on financial planning.


Each and every expat has a defined reason for leaving his childhood home and immediate family and coming to this region. They come because they want to earn money. They come because they want exposure to a foreign country and an international working environment. They come for better education and medical facilities. Mostly, though, they come to improve standards of living.

Financial planning is an important part of achieving this. Circumstances vary, and a plan that works for you might not be appropriate for your neighbour. But when we talk about financial planning, there are certain steps that every expat needs to consider.

The first one is life insurance. I feel that the most important thing an expat should do after settling down is to insure himself or herself with a life insurance policy that covers all liabilities – for example, car, personal and housing loans. It should also cover future financial responsibilities, such as maintaining the family’s standard of living, education and marriage expenses for children.

One of an individual’s greatest assets is his or her ability to earn income, and
this has to be protected adequately by way of a life insurance policy.

“Insurance is not to be taken because you are going to die,” as the saying goes,
“but because someone is going to live”.

Insurance and critical-illness insurance are also high-priority areas to consider in financial planning, as they cover the direct and indirect costs of getting sick and getting treatment.

You will need a personal medical insurance policy if you are not covered by a company, although UAE law now requires all firms to insure their employees. Medical insurance should cover everything from normal day-today treatment for cough and cold to major illnesses and hospitalisation in case of an emergency. Since the cost of having a baby in this part of the world is very high, it is advisable for young married couples to choose a medical insurance plan with maternity cover.

You should also think about critical illness insurance. Critical illness is indemnity insurance that pays the face amount of the policy to the insured in a lump sum upon the diagnosis of specified condition – heart disease, cancer, stroke, kidney failure and so forth. History shows that 10 years of your life savings can be wiped out by one critical illness.

The next basic financial-planning issue to think about is retirement planning.
One thing I feel is a major concern for expats is that they are not saving enough or are unable to save for the future and retirement. The kinds of luxuries and opportunities to indulge that are abundant in this region make us spend beyond our capacity. On top of that, credit cards and personal loans promoted by many financial institutions encourage us to spend more and more on bigger houses, better interiors, expensive cars, the latest mobiles and meals in fancy restaurants.

One of the things I liked about India, where I am from, is that the government encourages individuals to save to avail tax benefits on their income. Unfortunately, that facility is not available in this region. For example, even the basic gratuity (as per UAE law) is sometimes not given at the time of retirement, even after an individual has worked for many years for a private company.

During the course of my working life, I have seen two groups of people. Group one spends first and then saves a little bit if anything is left. Group two saves first and then spends.Many expats are in group one, though they want to be in group two. However, they find it very difficult to make the transition. Unless and until they start a disciplined and regular savings plan, putting away a few percentage points of their income every month, they will probably not get in the habit of saving. The best course for them is to consult a qualified financial planner and start a regular savings plan. I have observed that, because of a lack of savings, expats often find it difficult to maintain their desired standard of living when they go back to their home countries.

An average person lives for 15 to 20 years after retirement, mainly thanks to medical advancements. All of the savings they have built up for 30 years gets wiped out in five to seven years to maintain the standard of living they are accustomed to while they were working. Their only alternatives are to lower their standard of living or compromise in other ways.

Another big component of financial planning is saving for education. One major responsibility and invaluable asset that any parent can give to their children is an education. But inflation is making that more difficult; the sooner you start saving for eduction, the better. A financial planner can help you design a tailor-made savings plan to do this. Education, as George Peabody said, is “a debt due from present to future generations”.

Finally, I always recommend that expats keep records of all investments, savings plans, life insurance policies, bank accounts details, loans and debts on an excel sheet or a simple piece of paper and share it with their spouses. This makes life for the rest of the family easy in case an unforeseen accident strikes.

Mr Kadri is a certified financial planner based in Dubai