Cost of Living Contrasts: Portugal vs. the UK

If you’re thinking about a move to Portugal, the cost of living is an important factor to research. Here, someone who has lived in both Portugal and the UK discusses some big financial contrasts.

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Cost of living comparisons between countries are always somewhat subjective. After all, people have very different lifestyles, expectations and priorities. 
 
My wife and I lived in Portugal for several years. We’re back (for now at least!) in the UK, which puts us in a good position to contrast the cost of living in the two countries. For the purposes of this particular article, I’m going to concentrate on the real bare essentials of having a roof over your head and paying your way. 
 
To give you some background, my wife and I are both full-time freelancers. We earn income remotely from a variety of clients, mostly in the UK, and it’s this style of working that facilitated our move to Portugal in the first place. 
 
Cost of living comparisons between countries are always somewhat subjective.
 
Our lives in Portugal…
It is fair to say that Portugal isn’t an easy place to go and “make your fortune.” Wages are low, and expats who cannot speak fluent Portuguese are clearly at an immediate advantage. As such, our personal work situation helped us have a good life there. This situation isn’t unique to us, as it applies equally to those with a good UK pension income or any other source of international work.
 
…compared to our lives in the UK
When we first arrived back in the UK, we experienced something of a honeymoon period. Work flooded in, in part because our ability to have face-to-face meetings encouraged clients to send more work our way. It was a good job, because our basic living costs rocketed compared to Portugal!
 
Looking at those costs
In Portugal, we rented a large three-bedroom townhouse, with a garden, two balconies, a sea-view roof terrace and even a hot tub! It cost €650 per month – around £500 at the current exchange rate.
 
"When we first arrived back in the UK, we experienced something of a honeymoon period."
 
Back in Blightly, we now rent a sizeable three-bedroom property on the Kent coast, albeit without the sea view or the hot tub! It costs £900 per month.
 
Then there’s council tax. We didn’t pay this in Portugal, but it costs another £200 per month back in the UK. Even if we’d owned the property in Portugal, our equivalent tax (IMI) would have only been a couple of hundred per year.
 
As we both work full-time, we also need childcare. Back in the Algarve, we paid around €300 (£233) per month for unlimited weekday access to a wonderful crèche. This even included food for our toddler. In the UK we pay £900 for a child-minder, for fewer hours than the crèche was available. 
 
Just adding up those differences means that our basic existence cost us £1267 per month less in Portugal – a staggering £15,204 per year – and that’s before we even start to think about the difference in the cost of utilities, provisions and going out.
 
“Our basic existence cost us £1267 per month less in Portugal than it now does in the UK.”
 
There are considerable cost of living differences in play here too. In the UK, a round of drinks for a bunch of friends can easily run to £25 (€32) – that’s the cost of a good night out in the East Algarve, complete with a meal.
 
While our earning potential has undoubtedly increased back in the UK, these figures really do go to show how much cheaper our lives were in Portugal when we look at this on this basic level. Before you get too excited, however, it’s crucial to check your tax situation, as our liability was considerably higher in Portugal, cancelling out some of this saving.
 
While we may be able to earn more money as freelancers being based in the UK, the thought of losing a major client has somehow become rather more intimidating when our basic living cost is well over £1000 more each month. As I said at the start, everyone’s situation is unique, but I think it’s true for most that it’s far easier to tighten one’s purse strings in Portugal than it is in the UK – and that’s something that’s sure to enter our minds next time we consider a move.

Further reading for Living In Portugal

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Finding work in Portugal

There are a number of ways that UK expats can fund their lifestyle in Portugal.
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Social life in Portugal

The best way to get settled in Portugal is to find out as much as you can about your new community.
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Heathcare

One of the first things you need to do once you arrive in Portugal is find out where your nearest hospital is.
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Education in Portugal

Are you emigrating to Portugal with school-age children?
 

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