When you're researching your options for retirement or work abroad, it's not unusual to run into indexes and rankings of the relative cost of living in different countries. These indexes can be excellent guides when comparing various locations, as they will often include rankings for a particular country's transportation, health care systems, real estate prices, internet, etc. All of these indicators can be used to determine which country best fits your individual requirements and preferences.
Things get a little murkier, however, when it comes to a country's "cost of living." That's because how much you spend has less to do with how much things cost, and more to do with the things you want ... and how much you're willing to spend to get them.
In other words, once you account for the fixed costs that everyone living in a particular location incurs, you can spend as much or as little as you want to.
In Paris, everyone is subject to the generally high costs of real estate, rent, and utilities. But if you're a teetotaler, eat rice and beans, and take walks and people watch for entertainment, you can live pretty cheaply there.
In the Ecuadorian village of Cotacachi, real estate, rent, and utilities are generally low ... But if you need single-malt scotch or a decent bottle of carménère wine, eat at the local five-star restaurant three times a week, and drive your sedan to Quito on the weekends, you can spend a lot of money there.
It all depends on how you want and need to live. The costs of many items that go on the budget lines are fixed, but just as many are completely up to you ... especially the lines for food, entertainment, travel, and home furnishings.
That's why we always urge anyone considering a move abroad to carefully consider what they really need to be happy ... as opposed to what they simply want or are used to having. Especially if saving money is important, it's crucial to know what your requirements are and how you'll deal with them in your adopted country.
If having your favorite brand of peanut butter is crucial to your quality of life, find out if you can get it where you want to live ... and how much you'll pay for it. U.S. brands of peanut butter can go for $7 to $9 a jar in some locations.
Need super-soft, high-thread count sheets? Aged Angus beef? A space foam mattress? Colloidal silver water treatments? Special hearing aid batteries? Roasted red peppers? The latest phone/tablet/smart watch?
Your cost of living will reflect that.
There is no shame if you can't or won't compromise on the things you need to be happy. Everyone's list of requirements for the Good Life is different.
But in our experience, the happiest expats are those who measure their quality of life by the place they live, the adventures they have, and the people they know -- rather than by the things they consume. They don't compromise -- they adapt.
Adapting is one of the most effective ways to take control of your cost of living.