Navigating Financial Milestones: Taking Control of Your Personal Economy in a Global Environment

A strong personal economy has, historically, been built on traditional pillars: Make smart investments, manage expenditures, and build sound credit history. But in today's increasingly interconnected world, that alone won't cut it.
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A strong personal economy has, historically, been built on traditional pillars: Make smart investments, manage expenditures, and build sound credit history. But in today's increasingly interconnected world, that alone won't cut it. Pursuing career, business, education and even retirement goals is challenging enough, but when you add in the complexity of today's global economy - such as currency fluctuations and market volatility due to sovereign debt crises - your financial picture can seem more vulnerable than ever.

Managing risks and identifying growth opportunities calls for savvy planning and forward thinking when it comes to life's major financial milestones. Let's take a look at four common milestones that should be weighed in every family's financial plan, along with a few planning guidelines for global individuals.

1. Career: Planning your path whether expat or entrepreneur

Stagnant economic growth in the U.S. and attractive career and business opportunities abroad are pushing people to travel the world in search of new experiences and pathways to success. Calculated career moves abroad can be rewarding, but can also put you underwater when poorly planned. Here are a few variables to consider when taking your skills across the border:

  • Plan around and take advantage of exchange rates. The purchasing power of money earned overseas country will be different from the USD - a factor frequently overlooked when moving assets from one currency to another.
  • Accessing funds remotely creates a taxable event - similar to ATM fees, only much more expensive. Be mindful when accessing portfolios to prevent excess taxes and fees - while still ensuring you have liquidity to manage daily expenses and unexpected costs.

2. Mortgage: Buying a home requires a strong financial foundation

Purchasing property abroad can be a difficult and expensive process. The number of fees, taxes and closing costs, on top of property costs, can quickly put what looks like a reasonable investment over-budget. A few things to consider:

  • Credit history vanishes when moving abroad and the rules that constitute "good credit" change completely. A 750 credit score in the U.S. may mean nothing in, say, Barbados. It is possible to leverage already existing bank accounts and credit lines, however, especially when those assets are held at an international bank. When considering a move, have an international financial institution conduct proper due diligence.
  • The laws and protections afforded to home buyers vary widely across international markets. Lenders can abstain from lending to U.S. buyers for any number of reasons--including old age. U.S. citizens looking to buy abroad need to be cognizant of the potential discrepancy in fair lending practices.

3. Education: The ABCs of paying for college

According to a recent HSBC study, more than one in two parents believe that paying for a child's education is the best investment you can make. Not surprisingly however, more than a third of adults say they find making financial decisions about their child's education daunting. Below are some key considerations when planning for your family's education needs:

  • Plan around your earning potential. Many parents will be paying for their children's college tuition in their 50's, which puts them past their peak earning potential. This makes saving early vital. According to HSBC, 51% of parents wish they had begun saving and planning for their child's tuition earlier.
  • Consider all avenues: Factoring in inflation and the increasing costs of education mean that all savings avenues should be explored to maximize interest. Weigh all viable options, including 529 plans, deferred compensation plans and traditional taxable brokerage accounts. There are also generous education-related tax benefits available that many people aren't aware of, but should be taken advantage of.

4. Retirement: Save while you're young - it never gets old

People are living longer and saving less for retirement, yet the cost of living around the world continues to rise. According to a recent HSBC study, more than 20% of people aren't doing anything to prepare for retirement, and nearly half (48%) reported fear of not having enough money to live on during retirement. Here's what you need to think about to bridge the gap between your dream retirement and financial reality:

  • Calculate your cost of living. High taxation for high earners, increasing health care costs and long-term care challenges have raised the price of retirement in the U.S. Whether you choose to retire in the U.S. or settle elsewhere, you should calculate your own true cost of retirement and how far your funds will take you by talking to a trusted financial advisor.
  • Discover your axis: Everyone has a different vision for retirement. Identify what is important to you - whether it be travel, generous gifts for grandchildren, or philanthropy - and discuss it with your spouse and with your financial advisor to make sure it is feasible.

Navigating these milestones requires sound financial management and foresight into all variables that may come into play in today's global stage. Planning early is optimal, but it's never too late to get started. Understand the tools that are available to you, and don't hesitate to seek the help of a trusted financial advisor who can help you take control of your future for a better tomorrow.

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