cost of living crisis in Spain and financial planning

Cost of living crisis in Spain: What you can do about it

The cost of living crisis in Spain is one of the most important problems that put a strain on the Spanish residents’ budget. Of course, it is not only about its citizens, but for most people who have chosen the beautiful Mediterranean country to live and work in. The cost of living crisis affects UK expats in Spain, seeing their funds and savings accounts decreasing as prices increase. 

Reading this blog you will have the opportunity to understand how much has the cost of living increased in the past few months and how you can reduce the consequences of inflation on your wallet. 

Spanish inflation hit a 27-year high in June 2022!

According to preliminary figures that the National Statistics Institute released on Wednesday morning, inflation in Spain increased by an additional 1.5 percentage points in the month of June, bringing the overall rate to 10.2%. This is the highest level recorded since April 1985.

The majority of the increase in the consumer price index can be attributed to the higher prices of both food and energy. The prices of hotels, cafes, and restaurants have all increased when compared to their levels in 2021, which has contributed to the overall increase in inflation.

This year, inflation has been skyrocketing in Spain and worldwide due to several factors. One of these factors is the disruptions in the global supply chain that have been observed ever since the pandemic. These disruptions have been made worse ever since Russia’s invaded Ukraine.

The previous high point of this wave occurred in March 2022 when prices were 9.5% higher than they were the previous year.

How to minimise the effect of inflation

There are ways to decrease living costs that have skyrocketed in the last year. Making the right moves on a financial level isn’t as easy as it sounds. Some people can do it, some can’t as they lack the financial expertise to judge whether an investment is suitable for their budget and plan. To make things even worse, some people don’t have a financial plan at all.

A financial adviser with the necessary qualifications and expertise in markets would be able to design a financial plan according to your wishes and goals. Working with a financial adviser would save money and time and reduce anxiety and uncertainty. 

Conducting a personal financial review

A comprehensive analysis of your financial expenditures is what’s meant by the term “financial review.” The purpose of conducting a financial review is to ensure that your current spending patterns do not endanger your future financial stability in any way. Even though there are those who may concentrate on the unfavourable aspects of the word “review,” the reality is that it is an essential component of any process involving financial planning.

It is essential to comprehensively understand all aspects of your financial situation to formulate an effective strategy for managing them. Your review and your adviser won’t be able to assist you to the fullest extent unless it takes into consideration some of the less pleasant aspects of your financial situation.

Build a financial plan and invest

The next step involves building a financial plan with all the information you need regarding your financial situation. Your assets can be used to their fullest potential and long-term financial goals can be achieved through financial planning. Your financial future depends on your financial plan’s thoroughness and attention to detail. Of course, how well something is put into action is equally important.

Finding the right financial adviser is a critical first step in achieving financial success. It is essential that the person providing you with financial advice is fully qualified and has received their certifications from the most prestigious organisations.

You can rely on financial advisers to help you find viable financial solutions. In addition, they can provide you with access to financial products that are in line with your strategy and enhance its actual performance, as well as act as financial planners. If you don’t have much experience in a particular industry, this option will save you a lot of time and effort.

As a rule, it’s best to reevaluate your investment strategy and advice at least once every few years. On the other hand, financial advisers stress the importance of periodically reevaluating one’s financial strategy. Keeping an eye on your strategy’s performance is essential to financial planning. If you’re aware of your plan’s flaws, you can work with your financial adviser to fix them so that you meet your objectives.

Cut extra costs and focus on the future

It’s almost certain that you have spent money on various things that you have never used. However, the rise in energy prices, food prices etc., have probably reduced your purchasing power as an individual consumer or a family. The situation is even worse for low-income households as sometimes financial aid measures are insufficient. 

If you would like to reduce the consequences of the rising cost of living, it is time for radical decisions. There are ways to boost your savings account but sometimes, some small sacrifices are needed. Spending money on things you don’t need makes it difficult to build up your savings.

We recommend compiling a list of the things you require the most and going over it as frequently as possible. You might find it easier to examine your priorities and steer clear of buying things you don’t need if you keep your products on a written list.

Some say that shopping can be therapeutic. However, when prices are going up every month, we should be careful how we spend our available budget. If not every, most purchases should be useful in the future. Either way, minimalism is a lifestyle that perhaps you will find interesting.  

How can Holborn Spain help you with your finances?

For more than 20 years, Holborn Assets has supported expats worldwide and boosts them to achieve their financial goals. Our team of experienced and fully qualified financial advisers based in Spain are expats, so they know first-hand every problem you might face. 

The issue of living and working in Spain as the cost of living rises is crucial since Spain is a popular destination for British expats. We know what it’s like to confront the difficulties of relocating to a foreign country. If you have any questions or concerns, don’t hesitate to contact our team of expert.

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