7 important life events that could affect your finances

It was one of cinema’s most enduring characters, Forrest Gump, who said: “My mama always said life is like a box of chocolates. You never know what you’re going to get.”

While this is true to a large degree, there are several life events that happen to most of us that can have a significant effect on your finances. When they do happen, working with a financial planner is not just useful but, more often than not, essential, especially if you’re an expat.

Read on to discover how a planner could help you navigate through some of life’s most exciting, but potentially challenging, times.

1. Changing jobs

Switching jobs could affect your household finances and wider wealth, as it may carry tax implications that a financial planner could help reduce or negate. This is especially true if your job takes you to a new location in Europe, which may have different tax rules – something we will look at in a moment.

Additionally, a financial planner could help you assess your current renumeration package and benefits compared to the one being offered. This will confirm whether it really is in your financial interest to take the position, or stay where you are.

This could help you avoid a decision you later regret, or help you to negotiate a more favourable package.

2. Emigration

Whether you are moving to Europe, another country within it, or leaving it for another region, speaking to a financial planner who works with expats could be a wise move.

As there are a myriad of tax regulations across the EU, a financial planner can ensure you understand what you need to do to avoid an unexpected and unwanted tax charge.

3. Marriage

While marriage is one of the most exciting life changes, it can be expensive and result in financial upheaval. As this could have implications for your financial situation, it’s important to talk to a financial planner who can take into account every area of your and your new spouse’s wealth.

For example, you may want to ensure that you’ve taken full advantage of all the tax breaks that are available to you within the country you reside. Furthermore, a planner may be able to help you and your spouse inflation-proof your money, or expose it to greater growth potential so that you can enjoy the lifestyle you want in marriage.

4. Children

According to research, raising children to the age of 18 in Europe could cost hundreds of thousands of euros. An article published by thelocal.it in May 2022, for example, suggests you could pay upwards of €320,000 to raise a child to the age of 18 in Italy.

This may have implications for your money, something a financial planner might be able to help with through increased tax efficiency or by exposing your wealth to greater growth potential.

Alternatively, you might want to build a pot of money that could help fund your child’s further education, or pay for their first home. If so, speaking with a financial planner is likely to be a shrewd move, as they can help ensure your money is on track to meet your goals.

5. Divorce

According to Eurostat, Denmark has one of the highest divorce rates in Europe with 2.7 per 1,000 people in 2020. Sweden and Finland have 2.5 and 2.4 divorces per 1,000 people respectively, while Malta is lowest with 0.5 divorces per 1,000 people.

The emotional, practical, and financial costs of divorce can be high, and it has the potential to jeopardise your financial security. That’s why it’s important to speak to a financial planner as well as a legal professional during a divorce, as they will help ensure your financial security in the short and long term.

Furthermore, a planner can help you understand the true value of the marital assets, such as investments, property and pensions, which could help ensure you receive a fair divorce settlement.

6. Retirement

Planning for your retirement is vital, as not doing so could result in financial hardship later on in life. This might be because your pension pot is not large enough to generate the income you need in retirement and could run out prematurely.

A financial planner will work with you to establish the lifestyle you aspire to in retirement and confirm whether your pension pot will fund it. If it won’t, the planner can provide strategies that will help you to get your pension pot to where it needs to be.

Furthermore, if you’re about to retire, a planner could help you access your pension in the most tax-efficient way. This could mean you’re not faced with an unexpected, and potentially substantial, tax liability.

7. Death

Unfortunately, one life event that we will all have to deal with is the death of a loved one. If you lose a parent, you may receive an inheritance, which may then have tax implications. Understanding European Inheritance Tax is essential, as getting it wrong could result in a significant liability and reduce the amount you then receive.

As the rules can be even more complicated for expats, it’s important to work with a financial planner who understands the regulations and how they apply to you. Furthermore, a planner could also help you minimise any exposure your estate might have to an Inheritance Tax liability.

Get in touch

As specialists in helping expats in Europe, we can help you deal with life events as and when they happen, so that you can minimise their potential impacts and make the most of any opportunity.

If you would like to discuss this further, email us on info@blackswancapital.eu and we’d be happy to discuss your situation further.

Please note

This article is for information only. Please do not take action that is based on anything you read in this article until you have sought professional advice.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.