YouTube offers endless videos that tout the best cheapest countries to live in. Most come off as AI-generated lists narrated with a creepy electronic voice, which might stack up statistically but fail when you scratch the surface. I live outside the US now and have done for a total of almost eighteen years. When I see these reports, my familiarity with the challenges of life abroad always makes me question the arguments for each destination. Generally, these lists provide little of the kind of real-life knowledge you need when deciding where would be the best place to live for you outside your native country.
Most people looking to live abroad should have a few priorities in mind when they consider where they might choose to settle. Much will depend, of course, on the stage of life you are in, whether you’re a young digital nomad or a retiree. However, the list I offer is a sensible one that should apply to just about anyone.
Here are the priorities to have in mind when you consider the best affordable countries to live in, listed in alphabetical order.
Cost
The cheapest destinations always have big appeal. So much so that you might find you’re in danger of lying to yourself about some critical trade-offs you could be making. I don’t have statistics to back this, but I suspect this is a major reason why people who choose the least expensive countries in the world soon find themselves homesick and looking to get out. The cost of living leaves you feeling confident about the future in the short term, but the value you get for what you spend leaves much to be desired.
This is the balance that’s hardest to get right. Destinations like Costa Rica and Mexico closer to home or Thailand and the Philippines further afield may meet your criteria for affordable living, but the overall quality of life might be substandard – it’s just not what you’re accustomed to. I don’t single out these or any countries for that matter as destinations to avoid; it is only to make the point that affordable locations like these may have shortcomings you wax over in the early days only to regret later.
When you’re considering where you might go, draft a list of those countries that appear to be the most affordable for you. Then expand that list by adding a few countries which on paper look above your budget – a bit like when you are in the market to buy or rent a house. Because with many destinations, you may find hidden costs which make a budget country more expensive than expected. Equally, you may find unexpected savings in a more expensive destination that bring down your total costs (yes, this can happen. It’s been my experience after relocating to Austria). In other words, apply a healthy measure of skepticism to whatever you hear on YouTube and elsewhere (including what you read here). Once you’re in the country of your choice, you will likely discover some levers to pull which can adjust your budget in a way to make it acceptable for the long haul. Don’t rule out your dream destination based only on what you hear on-line.
Healthcare
If you’re healthy, you may be tempted to accept whatever healthcare you get in the country you choose. But keep in mind that the unexpected can happen at any time, at any age, whether it’s an illness (how about a kidney stone?) or an accident (a car crash). Both happened to me in Croatia just a couple of months apart.
To the extent possible, it’s worthwhile to get a sense for how much you can rely on the healthcare system of your chosen candidate countries. Even if you conclude public healthcare is inadequate, this may not be a dealbreaker; you just need to know what you’re dealing with.
When I moved to Croatia, it was with a clear understanding that the healthcare system was inadequate. Croatia has an admirable policy of universal coverage; however, the quality suffers from insufficient funding, among other things. A major news story while I lived there, for example, was the significant debt the Croatian government owed to pharmaceutical companies. The system was consequently facing undersupply of much-needed drugs. Some of the other issues the country faced at this time were an insufficient number of staff (many had emigrated or retired) and the unavailability of medical services in more remote locations, like the many islands.
This is not a wholesale critique of the Croatian healthcare system. I received good care in clean and modern facilities during the time I lived there. They excel in a number of areas, including most kinds of rehabilitation, for example. However, funding for healthcare, from education (one young doctor told me the only available textbook for her specialty had been published in English in 1964) to the availability of drugs, as previously noted, undermines the quality of the service.
There are private clinics available in Croatia, as there are in most European countries. Compared to the US, these are affordable options. However, not all specialty areas were well represented in Croatia, while in Austria, it is possible to find a private doctor in any specialty. Payment and possible reimbursement function differently in each country. In Croatia, you pay to see a private doctor and do not receive any reimbursement, unless you have international insurance, which I will come on to next. In Austria, if you see a private doctor, you can submit the invoice to your insurer and receive a partial reimbursement (the amount varies depending upon the specialty area and services or procedures you received and your insurer).
If you choose to live in a country with a less-developed public healthcare system, you have an option. You can purchase international healthcare coverage. You decide to what extent you want to rely on it. You may choose a blend of public services for minor health concerns and private healthcare providers for more specialized or serious issues. I am familiar with three companies which offer international healthcare coverage: Allianz, AXA, and Cigna.
The offers from these companies are broadly similar, although check their websites for the details, as there is a lot of fine print (although far less than in the US), and offerings can change at any time. Basically, insurance is provided to anyone of any nationality who lives outside the US.
I have a policy with AXA. I can receive care in any country in the world except the US. The services offered can be tailored to fit your specific needs from full coverage for doctor’s visits and prescriptions through to “light” coverage that is essentially a form of insurance against catastrophic illness, where the low cost of coverage is offset by a high deductible (this is what I have).
To put this in perspective, especially for those familiar with the cost of healthcare coverage in the US, I paid about $2,500 to be covered by both the Croatian public healthcare system and AXA for the year. In Austria, it is closer to $3,500 for coverage from both. If I include the annual cost of visiting private doctors and prescriptions in Austria, the total works out to about $5,000. This is affordable healthcare.
