Working as a nurse in the United Kingdom can boost your career growth and your earning potential. There’s no denying that the journey of each Filipino nurse in the UK is a testament to determination, skill and resilience. Most of us decided to venture to other foreign countries to improve our life disposition and our quality of life.
Navigating the complexities of the UK’s healthcare system and thriving in a foreign land can be challenging but we adapt and we survive so we can help our families back home. However, it’s equally important to consider your financial well-being too.
The UK offers unique opportunities to grow your money and secure a brighter future. This blog post will explore different ways you can make the most of your earnings and build a strong financial foundation while living and working in the UK. We will tackle practical insights and strategies on how to manage your expenses, invest wisely and set financial goals so you can thrive financially and fulfil the aspirations you have on your UK journey.
Set Your Financial Goals
Establishing financial goals is a crucial step to achieving financial success and security. Begin by assessing your financial situation and be brutally honest with it. Calculate your income, expenses, savings, and debts. This will give you a clear picture of your financial standing and understand which area you’re doing well and where to improve.
Cliche as it may be, setting SMART (specific, measurable, attainable, relevant and time-bound) is an effective goal-setting strategy. For instance, “ I will save £3,000 in one year that will be reflected in my savings account balance”. Allocating £3,000 is specific; having a savings account can measure how much you’ve saved; After computing your income and expenses, £3,000 is a realistic and doable amount to save in a year; that money can be put towards an emergency fund which aligns to your relevant needs and the 1-year deadline makes it time-bound.
After looking at your savings goal, determine your investment objectives. Your goals can be influenced by your age as time horizon can be a crucial indicator of your investment strategy. Are you investing for long-term growth, retirement, income, or a combination of these? It is imperative to understand your risk tolerance too as different investments have varying levels of risk. Assess how much you can tolerate the fluctuations in the value of your invested money.
Create a Budget
Creating a well-structured budget is a great way to manage your finances effectively by allocating your earnings with your fixed and variable expenses and deciding how much you can put in savings and investments. Consider how much money you can comfortably invest without affecting your day-to-day finances and emergency funds. You can use banking apps to track your spending and there’s a plethora of budgeting and tracking apps that can help you with budgeting. You can also do it in a traditional way either in writing or in a spreadsheet, whatever is comfortable for you.
Start with calculating your monthly salary from your job and any extra income from other sources such as a bank, overtime or side hustle.
Gather details of your monthly expenses and categorise them into fixed and variable expenses. If you have annual premiums such as car insurance, divide it by 12 to get a monthly estimate.
Fixed expenses - rent or mortgage, utility bills (gas, electricity and water), council tax, subscriptions (mobile phone and entertainment ie. Netflix, Spotify, Amazon Prime), internet, childcare, insurance (home, car and personal insurance)
Variable expenses - shopping, entertainment, dining out, experiences and groceries
Determine how much will be left after deducting your income from your overall expenses per month.
Allocate a budget for savings and investment. If you don’t have an emergency fund yet, it’s smart to prioritise saving for it and allocate some for investment. Having a cushion fund for unexpected expenses can save you from stress and borrowing loans with incurring interest.
If you have high-interest debt, allocate extra funds to pay it off faster. There’s no point in saving and investing if your credit card debt interest is higher than your savings and investment returns.
Review your spending regularly
Monitor your spending against your budget regularly and adjust your budget based on any changes in your income, expenses and circumstances. Make sure you’re staying on track and making progress with your goals by reviewing your budget and goals.
Listing all your expenses can also be a good way to track your spending habits and identify if you’re overspending in certain areas. For example, you may have noticed that you’ve been having takeaways more often than you think and you could’ve allocated that money to savings or investment if you had planned your meal and cooked your own food.
Choose an Investment Account
Before you start investing, educate yourself about different investment types such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and property. Understand their potential risks and returns.
Investing money in the UK involves careful consideration of your financial goals, risk tolerance, and available investment options. Remember that all investments come with risks, and there's no guarantee of profit. Be prepared for market fluctuations and potential losses. It's important to make informed decisions and start with an investment approach that aligns with your financial goals and risk tolerance.
In the UK, you can invest through various account types, such as Individual Savings Accounts (ISAs), Self-Invested Personal Pension (SIPP) accounts, general investment accounts, and more. Each has its own tax implications and advantages, so choose one that aligns with your goals.
