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Which Countries in the World Have the Lowest Cost of Living?

Cities in Texas, like San Antonio, have a lower cost of living than metropolises on the East Coast.
Bolivia has one of the lowest costs of living in the Americas, however it has experienced political turmoil in recent years.
Map of the world.
The waters off the Marshall Islands are ideal for scuba diving.
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  • Originally Written By: Erika Peterson
  • Revised By: C. Mitchell
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 November 2014
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Identifying the countries with the lowest cost of living is an imprecise science, since prices rise and fall and economies both grow and sputter; a country with a high cost of living one year may have a relatively low number the next. Historically lower costs of living are found in what is known as the “developing world,” in regions like sub-Saharan Africa, Central America, and Southeast Asia. It isn’t often expensive to live in countries in these places, but at the same time there isn’t usually much opportunity for income or salary growth, either. In many cases the countries with higher standard salaries also have generally high costs of living. The United States and Canada, Australia, and much of Western Europe falls into this category. Cost of living is usually best understood in context, since many of the countries with the lowest rankings are also — though not necessarily always — some the poorest and the most unstable.

General Examples

India and Pakistan traditionally have some of the world’s lowest living costs, but a lot of this depends on region. In most cases national averages are just that — averages that can be different in high-density cities than they are in rural areas. Several African countries, including Algeria, Egypt, and Morocco, also typically have relatively low scores when it comes to cost of living indexing.

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In South America, the country with the lowest cost of living is traditionally Bolivia. Bolivia is one of the region's poorest countries, and is largely divided between indigenous peoples who make up most of the population and a wealthy elite that has, at least historically, controlled political life and the economy. The country has experienced several political crises, most related to control of natural gas reserves, which are one of Bolivia's few natural resources. These conflicts and the general instability of the country as a whole has probably contributed to its relatively low cost of living.

Nicaragua, which suffered considerable political unrest in the 1980s, has enjoyed more economic growth since a 1990 peace agreement, and the tourism industry has had a rebound. The Marshall Islands, similarly, offer warm temperatures, sandy beaches, and waters ideal for fishing and scuba diving. Several of the islands were used for nuclear testing by the US in the 1940s and '50s, when the country was occupied by the United States, and some areas are still contaminated; still, the region has tried to reframe itself as a tourist destination where luxuries aren’t as expensive as they could be elsewhere.

Visitors and Vacationers

People from countries with relatively higher costs of living often choose to vacation in countries like these in order to take advantage of the generally strong exchange rate and buying power, and people sometimes retire to these places on similar logic. Simply moving during working years can be a challenge unless a person has a job that can be done remotely or is independently wealthy, though, since in most cases local salaries are adjusted to the local costs of living.

Cost of Living Basics

The cost of living is how much money it takes to afford basic necessities, particularly food and shelter. Different industry groups have come up with various ways of calculating exact rankings, but in most cases the biggest factors are the costs associated with certain standard food items, like bread and milk, and the costs of renting or owning land as needed to shelter a moderate-sized family. Local currency’s purchasing power matters, as does the cost of basic services like electricity, medical care, and any taxes owed. The idea is to get a baseline figure of what it costs for a person or family to live — not necessarily for them to live in comfort or luxury, but rather for them to simply exist and have what they need for survival.

Why Some Numbers Are Low

In most cases the calculation does not consider anything about the local economy, and doesn’t usually factor in things like income potential or political stability. As a result, many of the countries considered to have a low cost of living also have relatively low standards of living, and many are quite impoverished.

Phrased differently, having a low cost of living doesn't necessarily mean that a country would be a good place to live or visit. Even those countries that are relatively peaceful often have poor infrastructure, like a lack of paved roads or regular supplies of electricity, and limited access to services including medical care. In many cases, the cost of living is low because of high unemployment and an uncertain economy.

In the West

Globally speaking, cost of living tends to be highest in Northern Europe, particularly Scandinavia, and in Japan; the United States, Canada, and Australia aren’t usually far behind. It’s important to keep in mind, though, that in many cases this high cost represents a large number of services that are available either for free or for a dramatically reduced cost. This can include social welfare services and government-sponsored benefits.

A lot also depends on precise location, too. The cost of living in the United States, for example, is lower on average than many people might expect, but many major cities, particularly New York and Los Angeles, have a very high cost of living that in some cases even outpaces European counterparts. Location is an essential part of the calculation, and average figures only say so much.

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Discuss this Article

anon343098
Post 8

Rent in Japan is expensive, unless you're living in a cheaper "Gaijin House" which is like living in a dorm. Western food will cost more than Japanese food which, if a person eats like the Japanese, is not quite as expensive as people think.

I was able to get legal copies of major recording artists for only the equivalent of five dollars USA. Knowing where to shop is important in a place like Japan.

anon232542
Post 7

I strongly suggest you read articles about the cost of living online, from an objective source.

There are many articles you will find to be very enlightening. It's news that affects normal, everyday people's way of life and not Wall Street. Get your info from an untainted source.

anon182605
Post 6

Most places that you would normally consider cheap when on holiday are quite expensive if you are living off a lump sum and expect a lifestyle way above that of the local population.

anon122627
Post 4

These living cost tables and surveys never work, no matter what city, country your looking at. It's possible for any city, community, state, country to lower the living costs by assertive workforce placement, proper trade schemes not to mention if governments didn't hand out grants for first home buyers in some countries they could use that money and reserve prices for building supplies.

But typically, a lot of the world is trying to make something out of nothing these days, so living costs are going to rise for things that virtually should be free.

Here's some insight in Australian prices.

Food: Can of Coke - $2.30; Packet of Cigarettes - $11.00 - $19.00; Rent for a 1 - 2 Bedroom - $150 - $300 a week; Rent for a 3 - 5 Bedroom - $350 - $800 a week.

Groceries can cost anything in Australia because of barely no consumer regulations besides a few.

You can shop at a large supermarket chain, and save money, but the quality of the products you are receiving is definitely a step down.

That means you can spend $50 a week but all your food probably will be home brand.

Plus it's not usual shelf item prices that piss many Australians off, it's the fact the prices for fresh produce and quality meats can be determined by the major retailer and not the producer.

anon98003
Post 3

Yeah, Australia is one of the most expensive countries in the world outside of the Scandinavian states and Japan.

It's twice as expensive to live in Aus than America. American friends visit me all the time and comment on the cost of food. I suppose they only earn $10 an hour or some rubbish like that so it is expensive.

anon86460
Post 2

Australia cost of living is a joke. Are you saying it costs more (500 Euros a month) for food than it costs, in Australia, for food for a family (500 Euros a month)? Wow! All I can say is that they must have huge families in Australia. My family eats about $100 USA dollars a month each member and the mortgage was about $800.00 per month.

Moderator's reply: We've recently updated the information in this article with more recent figures. Part of that included removing the information on Australia, as it was no longer accurate.

anon81716
Post 1

Great map! Thanks, but cost of living comes second to income. If you are earning much it really does not matter how expensive your city is. Anybody out there willing to relocate, I advise to check the salaries first.

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