Financial planning for self-employed expats in Germany
July • 9th, 2020
by the HORBACH for Expats Team
Financial planning as a self-employed expat in Germany.
You’ve made the decision; you are going to try it on your own in Germany. Congratulations! Happy? Scared? Excited? Ready? Probably a little of bit of everything. We know… we’ve been there! In this article we share what we know for you to properly prepare yourself for self-employment in Germany. Written by self-employed consultants from the HORBACH Expats Team, for self-employed expats!
Becoming self-employed has a big impact on almost all aspects of your life. From following your passion, registering your business, from finding customers to financial implications. Even though all are equally important; in this article we will focus on our passion: your financial planning as a self-employed expat in Germany.
The basic financial areas you need to get sorted for your self-employment in Germany
Being self-employed comes with a lot of freedom and with a lot of responsibilities. You need to not only take care of your personal finances, but those of your company as well. Now that you no longer fall under the German social security system, the most important thing you need to know is how you can build a financial safety net effectively. To do this you need to know how the system works in Germany. The basic areas you need to get sorted are must-have insurances for both you and your company, how you can optimize costs and save taxes and the ways to secure your financial future.
Get in touch with the HORBACH Expats team to answer all your questions and aid you in your financial planning strategy.
Bye, bye social security system. Hello, private opportunities!
When you are self-employed you can no longer rely on the German social security system. You are now 100% on your own when it comes to saving up for your future, in order to sustain yours and eventually your family’s living standards in the long-term. For a lot of people this idea is the scariest part of self-employment. But not to worry, there are lots of opportunities too!
Private Health Insurance is now an option
If you are self-employed, congratulations, you now belong to a very select circle that qualifies you for taking out private health insurance. You do not only receive better and broader guaranteed coverage, but you also get to define it yourself. Why go for it? Apart from the coverage, the price advantage and flexibility are definitely deciding factors in the equation. Want to know more? Get in touch for a personal free consult.
Private Nursing Care Insurance: lower prices, more security
Your new status also means you have no installments taken out of your gross income going into nursing care. Why care about this now? Because we are all going to grow old and this insurance is an elemental one to make sure the wealth you are trying to build is not eaten up by you requiring care after many years of hard work. What is more, private insurances offer lower prices than what you would have to pay if you stayed in the social security system, without guarantees behind it either.
Vocational Disability – when you are unable to work
Another thing that you lose are employer benefits, such as sick-pays and coverage in the short-term if anything happens. For this you need now stronger than ever to ensure your personal workforce. It is no secret that being self-employed can become quite stressful at times. What if for any reason you happen to be unable to work anymore? If anything were to happen, would you not like to know that there would be a safe sum that is still going to flow in every month and substitute your income, so that you can focus on healing? This is indeed possible and fundamental for anyone, really.
Pension Planning when self-employed
Self-employed people have much higher personal gaps compared to standard employees when it comes to their pension. Good news: you can save up for retirement while profiting from tax benefits more than anyone. Since you tend to earn more, you also have the opportunity to save more taxes if played wisely. You can add flexibility to your concept, so that wherever the future might lead you, you can still profit from this investment in yourself for yourself.
Lastly, please bear in mind that there is a time restriction as to when you can do this. So, it is definitely one of the first things you should take care of (three-month period). Worried about whether you can still go for this and what the consequences might be if you did not already? Write us, we will help you understand your situation better.
How do you properly cater to your personal financial needs?
The answer to that question: through accurate financial planning. In the same way you will need a clear business strategy, you will no doubt need the right financial strategy to pair it with. From calculating your personal gaps in all fields related to lacking a security system, to establishing a cushion you can fall back on if anything goes south, to strategies for creating wealth and reinvesting as to growing even bigger and catering to more people. Especially now, during these times of low interest rates, investing can be the defining leverage needed to aid your business into growing into its next stage. Taking the leap into becoming an investor is, after all, the foundation of getting onto next-level entrepreneurship.
What does financial planning entail?
Financial planning is lively process which begins with an information flow, continues with trust and in-depth analysis, and ends with a business partnership where you can be entirely sure that regardless in which direction you pivot or whatever curve life throws at you, you are not only covered, but thriving, through having someone at your corner helping you navigate through these changes.
First you need to be able to tell what matters for you personally and where do you draw the line between what affects you personally and what concerns mainly your company. Then you need to know where you are and based on what you are aiming for, together with HORBACH Expats Team you will craft strategies and roadmaps that can in time lead you to that goal.
At HORBACH Expats Team we help people calculate and close their personal gaps on a daily basis. Self-employed people are very close to our hearts, because we can walk them through this step-by-step 100% out of own experience. Even if your German knowledge is rough around the edges or even non-existent, we are here for you. Our team takes care of making sure you are not the one who is forced to understand everything, but we make sure to make the situation and solutions understandable for you personally.
Want to learn more in about these topics?
If you want to learn more about these topics and speak to us personally, you can book a free consultation today with our consultants through our website.