05 Sep 2024
Financial challenges are a unique part of living overseas, particularly when attempting to support your family, establish a secure life in a foreign nation, and are distant from home. Effective money management is essential for Gambian expatriates in Germany to accomplish their short- and long-term objectives. A systematic approach can make a huge difference in controlling daily expenditures and determining the best ways to send money to Gambia from Germany. Five essential pieces of financial advice for Gambian expats residing in Germany are provided in this article.
Remitting cash back to their home country concerns many Gambians working in other countries. Whether the money is for the family's needs, community work, or an investment in a business, every single amount should be worth the euro sent out. Here are some strategies to optimize your money transfers:
The information is that the first precaution to enhance money transfers from Germany to Gambia involves choosing the right company to work with. Banks, online platforms, and specialized remittance services offer different exchange rates and fees. It is, therefore, equally important to compare these rates to ensure that more of the money is transferred to your loved ones.
Regarding fund transfers, internet-based money transfer services are usually more accessible and cheaper. They generally have better exchange rates than the usual banks and charge relatively lower fees. The criteria for selecting a service are its reliability, speed, and security. Among the most recognized ones is ACE Money Transfer, which enables you to transact and transfer money online to Gambia from Germany without much fading.
Exchange rates are sensitive and vary occasionally; the best option is to transfer the money when the Euro has the highest exchange rate in the market compared to the Gambian Dalasi. Some transfer service providers rate alerts or have a target rate upon which you are notified. Thus, by closely watching the currency rates and performing money transfers when the rates are high, you can send money online to Gambia from Germany.
The German tax system is complex, and it is essential that any expatriate living in Germany has at least a basic knowledge of how the system works. Germany has a progressive taxation policy, meaning you will pay taxes according to your income rate.
Any foreigner living in Germany needs to comprehend the tax system. According to income level, Germany's progressive tax system offers tax rates ranging from 0% to 45%. As an expat Gambian, you must know your tax responsibilities in Germany and maybe the Gambia to minimize legal problems and improve your tax position.
In Germany, everyone is taxed through their salary, and their employer takes the tax from them. Sometimes, an expat might have other sources of income in the country of residence or other countries, and thus, they will be subject to different taxes such as rental income tax or capital gains tax. Everyone who has received money from various sources must file a tax return, and it is also advisable to do so since one may end up paying less amount than expected and hence be eligible for a refund.
Germany signs double taxation treaties (DTAs) with many countries, including Gambia, to ensure that your earnings are not taxed twice. You should consult and be familiar with the provisions of the DTA between Germany and Gambia since you may be eligible for a specific tax credit or exemption on the German tax you file and pay.
There are situations where paying great attention to tax legislation is necessary, especially for foreigners making a money transfer from Germany to Gambia. Consequently, it is advisable always to seek the advice of a qualified tax attorney based in Germany or the Gambia who is knowledgeable about both nations' tax laws. Using a tax advisor's services will also help you take full advantage of your rights and claim any credits and deductions you are legally entitled to.
The third concern is saving; it is crucial to have a planned way of saving to avoid future heartaches, especially if one lives in a foreign country. Like any other expat, as a Gambian in Germany, you most likely have a number of goals in terms of your financial capabilities, such as repurchasing property in Gambia, paying for your children’s tuition fees, or even saving for your retirement back in Gambia. Developing a sound savings plan is the best approach to managing your money and achieving these two goals.
Setting realistic goals that align with the desired financial objectives is the first step in creating a savings strategy. Establish a goal. First, one should specify their objectives and the completion deadlines. For example, if you are interested in investing in Gambia by purchasing real estate, you should assess the venture's likely cost and anticipated duration. This will help you stay motivated and focused on the appropriate things throughout the process, all while having a clear goal in sight. Maybe you want to make an online money transfer from Germany to Gambia to complete this investment. Setting specific financial objectives will enable you to schedule your money transfers appropriately, guaranteeing a smooth process.
It is essential to have an automatic approach to saving money so that it becomes part of the daily routine. Every month, calculate a fixed amount you can afford from your salary and automate it from your salary account to your savings account. The rationale here is to guarantee that you make deposits into your savings account before you can shop.
