“Cost of living” is a borderline obsession for most digital nomads (or “nearly nomads”). We all want to make sure we’re living as cost-effectively as possible – and in countries that allow us to do so – regardless of how much money we’re making.
So it’s no real surprise that two of the questions we get asked most often are “How expensive is it to live in x city?” and “Is it more expensive to be a digital nomad than not?”
Our answers are always along the thoroughly unhelpful lines of “It depends.” Not because we’re trying to be vague or we’re desperate to return to Inbox Zero, but because it really does depend on quite a few factors.
In this post, I’m going to try to be more helpful! I’ll go through:
- What you need to consider when thinking about cost of living
- How to calculate your own monthly spending
- How much we spend on living around the world as digital nomads…
- And how that compares to if we were to live permanently in our old home city of London
Cost of living – what you need to consider
There are set-up costs whenever you move somewhere new
On average, we move to a new country (or at least a new city) every six weeks or so. And while we’ve got it down to a fine art and find the disruption to our work to be minimal, it still costs money to move. I’m not even talking about airfare – we’ll come to that in a bit. I’m just talking about the costs associated with dispensing with one life in one place, and starting up a new life in a new place.
To give a few small examples:
- We have to re-buy everyday stuff we can’t take with us, like washing-up liquid, kitchen foil, toilet roll, sponges, shampoo and conditioner. (Unless we’re travelling by train, in which case Rob will insist we take everything with us – including the washing-up sponge that’s on its last legs.)
- Usually it’ll take us a while to figure out the best, most optimal way to do our food shopping. We’ve been known to rock up at Spanish supermarkets that are closed due to “siesta time”, and it took us five days in Budapest to realise that rather than traipse around three different stores to cobble together our groceries, we could just turn left out of the apartment and find ourselves in a large, cheap supermarket that sells everything. (Google Maps didn’t tell us about it.)
- We might have to buy new plug adapters, or a multiway adapter if there are hardly any plug points in the apartment.
- We might need to buy new SIM cards and data.
Set-up costs, basically. And the more frequently you travel, the more you have to pay them.
If you stay longer, you may get a better deal on your accommodation
We stay in Airbnb apartments wherever we go. It’s more expensive than taking out a lease on an apartment, but I doubt we’d be able to take out a lease unless we were staying much longer than six weeks.
Even if we were to stay in a city for much longer (say six months), we’d probably still use Airbnb rather than take out a lease – it’s just a heck of a lot easier. The apartments are always fully furnished and come with towels, sheets, crockery and cutlery, etc. Plus we don’t have to worry about setting up or paying separately for electricity, water, gas, and – most importantly of all – wifi. It’s all there when we move in, and factored into the cost of our stay.
You might prefer to take out a lease instead though, because it’s bound to be far cheaper. If so, Numbeo provides good information about rental prices. Numbeo uses crowdsourcing to get approximate cost-of-living figures for cities around the world. You can of course also look at rental listings in that area.
What does a good time look like to you?
How do you like to work – from home, in a coworking space, or in a cafe?
What do you like to do when you’re not working – wander around town, go out drinking, go for coffee, eat a fancy meal out, have a massage, go to the gym?
Many of these activities vary widely in cost depending on the city – and it’s not just the case that the more expensive the city in general, the more expensive the activity. To get an idea of prices, you can consult Numbeo again.
We particularly like the Numbeo “cost of living comparison”: you enter two cities and can see how much it costs to buy a pint of milk, eat a two-course meal in a restaurant, rent an apartment, use public transport, become a member of a gym, etc. in each one. It’s a good way to compare the city where you live now to a city where you want to live as a digital nomad.
Are you willing to change your habits to fit in with each new city?
I wasn’t much of a wine drinker until I went to Spain and realised that I could get a glass of wine in a bar for about 50 cents cheaper than a soft drink – AND I got tapas (or at least some olives) for free! That was more than enough to persuade me that wine is the way to go in Spain.
