10 tips for international savers

Whether you want to pay for flights home or fund your retirement, a savings account can form a low-risk foundation to your financial planning.

Mark Spagnoli, Senior Manager, Savings at Lloyds TSB International provides some important advice for anyone considering opening one

Decide what you are saving for

Savings accounts are a useful way to save for life goals and one-off events like a wedding, a career break, a house deposit or your children’s education. When combined with other savings and investment products, they can also become an important part of your overall financial strategy.

2. Look before you leap

Consider carefully what kind of savings account is most suitable for you, since each one is different and each has different features. Some give you instant access to your money. Others tie your funds up for a set period (usually in exchange for a higher rate of interest) or are available in several different currencies, which could help to limit your exposure to exchange rate fluctuations if you receive payments in a currency other than sterling.

3. Consider monthly saving

If you don’t have a lump sum to put away, it could still be worthwhile to save a little and often. And that needn’t mean that you can’t take a punt on the markets – there are investment products that will allow you to invest in the stocks and shares in this way, providing you’re comfortable with the risk this entails.

4. Decide how long you want to save for

If you have a short-term goal, then looking for a savings account with a good rate is probably the best policy. For example, the Lloyds TSB International Bonus Saver Account allows instant access and offers an introductory bonus for the first six months to kick-start your savings habit. However, if you have a lump sum to save for a longer period, then you might consider something like the Lloyds TSB International Fixed Term Deposit, which gives you a fixed rate for the duration of your deposit to guard against interest rate fluctuations. It enables you to save for periods from seven days to three years.

5. Consider accessibility and notice periods

Do you need to access your money easily and at short notice? You may not always know the answer to this, so before you put money into products that lock your funds in for a long period, make sure that you have enough to cover emergencies and that you can access it easily. Everybody has different needs but as an approximate guide you should aim to have the equivalent of three months salary put aside for emergencies. The Lloyds TSB International Money Market Call Account offers holders instant access and is available in a range of currencies for flexibility.

6. Reduce the risk to your capital

Make sure you understand your attitude to risk. Many people prefer to grow their savings without much risk to their capital and that may be a perfect way for you to achieve your goals. A savings account with a good rate of interest is a secure option. If you are looking to save for a longer period, then you might consider putting your money into an investment product with greater potential returns. However, while investments such as equities are an alternative to savings accounts, they may expose your savings to greater risk.

7. Diversify your savings strategy

Diversification is a well-worn phrase in financial circles and it refers to the strategy of putting your money into products that could range from bank accounts to bonds, equities and even property. The idea is that even if some don’t perform as well as you’d hoped, others are likely to do better. A savings account with a good rate of interest can form an important foundation for such a strategy.

8. Consider your future expenditure

It’s not simply how much you need but when you need it that matters. Think carefully about your spending plans. Will you have enough by the time you need the money and will you have access to it? Some expenses, such as a new home or your flight back to the UK, have a definite date and will not wait for you to readjust your savings strategy, so make sure that you have access to enough money.

9. Be tax savvy

Consult a tax adviser to maximise your allowance and reduce potential liabilities. And don’t forget, if you hold a UK ISA, you will no longer be able to make contributions to it if you are living overseas. The only exception to this rule is for members of the British armed forces. However, banks that provide services for international savers can help with a range of funds that offer a tax-efficient method of saving.

10. Reduce outstanding debts

Consider reducing your outstanding debts (loans, credit cards etc) because the interest on them may be higher than the interest gained from savings.