The ISA is a tax-efficient way to save money and the current allowance is £20,000 per tax year. It allows you to invest your money tax-free meaning you won’t have to pay capital gains tax with the investment profits as long as you stay within the maximum allowance. There are different types of ISA: Stocks and Shares, Cash ISA, and Lifetime ISA and you can either have one account or spread your ISA allowance on these different types of accounts.
The Stocks and Shares (S and S) ISA allows you to invest in the stock market by buying individual stocks, index funds, ETFs, mutual funds and bonds. Investing in stocks and shares is beneficial for those who want to grow their money in the future and have a longer time to invest.
You can also save your money in Cash ISA and yield interest (interest depending on your provider) but once you withdraw it, you will lose that allowance amount for the tax year and the tax benefits.
If you’re planning to buy your first home or want to save for retirement, you can opt for a Lifetime ISA (LISA). This type of ISA also offers tax-free benefits but with an additional boost from the government as they add a 25% bonus of the amount that you have deposited. However, the maximum amount you can save in the LISA is £4,000.
Use an interest-yielding Easy Access Account
An emergency fund is your safety net should there be unexpected financial challenges that will come your way and it should be accessible anytime you need it. However, it shouldn’t just be sitting still in your bank account doing nothing until you need it. Inflation can eat the value of that money.
Hence, it’s smarter to put it in an easy savings account that yields interest. There are lots of savings accounts to choose from but our team loves the Chase savings account as it gives 4.1% interest on our savings whilst not worrying about accessing it if you need it. Your money grows as it stands still. You can also put your money in an Easy Access Cash ISA offering a good interest rate to maximise the tax benefits.
Stocks - Buying shares in companies allows you to participate in their growth. Stocks can be traded on the London Stock Exchange (LSE) or other global exchanges. You can also buy stocks in the Philippines by using credible stock brokerages like Citisec Online or COL Financial.
Bonds - These are loans you make to governments or corporations. In return, you receive interest over a set period and the principal back at maturity.
Mutual Funds and ETFs - These are pooled investments that offer exposure to a diverse range of assets managed by professionals.
Property Investing in real estate can provide rental income and potential property value appreciation. You may be required to save extra money to secure a deposit and stamp duty land tax for the additional property you want to purchase.
Cash and Savings You can also invest in high-interest savings accounts or cash ISAs for lower-risk options. If you also want to invest in the Philippines, you can use special government savings programmes such as Pag-ibig MP2.
Bear in mind that your time horizon for investing should influence the investment choice that you make. The younger you are, the more time you have in the market meaning you have more time to recuperate if there will be any losses in your investment.
Starting early will allow you to invest in a more volatile stock market, which can give higher returns but also carries a higher risk of losses. To mitigate this, you can invest in a low-cost platform like Vanguard and buy ETFs such as S and P 500 and FTSE 100. These funds allow an individual to invest in the top companies in America and the UK without buying individual stocks for each company (which is more risky). If you started a bit late with investing, it may be better to opt for lower-risk investments such as bonds and high-yield fixed cash savings accounts.
Be mindful of the fees associated with your investments, as they can impact your overall returns. These may include management fees, trading commissions, and administrative costs from the investment platforms you have chosen. Regularly review your investments and portfolio performance and rebalance if needed to maintain your desired asset allocation. Keep up with financial news, economic trends, and changes in regulations that might affect your investments.
As Filipino UK Nurses, we’re grateful for the professional and financial growth opportunities that the UK offers. Nurturing our financial well-being can have a massive impact on our lives as it can contribute to overall stability, lesser stress and therefore enjoying life. We hope this article served as a roadmap to help you make the most of your hard-earned income and build a secure financial future. By setting clear financial goals, creating a well-structured budget, and exploring avenues of investment, you're positioning yourself for success.
However, navigating the intricate world of finance can be complex, especially in a foreign country. Therefore, we strongly advocate seeking professional financial advice. An experienced financial advisor can provide personalised guidance tailored to your unique circumstances, helping you make informed decisions that align with your goals and risk tolerance. Their expertise can be invaluable in optimising your investment strategies and ensuring your financial plans are on the right track.
The suggestions presented in this article are grounded in practical experience and knowledge as fellow Filipinos who have walked the path of working as nurses in the UK. By combining these principles with your dedication and hard work, you're poised to not only thrive in your nursing career but also secure a prosperous financial future for yourself and your loved ones. Here's to your journey of growth, both in the healthcare profession and in your financial endeavours.