Is it Really Cheaper to Live in Portugal?
We share what we spend...
Many of you asked about the cost of living in Portugal. I wrote about this first in July 2021 and things were a bit different. For example, we rented an apartment and did not own a car. So today, I will share what we are spending in 2023.
What Remains the Same
While we live in a different city and own a house and a car now … what I wrote 2 years ago is still true:
When someone asks me what it costs to live in Portugal, my response is about 25% less than it did in the States. …[but] it depends on the choices one makes. If you went out to dinner 4 nights a week at home…you will likely do that here. If you enjoy live theater and concerts…you will buy such tickets here. If you rent in Cascais or Lisbon you will spend 3-4 times more on rent than if you rent in Estremoz…it is like comparing Southern California to Oklahoma.
The other “truth” is we all come from different places financially. I was fortunate to have a mother who taught me to budget. I would watch her place money every Friday evening into envelopes marked Utilities, Mortgage, Groceries, and Savings. I was taught to pay myself first and was always a dedicated saver. As a child, I literally took my quarter (allowance) to the bank and deposited it into my savings account. (Funny story: When I headed off to college I wanted to withdraw some of the money. My signature had changed just a bit from the 6-year-old’s one they had on file. My mother was required to go to the bank with my birth certificate to prove I was me.)1 I was also fortunate to work in an industry that compensated its salespeople very well. That along with Denise’s pension and savings make us very comfortable. Not super rich by US standards, but retiring with no debt, we could live comfortably in the US. I realize not everyone is this fortunate. Professions that contribute far more to society, are paid far less. (The average US Social Security check in 2023 is $1704, and the median net worth at age 65 is $266,400.)
What We Spend
Because I love my readers and have a lot of free time, I spent a few hours going through our online bank movimentos (a checking account register). I learned we withdraw cash a lot here. (It is pretty easy with 3 Multibanco machines, i.e. ATMs, within 3 blocks of our house.) I also am pleased to report, that we spend the largest percentage of our budget on Travel and Fun…followed by Food and Liquor. While my liver may not be happy…I am!
So let me provide a detailed breakdown:
We own our home2, but I “budget” a certain amount each month for ongoing maintenance. No, I don’t have envelopes squirreled away in a bottom drawer…this is just to reflect the minimum expected amount. If you don’t already live in Portugal, you are likely shocked at how little we pay in Real Estate Taxes. For many Americans that is their daily expense!
While there has been inflation in Portugal since I last wrote we still are spending about the same for groceries. (Please note, that we do not purchase meat.) We eat out more now than we did in 2021…also there is a wine store within 10 meters of our front door. Lovely people who we are getting to know very well…in fact, we invited them to our home for happy hour! I wonder if they will bring a bottle of wine?
Our medical insurance premiums will definitely go up next year…we hit the next major milestone, 70! (I am still shocked by that number, even when I write it!) We also pay €18 for most office visit copays, €1,80 for my monthly Gabapentin prescription, and a bit more for non-covered services. But I averaged it out for the purposes of this budget.
We purchased a car that came with 4 years of extended maintenance3… many people do not own a car. (I started paying for cars with cash in 1995 … I recall my grandfather always did ... setting aside a “car payment” in a bank account just for this purpose. Perhaps I should show a monthly accrual for car replacement, but this is to provide a rough idea. It is not a doctoral thesis.) Our car is diesel and while diesel is less than gas here, it is still pricey when compared to the US. As I write this, the average price for gas in Portugal comes out to $7.59/gallon; for diesel, you would pay $6.98/gallon. BTW: Our car insurance is with USAA. Yes, they insure cars in Portugal. I am not sure it is cheaper…but we have always loved their service.
I have amortized banking and accounting fees (Portuguese tax preparation). Denise gets a massage every week, and we both get our hair cut (me every 4 weeks, Denise every 6-8). I must admit the rest are educated guesses. We really don’t go overboard on gifts, clothing, etc. … when we see something we want we tend to buy it.
Finally, I know what we spend for our annual golf and pickleball memberships, and I know what we spend on Streaming services, Apps, and Digital Subscriptions. The rest are guestimates…but I think they are pretty close. The travel figure above reflects this year’s vacations. We traveled less than we would have liked due to overseeing the construction and our twice-a-week Portuguese classes. But we plan to travel more in the coming year, and this will likely increase.
Grand Total
So if you do the math, we spend about €52,656/year living in Portugal. On the day I am writing this (12 September 2023) the exchange rate would make this equal to $56,434/year. As I mentioned above, we do withdraw a lot of cash … many restaurants in VRSA only accept cash. I have accounted for some of the cash above, but probably not all of it. That along with the fact that we are able to buy something when we see it, suggests that we likely spend more! But the purpose of this post is not to say what we spend, but rather to give you an idea of what you might expect to spend.
And if you want the rudimentary budgeting spreadsheet I used, which allows you to enter your own estimates, it is here in Google Drive. I believe you will have to ask me to share the spreadsheet, which I will approve as quickly as I can. I suggest you “Make a Copy” of the spreadsheet (this function is available under File. That way you can keep your numbers private. I did not want to make everyone “Editors” as they would then change “my numbers”. If someone knows how I can protect my cells let me know and I will offer this to everyone without request.
Até logo, espero que isto o ajude,
Nanc
Editor’s Note: The electric amount showed above is incorrect. After receiving several more bills, including summer and winter months I can now report that our electric bill runs about €150/month.
Some folks mentioned that they hated scrolling for footnotes, so I included the prior tidbit in the body of the post. If you wish to offer an opinion, please Comment.
We did not have a mortgage in the US after 2008. As such, we bought in California for cash and our goal was to replace that home (including furnishing, dishes, etc.) for no more than the proceeds from the California sale. As you will learn in the coming weeks, we were able to do that.
Our only expense when we have routine service once a year is to pay for the oil.
Your housekeeping expense at 88e surprised me (maybe 1 or 2x week?).
We have a hardworking local lady who we pay 60e each week (I paid $110 in U.S.). She never told us what to pay but in asking around I learned a range of 8e - 15e/hr.
We went with 15e because housekeeping is hard work and she’s in demand - so we wanted to make it attractive to hire her & keep her.
We pay her each week even if we skip the week (for whatever reason) and during time away - like our 2 months away this summer (she came to get the mail, water plants and dust/vacuum).
This gentle, sweet Portuguese woman is in her late 50’s and has known no other work.
I simply point this out for others planning to figure in housekeeping. I find generosity is preferable. This is her livelihood and for the cost of a nice meal out we get her for a full half a day (+ travel - she’s about 20 minutes away). We find that it’s not about paying as little as one can get away with - but what we can well afford. Respecting and honoring others by contributing to a living wage is one way we feel good about fitting into our newly adopted country.
I doff my hat to anyone who has a seperate line item, in the budget, for wine and liquor. We just roll that figure straight into our food costs. It would scare me to know the exact figure. :-) Until moving to Portugal, it was always my job to be in charge of budgeting and all things concerning money. It is now on Mike's plate. I am now clueless about what we spend. I do know that almost everything here is noticeably cheaper with the exception of rental property (we are in Lisbon) and electronics. Thanks for sharing your deets.