Savings accounts also allow interest rates that can range in Germany. Browse various banks to identify those that offer the most interest on the account and have the most negligible fees charged. You may wish to open a fixed-term deposit account if you want to leave your money for a period you don’t want to spend freely, as these have better interest rates than a regular savings account.
Read more: 10 Things to Know Before Moving to Germany from Gambia.
Emergencies might be unpredictable, but they are always certain; thus, everyone must save an emergency fund. Ideally, people should aim for emergency funds of $1,000 or even three to six months of living expenses stored in an accessible account. This fund will act as an emergency fund in the event of rain with unexpected costs, such as medical bills or being laid off.
To be more specific, investing is also a very fruitful activity when accumulating extra capital, but it should be done carefully and responsibly. It's common for a Gambian expat residing in Germany to prioritize Germany to Gambia money transfer to offer financial assistance to their family members. Examining investment possibilities might help manage this financial obligation. Among the options are investments in stocks and bonds, real estate, and mutual funds.
Knowing your risk tolerance is crucial before you begin investing. The kinds of investments that are appropriate for you will be determined by this. If you are risk averse, you could favor low-risk investments like bonds or fixed deposits. German government bond returns as of 2023 were approximately 2%, but DAX index equities had yielded an average yearly return of almost 8% during the previous ten years.
The secret to reducing risk in your investing portfolio is diversification. Refrain from investing all of your money in a single kind of asset. Instead, distribute your assets among several asset groups, including commodities, equities, bonds, and real estate. In this manner, the other investments might help maintain balance if one performs adversely. For example, a well-diversified portfolio might include 40% in stocks, 30% in bonds, 20% in real estate, and 10% in commodities.
These financial markets are dynamic, and knowing global and local economic events is always essential. Checking and adapting your investment portfolio to achieve your goals is often required. A financial expert can give advice based on the client’s circumstances.
Real estate investing in the Gambia may be profitable, particularly if you want to return home or buy something unique for your family. As of 2023, real estate value in the Gambia has been rising rapidly, with metropolitan regions seeing an annual growth rate of about 5%. To prevent potential risks, though, be careful to conduct extensive research and deal with reliable agents.
Most people are negligent with their retirement planning. That is why it is critical to understand that it is essential even if you are working towards meeting your daily needs. Thus, many experts underline that it is better to start preparing for retirement right now, as the earlier you begin saving money for this period, the fewer problems you will face.
Due to the economic conditions in the Gambia, many Gambians look for better chances outside. People who want to support their families back home and better their lives frequently travel to countries like Germany. This often involves an online money transfer from Germany to Gambia; thus, retirement funds must be planned for in addition to these financial commitments.
Germany has a well-developed pension system, and some major components include statutory pension schemes, occupational pension schemes, and private pension schemes. Statutory pensions are also common in Germany; therefore, as an employee, you may be part of the system. Another crucial factor to consider while choosing this system is the amount of income you will be eligible for and if it will be enough to support you in your retirement.
If you can, it is recommended that you make supplementary personal payments to the statutory pension system. This can enhance the value of the pension and lead to improved financial planning during retirement. Also, there are occupational pensions where one is asked to contribute, and your employer also contributes to the pension. It is thus advisable to determine if the employer of your choice has one and avail yourself of it if the possibility arises.
If one intends to retire in Gambia, factors that should be considered include how the retirement income is transferred and how accessible it is in Gambia. It is possible to open so-called retirement accounts in some Gambian banks, and perhaps it is worth it to start saving while one is still earning money in Germany. Also, there is the question of living expenses in Gambia versus those in Germany, and as much as this depends on one's retirement income, it should not be overlooked.
Being a Gambian expat in Germany might make managing your finances difficult. Still, with the right strategies, you can reach your financial objectives and provide a solid future for your family. You may maximize your chances in Germany by making the most of your money transfers, being aware of your tax duties, creating a savings strategy, making prudent investments, and making retirement plans.
Gambian expatriates living in Germany can claim a number of tax deductions and allowances, including those for rent, healthcare, and dependent children.
A tax expert can help you maximize your tax return and take advantage of all the available deductions.
Get health insurance, open a bank account in Germany, and begin saving for emergencies.
Consider obtaining a credit card with a limited limit, paying your payments on time, and staying out of debt.
Common investment options include stocks, bonds, savings accounts, and real estate.
