The following is a guest post from Jane Bakerson. Jane writes for Reveal Real Estate a site that aims to improve the transparency of the real estate market in Central America by putting data in the hands of consumers.
Read enough about international living and investing in Central America and you’ll notice references to a cheaper cost of living as one of the primary attractions to making the move abroad. We wanted to test these claims, run some numbers, and see whether it is possible to live well, for less in Central America.
We’ve looked at cost of living in two ways. First by drawing on purchasing power parity (PPP) data released by the IMF to see what US $1000 “adds up to” in various countries in Central America. And second, by preparing a monthly budget for living in Nicaragua.
The theory behind PPP is that exchange rates should adjust to equalize the price of a basket of goods and services around the workld. Taking 2008 data, the equivalent purchasing power of US $1,000 turns out to be $2,629 in Nicaragua, $1,732 in Costa Rica, $1657 in Panama and $1910 in Belize. This looks like good news for those living in Central America. But we have to be careful not to draw too much from these averages as they won’t apply to all product categories.
So we’ve built up a monthly cost of living budget based on the price for goods and services in Nicaragua. We’ve found that you can live comfortably for under $1500 a month as a renter. And if you’ve purchased property and are living in your own home then $1,100 a month should set you up nicely, even taking into account property taxes. We’re including costs for entertainment (meals out, cinemas, trips to cafes and bars), transportation and even a full time maid.
Here’s the breakdown:
Rent $500
Transportation $55
Gas for cooking and hot water $20
Electricity $75
Water $10
Telephone $20
Internet and Cable $40
Full time maid $170
Food $360
Entertainment $250
So there does seem to be some substance behind the claims of “twice the lifestyle for half the price” in Central America. And those moving abroad may be onto a good thing.
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