By Peter Dougherty
BRIAN and Emily moved from the United States to Spain in 2022. They enjoy the slower pace and the sunnier weather.
They also like that the cost of maintaining a similar standard of living is lower than in the US. And that’s why they don’t understand why they aren’t able to save more money each month. They save less money now, in fact, than they did before they moved to Spain.
It’s an interesting occurrence that I call ‘the hidden cost of keeping one foot in America.’
The result is like a tiny hole in the wallets of the many Americans who relocate to Spain but never fully leave the United States financially.
This hidden cost rarely appears on a bank statement. Instead, it shows up as a number of small financial decisions that collectively consume thousands of dollars each year.
As an example, Brian and Emily are still paying for a self-storage unit in New Jersey.
Because 36% of Europeans have never even heard of self-storage facilities, allow me to explain: Americans often have more ‘stuff’ (household goods, furniture, holiday decorations, sports equipment, etc.) and move more frequently than Europeans do.
Businesses that rent individual units of space directly to customers with their own locks and access – self-storage – are widespread in the United States. Every month, this rent is an expense that Brian and Emily continue to pay.
Another example is the retiree who maintains a US home that sits empty ten months a year.
Other Americans continue paying for insurance policies they no longer need, maintain multiple bank accounts with fees, or make frequent trips back to the United States that are motivated more by habit than necessity.
Still others keep an automobile in an American garage ‘just in case.’
Individually, few of these expenses seem significant. Together, they can become surprisingly expensive.
Imagine an American expat in Spain spending:
- $2,000 annually on storage
- $3,000 on property expenses
- $1,000 on unused insurance coverage
- $3,500 on an extra trip to the U.S. each year
That’s $9,500 annually. Invested over ten or fifteen years, that money could potentially grow into a tidy sum.
Of course, this isn’t purely a financial issue. It’s an emotional one, too.
Keeping ties to home provides comfort. It offers a sense of security and the feeling that the move isn’t completely permanent.
The challenge is that financial decisions made for emotional reasons often carry a hidden price tag.
One American had lived in Spain for eight years but still paid for a storage unit in Florida.
When he finally cleaned it out, he calculated that he had spent nearly €15,000 protecting furniture, college textbooks and old skis worth about €1,200.
As investments decisions go, that storage unit clearly wasn’t his best.
Another common example involves housing. Many Americans assume they should keep their US property because ‘real estate always goes up.’
Sometimes that’s true. Sometimes it isn’t.
The important question isn’t whether the property appreciates. It’s whether that capital could be working harder elsewhere.
The same principle applies to banking relationships, credit cards, insurance policies, and even investment accounts.
Expats often maintain complex financial structures because that’s what they’ve always done. Yet complexity frequently creates costs, inefficiencies, and stress.
The goal isn’t to eliminate every American connection. Most US citizens living abroad will continue to have important financial ties to the United States.
The objective is to distinguish between what is necessary and what is simply familiar.
Peter Dougherty is a Financial Planner at BISSAN Wealth Management in Spain. He holds an MBA in finance from Columbia University in New York and an MS in Spanish Taxation (Máster en Fiscalidad y Tributación) from Nebrija University in Spain. He is a European Financial Planner (EFP) in Spain and is a CERTIFIED FINANCIAL PLANNER™ professional and a Chartered Retirement Planning Counselor® in the United States.
For more information: https://www.financial-planning-in-spain.com
Peter Dougherty
- MBA in finance
- MS in Spanish taxation
- BS in Economics
- European Financial Planner in Spain
- Chartered Retirement Planning Counselor® in U.S.
- Author of two financial planning books
- Certified Financial Planner™ in U.S.
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