Where $1,000 a Month is “Middle Class”

$2 appetizer platter at a nice restaurant in Nicaragua

“If you make $1,000 a month, you can drive a small car, take your family out to decent restaurants sometimes, and visit a place like this on the weekends.” That was an offhand comment from my Nicaraguan guide Pablo when we were at the overlook area checking out Lake Apoyo between Managua and Granada . “On that salary, you are middle class here.”

A lot more people are stepping up to that level in Nicaragua as the economy keeps improving and its relatively low crime rate make it a place international companies want to invest. If you’re coming from a developed country though, it’s an incredibly cheap place to live.

I do an annual post and individual country rundowns on the cheapest places to live in the world and there’s one key thing they have in common: most people earn less in that country than most people earn in yours. The big picture really is that simple. If you come from a country where the median income is above $40,000 per year, as it is in the USA, Canada, or Australia, then you’re clearly going to feel richer if you go live in a place where the median income is more like $6,000 a year. Even if you’re just living off a Social Security or pension check.

1/5 the price of Safeway, Kroger, or Tesco

These official numbers are kind of clumsy, of course, whether you’re talking about median income , per-capita GDP , or some other yardstick. Some “work” isn’t counted correctly, bartered goods don’t figure in, and naturally people under-report their real income if there are tax implications. Still, whether an average worker in Nepal makes $600 a year or $900 doesn’t make a big difference for my point. Compared to the Nepalis you’re loaded, even if you’re making the equivalent of a fast-food burger flipper.

If you’re living in a more expensive place, however, your money is worth less. Your purchasing power is crappy. Per-capita GDP may be almost six figures in Norway, but you’ll pay out the nose for virtually everything you would spend money on. It may be only 1% of that in Cambodia, but you can find a good meal for a couple dollars. In a sit-down place with a waiter. Then in the U.S., you have to factor in health care costs, which are astronomical if you’re not covered by a company health plan. This illogical, for-profit arrangement does not exist in most of the rest of the world.

Which brings us back to my travels in Nicaragua earlier this month. I was working on a few articles on assignment, so I had an English-speaking guide driving me around, one who had grown up in Miami and then moved back to Nicaragua when he was in high school. He wants to get back to the USA at some point, to take his kids to Disney World, but he’ll keep living where he is. His electric bill is usually eight or nine dollars. His house is paid for. His family eats very well on what he makes.

House in the center of Granada, for the price of a BMW…

I had coffee with a retired couple living in Granada and I’ll profile them in the book I have coming out later this year. “My pension alone is 3-4 times what the average Nica makes,” Jim told me. We spend around $1,800 a month, which is extravagant by local standards. We live in a big air-conditioned house with a swimming pool and pay $650 a month in rent. We eat out whenever we want, wherever we want. Medical care is so inexpensive here we don’t even have insurance. We just pay for things as they come up. I had to go to the best hospital in Managua for surgery and it was cheap enough that I put it on a credit card.”

Another couple I’ve been corresponding with there has lived in Leon, Granada, and now San Juan del Sur for around $1,400 a month, while having a really good time. They’re sensible with what they spend, but not all that frugal when it comes to having fun. Their housing is only $300 of that.

$4 – $8 for a bottle of rum with set-ups in a bar

I like Nicaragua and I could live there, but this is just one country out of many that will have a detailed chapter. It’s one of the best deals, yes, but there are plenty of countries out there where the per capita GDP is 1/4 or less than what it is where most people reading this blog are from. Some of them have pretty good infrastructure too: popular destinations like Mexico, Turkey, Thailand, and Colombia. It’s just that a “middle class life” has a much lower price tag.

After surveying people who have signed up for the Cheap Living Abroad e-mail newsletter, the verdict is in on the book title:

A Better Life for Half the Price

The second and third choices will get worked into the subtitle.

For those who are serious about cutting their expenses in half and upgrading their life in the process, there will be other packages available with worksheets, webinars, and more. Details to follow, but sign up here to get the inside scoop.