If you’ve ever moved across state lines or to a new city, you’ve probably experienced a change in your cost of living expenses. Depending on where in the U.S. you’re located, your city could be hurting or helping your chances at getting rich.
In your quest to save, invest and build wealth, where you reside is an important factor to take into consideration. Areas with lower cost of living can help you achieve your financial goals faster with a disciplined savings strategy. But the tradeoff is sometimes lower wages.
Perhaps you’ve daydreamed about relocating outside of the U.S. to a tropical island off the coast of Thailand where you can eat feasts and get massages for a fraction of what it costs in the U.S. Or maybe you’ve thought about crossing the border into Canada to get access to their generous paid parental leave benefits (up to 52 weeks) and low-cost healthcare.1In your quest to save, invest and build wealth, where you reside is an important factor to take into considerationClick To Tweet
Life Beyond Our Borders
Moving abroad may seem far-fetched, but it’s worthwhile to at least consider it as an option in your financial journey. A foreign country with a low cost of living could save you money while also providing fascinating cultural experiences and adventures.
Of course it’s easier said than done to say goodbye to loved ones, learn a foreign language and move thousands of miles away, but keep an open mind for a few minutes and imagine the possibilities. Let’s take a look at some of the differences in income and spending around the world.
There are large differences in median per-capita income around the world, especially between well-established and developing countries. For example, a study by Gallup found that people in the top 10 wealthiest locations are making over 50 times more than those in the bottom 10. They also noted that the availability of full-time work in a country versus part-time and intermittent work directly impacts where a country falls on the income scale.2
As you can imagine, the amount of money one can earn based on their location also impacts how much they spend and save. If you are unable to take your job with you abroad, it’s important to consider how much you’d realistically be able to earn working in the local market – it might be on par with what you’re earning now or could be considerably less.
Cost Of Living By Country
So just how much does it cost for people to live in different countries around the world? Here’s a look at the globe color coded by cost of living.
The top 10 most expensive countries might not be where you’d expect: Switzerland, Norway, Venezuela, Iceland, Denmark, Australia, New Zealand, Singapore, Kuwait and the UK. The U.S. didn’t even make the top 20.
Countires with the lowest cost of living are India, Nepal, Pakistan, Tunisia, Algeria, Moldova, Egypt, Macedonia, Syria and Colombia.3
What’s interesting is even though Switzerland is ranked the most expensive country to live in, it got the top spot for highest monthly disposable income. To give you some perspective, living in Switzerland is about 26 percent more expensive than New York City.
Similar to Switzerland, Australia and Denmark also have a high cost of living paired with high disposable income.
Differences In Housing Costs Around The World
The cost of housing is also a big consideration if you’re open to relocating. If you think your rent is expensive, it might not seem so bad in comparison to the most expensive international cities below. The monthly rent for a 120 square meter apartment (roughly 1,290 square feet) costs about $6,277 in Moscow, $6,341 in Tokyo, $6,856 in London and an incredible $10,099 in Monaco.
If you’re looking for more affordable international city living, you could find a 1-bedroom apartment in Taipei for roughly $982, $925 in Berlin, $717 in Seoul, $629 in Lisbon and $449 in Bucharest.4
More Affordable Healthcare Abroad
Although the U.S. has made improvements to the healthcare system through the Affordable Care Act, we are still lagging behind many other developed nations.
Over the last several decades, the gap between the U.S. and other industrialized countries on total healthcare spending as a percentage of GDP has widened substantially. Back in 1980, healthcare spending in the U.S. was 9 percent of GDP compared to 7 percent in Switzerland and Canada, and 6 percent in Japan, the UK and Australia. In 2012, the U.S. rose to 17 percent versus 11 percent in Switzerland and Canada, 10 percent in Japan, and 9 percent in the UK and Australia.5
The cost of healthcare is a big component of retirement planning and you might find the options and pricing in other countries much more favorable to your lifestyle and budget. Take a look below at how the U.S. compares to several countries that offer universal coverage and rank higher on economic freedom.
Food Cost Comparisons By Country
If you’ve ever traveled to Southeast Asian countries like Malaysia, Indonesia and Thailand you were probably ecstatic when you experienced how cheap good eats are over there. For example, a tasty plate of nasi lemak, a staple meal in Malaysia, only costs about $0.50–$1.00 USD in Kuala Lumpur. Try to get the same meal in the U.S. and you’ll probably have to fork over $12–$15 USD.
If you’re interested in moving or vacationing in a new country with cheap food, here’s a look at how food prices compare across the world. Flock to the countries colored in blue if you want to feast for a fraction of what it would cost you in the U.S.
Source: IB Times
Save On Education By Studying Abroad
If you’re worried about affording college tuition for yourself or your kids, you’re certainly not alone. Sallie Mae reported that the average amount families spent for college in the 2014-2015 academic year rose 16 percent to $24,164.6
The good news is there are many countries outside the U.S. that offer free or significantly more affordable higher education: Germany, Finland, France, Sweden, Norway, Slovenia, Brazil, Luxembourg and Iceland. Most of them offer programs taught in English that welcome international students for free or only require small enrollment fees.7
Reduce Your Living Expenses And Start Investing Your Extra Cash
Ready to sell all your stuff and book a one-way ticket overseas? Moving abroad might not be in your foreseeable future, but it’s insightful to understand how much your ability to save can be affected by where you live. The differences in how much people spend around the world on healthcare, food, education and housing are staggering.
Use the new perspectives you’ve gained from this post as motivation to cut back on your spending. Remember, the less you spend each month, the more money you have at your fingertips to invest for your future.
The sooner you get started, the better. Find out how Motif Investing can help you put your money to work. Start investing today in a theme, market insight or innovative trend with just one click. Open a free account today.
1 Eccleston, Janine, “U.S. Or Canada: Which Country Is Best To Call Home?” Investopedia, October 14, 2012.
2 Phelps, Glenn, Steve Crabtree, “Worldwide, Median Household Income About $10,000,” Gallup, December 16, 2013.
3 George, Sergiu, “MAP: Living Costs Around The World,” Movehub, October 19, 2015.
4 McGregor, Jay, “The Cheapest Cities In The World To Work Remotely,” Forbes, August 13, 2014.
5 KFF, “Health Spending In The U.S. As Compared To Other Countries Slideshow,” The Henry J. Kaiser Family Foundation, 2015.
6 Fox, Emily Jane, “ Spending On College Soars 16%,” CNNMoney, July 20, 2015.
7 Stanek, Becca, “The Average Cost Of U.S. Tuition Is $29,408 Per Year. In These 9 Countries, It’s Free,” MIC, December 19, 2014.