Explore the options locally and globally to arrange for the coverage that provides you with the peace of mind you need.
Language
This has been for me the single most daunting aspect of living abroad. No matter what anyone tells you about English-language expat communities, or how much English is spoken by the locals, when you face a challenging situation (and you will), whether it’s with a utility company or a hospital, not knowing the language with some degree of fluency will be a problem.
My preference has, for the most part, been to live in a country with an official language I would like to speak. Learning a language even to just a lower intermediate level can help to see you through most of the uncomplicated transactions of daily life. In a stretch, it might even get you out of a few sticky situations. If nothing else, it should be able to help you get to someone who speaks some English, especially if the circumstances are dire.
People habitually underestimate the importance of this (I have). You’re enamored by a country and have convinced yourself you want to live there for the rest of your life, despite the fact that the language is a difficult one to master and maybe the alphabet isn’t even one you can read (think Georgia or Thailand). It creates a much bigger cultural gap for you to bridge. You will feel you can’t learn the language fast enough (or that you will never learn it). This will leave you woefully unable to integrate in any meaningful way in your adopted society. You will never feel at home.
Unless you are convinced of your ability to navigate the challenges of a specific country without much knowledge of the local language (like living in a major city with a large and active expat community), choose a destination with a relatively simple language to learn, and one you would like to learn. If you have no experience with the language, get a feel for it by taking some courses. Ask yourself a few questions such as, would I want to read a newspaper in this language, or attempt a novel? Does the culture of the country interest me deeply enough to discover it by knowing the language? This will help you evaluate your level of motivation, which will help you decide how realistic it will be for you to learn it. Ideally, it will encourage you to work for a firm grasp of the language before you land in your chosen country.
Property
Markets will vary from one country to the next; however, it is worth keeping in mind that how a country’s living costs are evaluated may be disproportionately impacted by the cost of buying or renting a property. Also, when you view high-level country comparisons, the average cost of housing for the country as a whole will conceal bargains in smaller cities and towns or rural locations.
Austria is a good example of this. The cost of housing in Vienna and Salzburg, for example, drives up the overall average cost of property for the country. Bargains can be found in other cities like Linz and Graz, while even lower cost housing is available in towns and villages surrounding these cities or further afield. What this means is that you may discover that the cost of living in a country you believed was prohibitively expensive may be affordable after the cost of housing is broken out.
My experience has been that Croatia, while cheaper, especially considering the low cost of housing outside the largest cities, is actually not that much cheaper than Austria once the cost of property is excluded. If you could afford to purchase a property in Austria, for example, your daily cost of living could prove to be more affordable than you think.
Another consideration regarding property is the fees associated with both rental and purchase. In every European country where I have rented or purchased property, there are unique laws and processes. However, what stands out across most is the high sales tax that must be paid when you buy a home, and the expensive provision you may have to pay to a real estate agent who helps you find your new home or rental. In some countries (Austria, for example), the length of a lease can be long (I’ve seen ten-year leases). You can leave after the first year, but if you stay, you are obliged to complete the full term of the lease. The good news is that the property tax in most European countries is low compared to the US (Croatia has no property tax). Which brings us to the final consideration.
Taxes
Like property, taxes are a minefield of variables from one country to the next and dependent upon your specific circumstances. My recommendation is to invest in a reliable tax advisor. For me, the peace of mind from knowing that a tax expert fluent in the local language is managing my taxes is worth the cost alone. Austrian tax law, for example, is complicated. My situation is further complicated by the fact that I do not have a regular salary or pension payment; my income varies from one month to the next. When I worked in Belgium and Germany, I had a tax advisor who prepared my taxes. The complexity of the Belgian tax system, for example, is so extreme that a reliable tax advisor is a necessity.
If you’re an American, you are required to file every year, regardless of where you are in the world. If you earn any income in the US (on investments, for example), you may be obligated to pay both in the US and in your country of residence. This has been the case for me in Austria; however, my tax advisor is still coming to terms with the complexities of the US-Austrian tax agreement. I have lived in Austria for less than a year at the time of this writing. What taxes I may owe remains to be seen.
As far as US income taxes are concerned, it is possible to file using Turbo Tax and Taxslayer. Both have a few glitches that occur because you’re outside the US. The first is the ability to make a payment to or receive a refund from the IRS. The second relates to the US State portion of the process. Both result from not having a US address or a US phone number. I have been able to work around both issues, but both companies could make the process for true expats easier.
Is a low-cost destination worth it?
If you choose to make your new home in a budget destination, the low cost of living might make up for any shortcomings in your quality of life. For the most part, Croatia, for example, was acceptable. But it required planning (international healthcare coverage) and some concessions. Austria, where I live now, is more expensive, but there are no real concessions. I live in a country that is in every way equal or superior to the US in standard of living and quality of life. Language and integration into Austrian society remain the biggest challenges, but this will be the case in any new country. After having experienced both Croatia and Austria over the last three years, when it comes to coping with the difference in living costs, my preference would be to remain in Austria, even if it means searching for new income sources to manage the higher cost, versus relocating to a lower-cost country where I could afford to live on the income I have now.
If you’ve read this far, I would be interested to hear from you. Do you have any comments or questions or complaints? Your experience may be different from mine. Please feel free to share it.