Working Life vs Life Savings When Living in Spain

The reasons are many fold from having a love of “things” instead of savings and security. Social and peer pressure adds to the need to buy the latest iPhone, for example. We might not understand investments so do not spend time exploring the options. We might think our savings are just put away for a rainy day and not realise that they can be used to provide us with a feeling of security because they can also provide us with lifelong income.

The reason for our lack of attention, in part, is that there is no structure in place to make sure we do give the right amount of time to our money and savings. When we are at work we have a structure, a place you go to, probably training for the job, a boss, a company mission, company values, a product line which is specific and customers who keep you on your toes. The better we get at the job the more likely we are to get a promotion.

Don’t worry. I am not suggesting you spend another 40 hours a week on top of working to look after your savings. What will make a difference, though, is if we apply these work elements to our savings.

Structure – perhaps as simple as saving regularly, or perhaps using savings type where tax is not paid whilst your money grows. Using a cashflow model to see what your financial future looks like.

A place to go – more difficult but if you have an adviser go to his/her office to discuss your situation and your requirements.

Training – there are many good books on looking after your savings. You will notice that the best concentrate on your approach to money and the process of making it grow. Not on an “investment product”. Always start with your plan and then fit the products into your plan. Do not buy a product and then wonder why you have it. This is not as easy as we might think because the adverts for financial services are mostly offering products.

A boss – if you have an adviser you become the boss and the adviser becomes your employee. If this is not the case, get a new adviser!

Mission and values – have a list of requirements for your savings, investments and pensions. It may be that you have chosen a set date to retire or how much to leave the children or many, many more objectives. Your values may include making your money grow without causing harm to the environment.

Product line – emotions guide what you want from your money but make your decisions on how to achieve that based on data. Recognise that you should build your planning on emotion and implement the plan based on data. Your work company has a limited number of products. In Europe alone we have 16,000 different possibilities in just one investment class. Even if you have a really good knowledge of how investments work you still need help with sorting the data on 16,000 options. Use an adviser with tools to analyse that data on your behalf and to give you guidance on what will best fit your plan.

Customers who keep you on your toes – the customers who will keep you on your toes for your savings are interest rates, markets, tax, rules and regulation. All of these “customers” change their minds. A very good recent example is in the markets, with the S&P 500 index of US shares from the start of Covid:

• 9th February 2020 – 3,380.16
• 15th March 2020 – 2304.92 (31.8% change)
• 12th April 2020 – 2874.56 (24.7% back up)
• 7th October 2021 – 4399.76%

*Source New York Stock Exchange

Of course this is an extreme example, but it does illustrate how you or your adviser needs to pay attention.

For those of us living in Spain we have to add in the additional issues of a tax system in the UK and a tax system in Spain. Exchange rates are another factor we need to consider.

If you would like to be the boss of your savings with an adviser who can guide you for building your plan and then use data to best work out how to implement your plan, myself and our team at the Spectrum IFA Group are here to help. With software systems for cashflow planning, an investment panel for reviewing investments, clear understanding of both UK and Spanish tax systems and ongoing support, all given in English by an adviser who lives in Spain.

For an initial call to find out more, choose a time for a phone call or Zoom meeting that is convenient for you with this link: initial telephone or Zoom meeting.

I look forward to converting our expertise and systems into easy to understand ways for you to make your plans become a reality.