The Cheapest Country To Live In?
Our readers are increasingly turning to us and asking us to help them find the cheapest country to live in, retire to and expatriate to abroad so we have produced a guide dedicated to anyone searching for the cheapest country to live in overseas
As you can probably imagine, we are contacted every single day by readers who are thinking about starting a new life abroad – and a very common question we’re asked by such people is: ‘what’s the cheapest country to live in?’
Inflation in the UK is far outpacing interest rates which means that anyone with any saved or invested wealth in Britain is seeing their asset pot dwindling, and at the same time, the cost of living in the UK is far from comfortably affordable for many people. Other people are fed up with the number of hours they have to work just to keep their heads above water – and the one thing all of these people have in common is a desire to know if there is a more affordable place to enjoy a decent quality of life abroad.
Because affordability is a driving concern for an increasing number of people, and because people really do want to know which is the cheapest country to live in abroad, this article sets out to discover where we can move to live abroad and see our money go far further.
Where is the Cost of Living Lower Abroad?
Inflation in the UK is running at about 3.2% according to the very latest figures released, and some grocery prices are up by 58% since 2007. Bearing in mind that everyone in the UK is being squeezed in terms of having to afford this increased cost of living, whilst at the same time many are enduring an untenable situation in terms of job instability, it is of no surprise that so many people are actively looking for a new and better life abroad.
So, just where is the cost of living lower abroad?
In nations that manufacture or grow much of their own produce in terms of food and fuel, the cost of day-to-day living can be much lower. Britons moving abroad to such nations need to learn a new way of shopping however. In Britain we can go online, fill a virtual shopping basket at Sainsbury’s and have it delivered to our door with the price of goods being deducted from our debit card. We can remove ourselves so far from the shopping experience that we forget to think about what’s locally produced, what’s in season, what has travelled fewer food miles and therefore what is better value to buy.
In many nations abroad where food is available to buy in abundance from local markets and where the local people shop at dedicated suppliers for their goods and even their services, costs can be far lower. And Britons need to learn not to head to the local supermarket, but to shop, barter and buy like the local people.
For example, in a country like Malaysia you will find your living costs are far reduced – that you can buy your food cheaply, you can eat out affordably and you can even buy beautiful silk and cotton clothing for very reasonable prices. This is because you can buy meat and fish in so-called ‘wet markets’ where the producers sell direct to business and the public, and you can grow almost anything in the Malaysian climate in terms of fruit and veg so as a result, fruit and veg are cheap!
Anything locally produced is cheap in relative terms for a Briton living in Malaysia.
However, you don’t have to travel so far to find a more affordable cost of living. You just have to learn how to shop and think about which nations produce or manufacture affordably. Turkey is a number one choice if you want affordability for example – it produces a great deal of food, it manufactures a wealth of goods that are sold in British shops under designer labels, it’s a country that has on average a relatively ‘poor’ population, therefore for Britons who are far wealthier by comparison, Turkey can be highly affordable.
When looking for a country you can afford to live in think about the average wages of those living in that nation. Think about the food and goods, services and even fuel that nation produces. Think also about what they don’t manufacture and what will be subject to importation costs and therefore perhaps be more expensive than in the UK. If you understand how items, goods, products and services are valued and sold on to the consumer, you can look at each country in turn and determine whether potentially its cost of living could be more affordable for you. However, there is one more aspect to factor in at this point and that is…taxation. Even in a nation where the cost of producing and manufacturing is cheap, tax can push up the final cost to the consumer.
Where is Tax Lower Abroad?
The Chancellor in the UK made a statement yesterday that really infuriated many people – in his statement he said, to paraphrase: ‘that the massive cuts to public spending were essential so that future generations will not have to bear the cost of this generation’s debt.’ In so saying, he basically accused us all of being responsible in some way for the huge deficit and the crumbling state of the economy in Britain. However, in reality the government and the greedy banks in Britain have spent all the taxpayers’ money, therefore the ‘blame’ for the ‘debt’ should not be levelled at us. However, levelled at us it has been – and to pay it off the government is cutting spending and increasing taxes. So is it any wonder that according to a new survey by Aon, out of all European nations Britain is the one with the most dissatisfied population of all?
With the highest rate of income tax in the UK now 50%, it isn’t hard to find countries that tax their citizens and residents less! However, goods and service taxes as well as income, inheritance, capital gains and even property taxes need to be taken into account when you’re seeking a lower taxed nation.
There are some countries in there world where there are no significant taxes to speak of – many in the Middle East such as Saudi Arabia and Dubai are income tax free. But any gains you can enjoy are soon eroded by the cost of living in such locations. Other countries such as Cyprus tax pension income at a fixed rate of just 5% which can help retirees who are looking for a more affordable nation for example. And then there are the likes of Belize, Malaysia and even the Philippines where there are retired persons’ incentive programmes that you can access from as young as 45, (depending on the nation), and where you can enjoy foreign sourced income 100% free of local income taxes.
But for the rest of us, or for those who don’t want to move so far afield – where can we pay less tax abroad? In Europe Bulgaria, Estonia and Lithuania all charge a flat tax rate. Alternatively on a more global scale, France, Latvia, Malaysia, Mexico, New Zealand, Russia and Switzerland all have lower personal income tax rates for workers than the UK. And of course, we must mention the fact that as soon as you become non-resident for tax purposes in the UK, there are often excellent ways you can save, invest and even enjoy an income from your wealth 100% free of tax. It may be that you can defer tax on money invested until a point in time when you are a lower rate tax-payer (such as when you retire maybe), or it may be, depending on the country you move to, that by keeping your wealth outside that country it is legally free from any tax. These are options we encourage anyone thinking about moving abroad to discuss with a qualified and experienced expatriate financial or wealth adviser.
