Here’s How To Reduce Your Cost Of Basic Expenses By 50% Or More
The United States has a high cost of living.
According to the most recent Consumer Spending Report from the Bureau of Labor Statistics, the average American household spends $66,928 a year.
Over 70% of this sum went to basic necessities such as shelter, transport, food and health care.
With inflation currently at 6.4%, costs are only going up, making it increasingly difficult for people to afford essentials.
About 67% of Americans are concerned about being able to meet their basic ongoing expenses. Concern is even greater for people with fixed incomes, such as retirees.
For many Americans, the reality of living paycheck to paycheck is that they don’t have a budget for voluntary spending — things like travel, entertainment, and goods and services that aren’t considered essential but can affect how much they do actually enjoying life.
Although declining, inflation is still high by historical standards. It continues to pose a threat to retirees’ long-term quality of life, but there is a solution that can help mitigate it: retiring abroad.
The costs are so much lower abroad that you can cut your daily necessities by 50% or more just by moving.
This frees up more room in your budget for discretionary spending that can be used to create a lifestyle of great dining, unique cultural experiences and adventure.
Here are three examples of places where you can flip your budget to spend less on essentials and more on things you enjoy.
1. Medellin, Colombia
Medellín is one of the most livable cities in the world thanks to its efficient public transport system, strong infrastructure, friendly locals, large green spaces and pleasant weather all year round.
This high standard of living does not cost a premium. Housing alone offers an opportunity for savings of up to 80% compared to what the average American household spends on housing ($1,885 per month).
Apartment prices vary in Medellín, but around $550 per month is standard for a mid-range, 80-square-meter, two-bedroom apartment in a central area. A similar sized local style apartment in a less central area costs around $360 per month.
Electricity bills stay low in The City of Eternal Spring as temperatures are always in the 60 to 80 degree Fahrenheit range. Because it’s never too hot or too cold, you don’t need to heat or cool your home. Expats spend about $55 a month on utilities.
Living in Medellín also allows you to save money on transportation, which was the second largest expense for the average American household after housing.
Medellín has Colombia’s only rapid transit metro system. It is efficient, easy to use and inexpensive. The standard fare is 2,880 Colombian pesos – about 60 cents.
The average American household spent about $913 per month on transportation in 2021. A monthly transportation budget of around US$100 per household would be sufficient in Medellín.
Another necessity that you can save on in Medellín is healthcare. Health care in Colombia costs 20% to 25% as much as in the United States, and care is superior.
Colombia ranks 22nd for World Health Organization performance, while the United States ranks 37th.
With the same budget as the average American household ($66,928 annually or $5,577 monthly) available to you in Medellín, only 16% to 20% of that would need to be spent on basic expenses, as opposed to over 70 % in the United States states.
That leaves you at least $4,437 a month for voluntary spending, and there are tons of ways to diversify in Medellín. It is a cultural hub, a place where you can enjoy gastronomy, orchestral and theatrical performances, museums, festivals and a generally sophisticated arts scene.
2. Pattaya, Thailand
Pattaya is a seaside resort town located a two-hour drive south of Bangkok on the east coast of the Gulf of Thailand.
It is a vast area that offers everything from sleepy fishing villages, where time has stood still, to modern zones with quality infrastructure and international flair.
Pattaya offers something for everyone, which is one of the reasons it is home to such a large and diverse expat community. Many are retirees who came here on vacation and stayed for the warm weather, low cost of living and simple beach life.
Apartment prices depend on where you live, the size of your apartment and the length of your rental agreement. For $515 per month you get an 80 square foot two bedroom condo in a desirable area about 10 minutes from the beach.
A car is not required in Pattaya, which will help you save on your monthly transportation costs. People get around with ride-hailing apps like Bolt and Grab. With a mix of these plus public transit and taxis, the cost of transportation for two people is about $115 per month.
When it comes to dining, there are a variety of shopping options and associated price points. At the lower end of the price spectrum are Thai open-air markets selling fresh meat and produce; At the higher end are grocery boutiques and Costco equivalents that only sell international brands. Imported goods always cost a surcharge.
Monthly groceries for two, including a mix of local and imported items, cost about $430. This is a savings of almost 40% compared to the amount the average American household spends on groceries.
Quality and affordable healthcare is one of the main reasons to live in Thailand, and the Pattaya area boasts some of the best healthcare facilities in the country.
Comprehensive health insurance for two people costs about $300 a month. Even major procedures cost 50% to 70% less than in North America, and many doctors are trained at leading medical schools in Asia, Europe and the US.
In Pattaya, you could cover your basic expenses with around US$1,385 per month, or 25% of the monthly expenses of the average American household. That would leave $4,192 a month for voluntary spending.
That amount would go a long way in Pattaya. You could indulge in a lifestyle that involves regular drinking and eating well, shopping at the luxury malls, and hiring domestic help.
The beautiful and varied beaches, as well as the water sports associated with them, are the main attraction. World-class golf courses and wellness treatments and practices are other top attractions.
3. Chitre, Panama
Chitré is a beach town on Panama’s Pacific Coast, about a three-and-a-half hour drive west of Panama City.
It’s a small town of less than 10,000 people, but being a local center of commerce and transportation offers the amenities of a much larger city, including shopping, banking, health care, legal advice, real estate and more.
Chitré receives limited tourist attention and has a small expat community compared to other parts of Panama, so prices for everything are low. The cost of living is highly customizable and depends on your lifestyle preferences.
Rent for a two-bedroom home ranges from $450 to $800 per month, which is 55% to 75% less than the cost of housing for the average American household.
One thing you can’t skimp on here is your home air conditioning, which adds up to a monthly electric bill of around $125, depending on usage and the size of the space being cooled.
When you shop for local produce and seafood at the open-air market, you spend about $100 a month on groceries, compared to about $425 when shopping at supermarkets for imported goods, which cost a premium.
Even at the high end of the spectrum, this is almost 40% less than what the average American household spends on groceries.
Owning a car costs about $60 a month for gas and maintenance, but you can do without one if you live in a central part of town and walk or bike from A to B.
With several public hospitals and private clinics in the area, Chitré has quality healthcare. Local health insurance that covers two people costs about $200 a month.
This adds up to a monthly budget of $1,215 to $1,565 for basic needs in Chitré, which is only 22% to 28% of the average American household’s monthly spending.
That would leave at least $4,012 per month in your budget to save, invest, or spend to enjoy Chitré’s unique lifestyle opportunities.
This low-key city is a nature lover’s paradise. It is close to some of Panama’s most beautiful beaches, as well as national parks, golf courses, baseball stadiums, and biking, running, and hiking trails.