Sorting Out Personal Finances When Living in Spain

If we’ve said it once we’ve said it a thousand times – the number one reason why most expatriates fail to make a go of their new life abroad is because of money.  Sorry to once again reiterate this point, but it is well worth detailing because if you prepare your finances properly before you go you stand the very best chance of fulfilling your personal dreams of living an idyllic lifestyle in your personal choice of overseas paradise.

In this specific report we’re going to be looking at sorting out personal finances when living in Spain so that all you retirees who already have your feet up over there on the Costa del Sol - as well as you would-be-Spanish-sun-seekers - can get your money in order and enjoy the Spanish lifestyle instead of sweating and fretting over your financial situation.

Before You Go (unless you’ve gone already!)

If you’re planning your move to Spain then you need to start with all things money.  Firstly you need to get a handle on the amount of money you will have to play with when it comes to finding accommodation.

If you have a house to sell before you go, get it valued and on the market well in advance of your move.  You will then know how much equity you can expect from the sale and put this together with any other savings you have towards the purchase of property in Spain.

In addition you could consider speaking to Barclays Bank who are experts in mortgages for Spanish property for both those already resident in Spain as well as those living elsewhere and planning a property purchase.  Click here for Barclays’ mortgages in Spain page where you can request a quotation which will give you more of an idea of the amount of money you will have to fund your Spanish property purchase.

If you are going to be renting property in Spain you will need to make sure you have sufficient money to cover an initial holding deposit as well as up to 3 months rent in advance towards deposits and fees for rental agents.  Ongoing you need to start thinking about where your income will come from to pay the monthly rent and meet the monthly bills…

Despite the fact that you can live modestly in Spain when you shop in local markets and eat locally produced and in season food, the cost of living in Spain is not so low that you can live on next to nothing!  You need to get a sensible handle on the Spanish cost of living and factor in financial extras that you may personally encounter such as flights back to your home country to visit friends and family, golf club membership or money for weekly entertainment and nights out for example.

Once you have a breakdown of how your weekly and monthly expenses add up it’s time to look at how much income you can generate from any investments or pension you have or from the letting out your home or any investment real estate for example.  If there is a shortfall in the amount you receive each month and the amount you expect to have to pay out you are going to have to start seriously thinking about getting a job in Spain.

Once You Arrive

You will need to get a Spanish or an offshore/international bank account sorted out so that you can get access to any investment income you receive, you can receive any wages you earn in Spain and you can handle your financial obligations back home and in your new home country of Spain.

Offshore and international accounts can be set up before you go if you want – your high street bank may be willing to transfer your current account to an international bank account package for example and you should ask before you travel to Spain.  Your local Spanish account can of course be opened once you are resident in Spain…

An additional financial outlay that you need to consider is getting health insurance – whilst retirees are quite well covered by a reciprocal agreement between the UK and Spain for example, other people need to take out private medical insurance and even some retirees are sensible to make plans for a top up type health insurance.  You can click here for Good Health’s free quotation form.  They have created an expat package in associate with American Express so that anyone moving abroad gets the best healthcare and health insurance package available.  Their free quotation page gives you the chance to see how much you would have to pay for given levels of cover…

If you’re of working age when you move to live in Spain you’ll need to start thinking about saving some of your income towards your retirement.  There are many ways to go about this from paying into a pension scheme in Spain or utilizing an offshore or international retirement savings vehicle.  You could also consider investing into property for example or simply saving into a straightforward offshore savings account. 

It’s well worth taking independent financial advice on this matter as laws, rules and opportunities differ in Spain and what’s more, there are many opportunities available to expatriates to utilize the offshore advantage when it comes to savings and investments.

And finally – we recommend that you always have a sum of money tucked away for a rainy day – although these are few and far between on the sunny Costas!  This might be money you use for a flight back home in an emergency, a sum of money for a hospital visit, a sum of money for an unexpected large bill or just the money you need to get out and away if you decide your new life in Spain isn’t all you wanted it to be.  This lump sum once tucked away need not be dwelt upon but it is there in the event that you need it which will give you the financial comfort and security you need to actually feel very positive about your relocation which in turn means you are of the right mindset to make an excellent go of your brand new life in Spain.