Where is the Cost of Property Cheaper Abroad?
We Britons like to own our own home – it is an ambition we are almost pre-programmed to aspire to from birth! However, over the past decade the real cost of owning a property in the UK has slipped beyond an increasing number of people’s reach as inflation in the property marketplace has far outstripped average wage inflation. Now the UK housing market is also questionably poised on the brink of a fallback in terms of values and the mortgage market is still restricted in terms of lending, it is no surprised that according to recent research from Moneycorp, up to 1 in 4 Britons thinking about buying a home are now looking abroad.
So, where in the world is real estate cheaper than in Britain?
Fortunately if your driving concern when seeking out a more affordable nation is that real estate be affordable you have a lot of choice. Britain is really ‘over priced’ if you compare it like for like with some very beautiful and desirable countries around the world. You can buy affordable property in Spain now that the market has gone bust there – you just need to ensure the property you buy is completed, within a fully developed community, that you will get the deeds once you have bought and that you negotiate hard on the asking price.
You can still buy ‘cheap’ property in France if you step off the beaten track – although compared to our fairly cheap DIY chains in the UK, renovating or even re-decorating your home in France can be quite costly. You can buy huge and fabulous property in Argentina as long as you move out from Buenos Aires – and if you look at the countries whose economies have been hardest hit in recent years, there are real estate bargains to be bagged.
America is a prime example – it’s economy suffered greatly from the global economic storm and its real estate market was hardest hit. As a result investors are buying up foreclosed property assets cheaply. You could get in on this wave and purchase yourself an affordable home…however, you do need to factor in the additional and ‘hidden’ costs of buying in any nation you are attracted to.
Going back to France for a moment, it can cost at least an additional 10% on top of your property’s value to actually buy it. In all countries you have to consider notary and/or solicitors’ fees, taxes, escrow costs and property registration costs too when looking at how much a property will cost you.
Where is the Standard of Living High on a Tight Budget?
If you want a decent standard of living and you don’t want to have to pay through the nose for it, it’s worth looking around the world to see where there is a balance in terms of the living standards of local people, and the average wage. For example, a country like India could be a very affordable place to live, (depending on where you chose to base yourself), but because the average wage across the nation’s massive population is incredibly low, you may struggle to achieve a decent standard of living according to your personal requirements.
On the other hand, in a location such as Dubai the general standard of living is accepted as being affluent and desirable – and yet the average wage needs to be very high and workers work long hours to earn enough to afford this quality of life. Striking the right balance can be hard.
Two nations to potentially consider – or use as your benchmark to guide your personal decisions – are Turkey and Northern Cyprus. These countries have a low average wage and yet the quality of life achievable can be decent even on low wages, it can be very good on a modest income and it can be exceptional on a Western style salary. In doing your research look at the quality of life that is really realistically achievable by at least middle classes on relatively tight wages/incomes compared to what we are used to in the UK, and you should be able to find yourself a location where you can ‘buy’ the quality of life you aspire to without having to break your back to achieve it.
Where in the World is the Exchange Rate Favourable?
Last year there was non-stop speculation in the media about how the strong euro was crushing the weak pound and making it almost impossible for some expatriates now living in Europe to afford their lifestyle on their British sourced budget…now that the eurozone has been undermined by the economies in nations such as Greece and Spain the pound is not so badly affected as it once was. That’s not to say the exchange rate is going in our favour though – so where in the world can the pound buy you more?
Unfortunately every currency broker in the world will always ‘value’ an opposing currency against the pound by looking at our economy in the UK – and because the economy is so far from healthy the pound is not making any significant and lasting gains against any currencies at the moment. It rallies against the euro and the dollar occasionally, but most of its gains then fall back. What this means is that Britons have to now learn about getting the most out of any currency exchanges they do.
As a nation were once so complacent about moving money internationally because we could afford to be – the pound was so strong that even moving our monies through banks and enduring their poorly competitive exchange rates and high costs was just fine because the amount of foreign currency that came out the other end of the exchange process was still loads! Nowadays we have to work hard to get the most out of our money.
Fortunately, at the same time the increase in the number of professional companies available on the high street and online to assist us to move our money abroad at competitive rates has increased. Nowadays most people are aware that they will get better rates and lower charges if they use a dedicated FX (foreign exchange) company for their money’s movement. However, if you’re moving abroad you need to learn about forward contracts available from such companies that can even mean you may get more from your currency transfer.
Forward contracts are useful to those who regularly transfer an income into a new currency – such as retirees moving abroad and still getting their pension income paid to them in pounds. They can also be useful for anyone committing to buying a home overseas and who will need to move a fixed lump sum on a given date.
So, until the pound consistently rallies – make sure you work hard to get the best rates of exchange on your money, seek out a reputable and regulated currency broker to advise and assist with your money’s movement abroad.
So, Which is the Cheapest Country to Live in?
As this report has probably shown you, many nations can be cheaper than the UK in terms of taxes, the cost of living and the cost of property – and because there are plenty of countries out there not overburdened with debt, the lifestyle achievable can be much better than in the UK where we are all having to work harder and harder to pay of incomprehensible levels of debt that we are not responsible for.
Finding the right country for you is more important than finding the cheapest country in the world – otherwise we’d all be living in the poorest nations in Africa or Asia. Hopefully the information, ideas and research contained in this report will guide your decision making – but really, there is no substitute for paying a visit to any country you favour and spending an extended holiday there living as a local so that you can get a feel for what it is going to cost you once you make it your permanent home.
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