Rob used to have a great membership rate at his local gym in London. He can’t get anywhere near as good a rate anywhere else in the world, so these days he just exercises from the apartment or goes for runs around the city (which are much more enjoyable than in London because it isn’t usually pissing down with rain).
In Chiang Mai we’d take songthaews everywhere. (They’re like a cross between a bus and a taxi: you flag them down and they’ll take you to the door of your destination, but you may have to share your ride with other people. It cost about 60 cents to get to the other side of town.) That’s great for Chiang Mai, but in other cities we have to be prepared to change our ways and take public transport or walk instead of taxis.
For other things though, we’re simply not prepared to change our habits. We work from wifi cafes as much as we can, and if a particular city charges extortionate rates for coffee, so be it.
It makes sense to think about these things in advance, and – using Numbeo and other blogs to help you – figure out if you’d be prepared to change your habits (or put up with the costs of existing ones) when moving to new places.
Don’t forget to factor in flights!
Chiang Mai is cheap. Really really cheap. But if you’re only going to live there for two months and you’re flying over from the States or Europe, you’ll think twice about posting a “HOLY F**K – I JUST GOT AN HOUR-LONG MASSAGE FOR $4” status update on Facebook: a return flight from London costs us about £1,200 ($2,050) for two people. Calculating our monthly living costs, that’s £600 ($1,025) a month on top of what we spend when we’re out there. It’d actually be cheaper for us to spend two months in Spain — even though accommodation is about 150% more expensive, and a meal out costs five times more.
Flying to super-cheap digital nomad hubs makes more financial sense when you stay for extended periods of time… although remember to factor in visa runs/extensions when calculating your cost of living.
How luxurious does your accommodation have to be?
In the good old days when we first got started, we’d live in the teensiest studio apartments. The smallest was a 19m² windowless basement in Queens, NY – where we stayed for a fortnight during a 40-degree heatwave. The water outlet for the air conditioning unit was indoors with us, so every morning we’d have an overfilled bucket on our hands, along with a flooded floor. The shower didn’t have a curtain either, so we pretty much always had wet feet. Oh, and the wifi (and wifi password) actually belonged to the hair salon above us – hence a seriously crappy signal.
It was actually fine, but today there’s no way we’d want to live and work somewhere like that. We’ve become far pickier, because we know that spending a bit more on our apartment make us much more productive and comfortable.
As a result, the cost of renting has increased for us. Our apartment in Valencia cost us about £740 ($1,260) for the month; we could have spent as little as £450 ($770) if we were willing to live somewhere much smaller and outside of our favourite area. Or of course, we could have spent upwards of £5,000 ($8,560) if we wanted somewhere really luxurious.
Before you can figure out the cost of living in a particular city, you need to decide how much your accommodation is going to cost – and that depends on your preferences.
How to calculate your cost of living
The above “things to think about” are important and helpful, but of course you’ll only really know how much you spend if you keep track of your own expenses and see what your spending habits are.
We’ve been calculating our monthly expenses for well over two years now – before we even became digital nomads. As a result, we’ve got a pretty good idea of where is expensive for us to live, and where is mega-cheap (based on how we like to spend our time and what sort of accommodation we prefer).
Here’s how you can calculate your cost of living (based on what we do)
1: Use The Birdy every day to record your day’s expenses
With The Birdy, you reply to a daily email listing everything you spent that day – and you can use a really clever hashtagging system to divide up your daily expenses into anything you like. A few of the hashtags we use (frequently) are #coffee, #groceries, #transport, #mealsout. You can then go into The Birdy dashboard and view pie charts depicting your spending habits.
Barcelona last year was the first time we spent more on wine than we did on coffee. In Chiang Mai, the #massages hashtag gets used way more than #groceries (we mainly eat street food when we’re there). And in London, #takeaway makes a fair few appearances – as does #health (because we do all our dentist/doctor/optician stuff when we’re there).
2: Incorporate your flights!
