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Financial Planning for Expat Families in Germany

August • 25th, 2020
by the Horbach Expats Team

financial planning for expat families in Germany

Financial planning is important for your family's future in Germany. 


Building a better a life in Germany - This is the dream of most expats coming to Germany. And not just for themselves, but for their family as well: their spouses and their child(ren). And yet, most expats coming to Germany have experienced sleepless nights full of financial worries and fears: What is the impact of having a child as an expat in Germany? Will I be able to afford it? Can I also expect help from the German state as an expat when I have children? What insurances do I need to get for my children?How will I provide for my future and for my children? 


The HORBACH Expats Team  has created this article to take those worries away and explain the key aspects of financial planning you need to consider to make informed decisions about 


Having children brings about significant changes, maybe even more so when you are an expat.


One thing you can be sure about: it will affect your personal finances like no other event in your life. That’s why careful planning both before and after they are born, is necessary to ensure that you do not only make the most out of the available benefits, but also to set a firm foundation for both your and your children’s future.


Step 1: Making sure your financial foundation is solid


We all know that, besides the unconditional love you’ll have for your child, having children costs money. As soon as offspring comes into the picture there is a fervent need to reshuffle the resources available and make sure your money is working for you and that you are gaining the most out of it.


That’s why it is important to be sure that there are enough resources to make sure all needs are satisfied, both now and in the future. Having a family should not lead to financial difficulties. The good news is that with good asset management and careful planning, you can make sure you can secure a healthy, bright future, full of opportunities to come.


The very first step is to check your financial foundation, which needs to be stronger than ever if it now has to support more people. Food, mortgage and kindergarten – your family depends on your monthly income, especially when you are a parent, a single earner or a house owner. One of the most frequent worries of young families is what would happen if there is an accident, casualties, or prolonged illness that jeopardizes the whole structure.


Step 2: Check basic insurances – make sure you and your family are not at risk


In Germany there are 4 basic insurances everyone should have.


1. Health insurance

A dual system of private or public health insurance in Germany, offering different options for different constellations.

2. Private liability insurance

Covers the financial implications arising, should you or your family cause unintentional damage to a third party, either physical, material or financial. 

3. Vocational disability insurance

For when, as a result of an accident or an illness you are permanently no longer in a position to earn a living. Because your workforce is your most valuable asset.

4. Nursing care insurance

This insurance secures the risk for long-term care. Should you need care in the future, this insurance will (partly) cover the costs. To avoid becoming a financial burden to your family later on in life.



Once you have children or get a mortgage, for example, a term insurance also becomes necessary, to make sure that in the absolute worst-case scenario, the death of a spouse does not become a financial burden added on top.


Your financial planning should begin with a check to see if these basics are in place, because these insured risks are the ones that could jeopardize your income and wealth. If you are curious to know if your health state is good enough to be insurable get in touch, get in touch with the HORBACH Expats team, can run it anonymously by the companies to show you the possibilities there.


Another thing to check is liquidity, making sure that there are enough savings before jumping into any investments. Having a security savings fund is even more important when planning for childbirth or as more unexpected situations are more likely to occur.


Step 3: Check how the state helps to provide for your family



As an expat it is probably interesting to know that in Germany the state aids families through for example Kindergeld. The state subventions families with children per child with specific sums that need to be determined individually, to make sure families are able to afford the basics. You receive it for a limited time period, depending on your individual situation and for how long your children prolong their education, for example. As an expat you are also entitled to receive Kindergeld under specific criteria, spanning from your nationality as well as your type of residence permit.


Widows and/or orphans’ pension

When it comes to anyone paying into the statutory system (compulsory for employees), if the minimum required period of 5 years has been fulfilled, then you might be able to expect a small sum in case of death – meaning your spouse and children could receive a widow and/or orphans pension if they fulfill the criteria as well. As an expat you should know, nevertheless, that unless you plan on staying here in the long term or at least move between countries with social security treaties with Germany, the small benefits you might receive should not be something so rely on heavily or as a main source of sustenance.


Health insurance

Another interesting scenario is health insurance. Germany has a dual system of private and statutory insurance. A privileged few get to access private health insurance, deciding over their coverage and care. This is to be individually assessed, since multiple constellations are possible. For example, a couple with 5 children is a whole different thing than two self-employed partners or a couple with 2 children where only one is self-employed. For this we recommend having a cost-free session with our health-insurance specialist to make sure you are receiving the best coverage for you and your family and also paying accordingly.


Step 4: Find out what you can do to provide for a financially secure future


Now that you have the basics covered and know what to expect from the state, it is time to see how you can get your money to work for you and your family. Once the safety net is there and all basic risks have been properly insured, we can take a look at investing. It is not only important to take care of your children but also for yourself. The reason is two-fold, when your kids are still dependent on you, you need to take of them. But once they are adults, you don’t want them to have to care of you!


Fill in your pension gaps

The greatest risks most expats face, given the frequent relocation and non homogenous contributing into a system is old-age poverty. It is alarming to find out how big personal gaps can get just by postponing this important decision. Check out this article to learn more about how to fill the gaps.



For families where at least one family member is paying into the statutory pension system, the Riester could be incredibly beneficial. Through the leverage effect, it is a lucrative plan for all parents who seek to create financial safety for their pension. If done right: not only do you invest for yourself … the state stocks up your investment yearly with 175 € and adds 300 € per child.


Inside tip: find out whether you are eligible for the Riester. If you are, your partner might be as well! Get in touch with us and we can get this checked.


Choosing the right investment plan as well as calculating it precisely to make sure you receive all benefits is essential. By understanding your own personal gap, it is also easy to grasp that the earlier one starts the more power your money has over time, thanks to the compound interest effect.


The children savings plan – providing for their future

What if we told you about an investment plan, that allows your kids to buy a car, to study... in short: to be in the privileged position to catapult them multiple steps closer to fulfilling their ambitions once they turn 18? The so-called children savings plan makes this head start possible! And remember the workforce insurance? It can be included on top in the investment to make the way to financial security even easier for your offspring.


Inside tip for families on a budget: it only takes as much as 25 € to 50 € monthly, to make sure that your kids will have an easier start.  


Looking for more information?


By now, you are probably wondering: how big is my personal gap? Is there an impact on my pension when I have to move back home? What happens if I leave Germany? Are my insurances the right ones? Can I afford all of this? What if I have more children or get divorced? 


The HORBACH Expat Team is here to help you

The path to financial security does not have to be bumpy! To help you The HORBACH Expats Team not only prepared this article; after successful editions about multiple financial topics, we welcome you to our next cost-free webinar where you and your family get all the information you need to build financial safety in Germany.


The HORBACH Expats Team has been there and knows that the last thing you would like to worry about on top of changing countries are your finances. They take care of taking that worry away and provide you with a clear roadmap and solutions, for you to be informed and know you can rely on our expertise in these areas.


Book a free consultation with the team 

Can’t wait till September 2nd? You can always book a consultation directly here.







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