Divide the cost of the flight between all the months that you’ll be staying in the place that you flew to.
3: That’s it!
At the end of each month, look through and see where your money’s gone. You can use the information to figure out what your priorities are, and then use Numbeo (or other travel websites) to see how much those things would cost in other cities.
What’s our cost of living?
The figures below are for two people.
Although some cities are more expensive for us than others, we’ve actually found our spending to be quite consistent – probably because we do adapt quite a lot to where we’re living.
For example, in Berlin we found the accommodation to be more expensive than cities like Valencia. But drinking out was also more expensive – and because we’re not that fussed about wine, and the general vibe of Berlin felt less conducive to wine-drinking, we did it less. Instead, we cycled a lot, read our books in parks, and spent time with friends in coffee shops.
The same sort of principle applies to every place we stay: we spend less on some things, more on others, and the overall amount is somewhat consistent. It might not be so consistent for you if you choose to or have to stick to certain spending habits. Also, we spend a lot of time in Europe; although the costs of each country vary, they’re nowhere near as varied as, say, living in Saigon and then moving to Sydney.
We spend £2,000 ($3,400) per month, give or take, wherever we are in the world. That includes flights, public transport, food, accommodation, visas, meals and drinks out… everything.
- SE Asia, because we stay for at least three months and the cost of our flights is split between them. It usually works out at about £1,000 ($1,700) a month. That’s why it pays to spend months and months in SE Asia.
- New York. I think we spent over £2,000 ($3,425) a month on accommodation alone.
If we were to stay put in the UK, would we spend more or less?
I’ve used Rightmove to find a one-bedroom rental apartment that’s equivalent to where we lived before we left – because if we were permanently living in London, we wouldn’t use Airbnb. That apartment is £1,500 ($2,570) a month. (Clearly we could find cheaper places to live in London, but my calculation is based on where we would live if we were back in the UK permanently.)
The last time we spent a full month in London was early August to early September 2013. I checked The Birdy for that month and removed our flights in and out of the city from the total (because we’re assuming we live there full-time). That amount came to £1,000 ($1,710). I then added on £200 ($340) for the council tax and bills (gas, electricity, water, internet) we’d have to pay.
So the total amount we’d spend each month would be about £2,700 ($4,620). Not too bad, considering it’s London, but at the same time we get to spend less than this and have the time of our lives living around the world.
While this sort of calculation is fun to know and useful from a general interest point of view, it shouldn’t really contribute to any decision-making about whether to be a digital nomad or not: if you want to do it, you’ll find a way to make it work – even if you currently live in Thiruvananthapuram.
Finally, why ARE digital nomads so obsessed with cost of living?
I do believe digital nomads (or those considering digital nomadism) spend more time thinking about prices and the cost of living than “normal” people.
And I think it’s for a few different reasons:
- Prices vary so widely as we move around. People who stay put in one place just pay $3 for a coffee without thinking about it; if they go on vacation for a week and spend more or less, that’s fine: it’s a vacation and things will go back to normal soon. For us, it could be 50 cents for a month one month, then $5 for a month the next.
- We have the CHOICE of where we live, so we can factor cost into our general “where shall we live next?” calculus along with other factors that influence our happiness.
- People who are considering digital nomadism want to know how their finances will differ from what they are today, so that they can create a realistic plan of action.
- Digital nomads are almost pre-disposed to question the status quo about how to live and what to spend money on. We want to make sure we’re optimising our spending wherever we live, and we don’t want to spend money unless it’ll generate more value (in terms of health, wellbeing, enjoyment, etc.) for us in return.
What do you think?
Care to share how much you spend monthly?
Or what you use to keep tabs on your spending?
Do you have any tactics for figuring out where to live next?
What do you prioritise when it comes to choosing where to live?
Is anywhere completely off-limits for you because you can’t justify how much it’ll cost (even if you can afford it)?
Are you a newbie digital nomad? Has this post helped or hindered?!
Let me know in the comments!