How One Couple Cut Their Living Costs in Half for a Better Life in Portugal

Editor’s Note: This story appeared on Live and Invest Overseas.

Today I’m sitting with my friends Jeff and Joch, who live in the north of Portugal since 2020. Their claim is simple but surprising: Since moving from California, they have reduced their monthly expenses by nearly 50%.

Considering the rising cost of living in the United States, that kind of reduction naturally raises the question: How exactly do they do it?

Leaving the Grinding Life Behind

Before immigrating, Jeff and Joch lived outside of Sacramento in Elk Grove, California.

Jeff walked about 37 miles to work each day—what was supposed to be a short commute often stretched an hour along with traffic.

“It was gas, mortgage, food, insurance, car payments, car insurance, health insurance,” Joch recalled. “It just kept coming together.”

They describe their life at that time as comfortable—but expensive.

“We were living a happy life,” said Joch. “But our budget costs and standard of living?”

Retirement forced them to take a closer look at those numbers. When Joch looks forward to retirement—which he should do in 2019—and will receive only Social Security, his household income will drop significantly.

Jeff says: “We were continuing my work, but that was it.

Another thing they were determined to avoid was tapping into their retirement savings.

“We really wanted to live with the income,” said Joch. “Not the principal.”

Fortunately, Portugal had been on their radar for decades.

Joch says: “I first came to work in Portugal in 1979. “I fell in love with the country and the people and said I would retire here one day.”

As they began to research in depth, they realized that a long-held dream might solve their financial problems.

“To stay in California, we would have to go down a lot,” said Joch. “Jeff would have to continue working for another 20 years—and what could I do to fill my days alone for 20 years?!”

Portugal suddenly seemed to be the answer.

Great Savings

Although they expected Portugal to be cheaper, some of the biggest savings still surprised them.

“We started tracking everything,” Jeff said. “Every few weeks I’d look at the numbers and think, ‘Wow—it’s really working.'”

Groceries

One of the first shocks was the cost of food.

“In the US, some friends recently told us that they can’t get a bag of groceries for $50,” said Jeff. “Here, for 50 or 60 euros we can get five or six bags.”

Shopping at local markets can make big savings, especially on fresh produce.

Houses

Housing also played a big role.

“Our loans here are almost half of what they were in California,” said Joch.

Even better, the timeline changed dramatically. In California they had about 20 years left on their mortgage. In Portugal, they were able to get a 9-year loan on very favorable terms.

“We only have a few years left,” said Joch. “It will be paid in 2029.”

Property taxes are also very low, both at the time of purchase and throughout the years of ownership.

Health care

Health care was another major expense for them in the United States.

“The cost of insurance on the home was outrageous,” said Jeff.

In Portugal, their private health insurance costs about a quarter of what they used to pay.

Prescription drugs are also much cheaper—in fact, this was one of the first places where they started seeing big savings after moving.

Resources

Even utilities have been kept under control, despite Europe’s reputation for high energy costs.

Their electricity costs are around 30 to 40 euros per month, while gas—used for heating and hot water—runs around 30 to 100 euros depending on the season.

Living near the coast helps…

Jeff says: “We don’t even have air conditioners. “Here at the beach we don’t need one, we just open the windows at night and let the sea air cool the house.

Where Costs Are High

Not everything in Portugal is cheaper than at home…

Electronics tend to be more expensive in Europe.

“I’m so tempted to go back to the States when it’s time to hang up my MacBook,” says Jeff.

Cars can also be expensive due to import taxes, and fuel prices are higher than in the US

However, overall transportation can still be a little expensive because many people rely on public transportation.

Jeff and Joch themselves spent their first three years in Portugal without a car.

Jeff says: “If you can live close to public transportation, you can save a lot.”

A Different Way to Spend Money

Another big change in finance wasn’t about prices—it was about habits.

“In the US, we had several credit cards,” said Joch. If we overspent, sometimes we would pay it back in a few months.”

Their Portuguese bank works differently.

“Whatever you use this month comes out the next month,” he explains. So it’s like an American Express card.

The result?

He says: “We just spend a little money.

Living on a fixed income has also encouraged them to plan ahead for big expenses.

Joch explains, “If we want to take a cruise—which we’re going to do in a few weeks, leaving Venice and going around all the Greek islands—we just say, ‘OK, in two months we’ll have enough money to choose from that.'”

Better Quality of Life

Reducing their expenses does not mean they have to reduce their lifestyle.

In fact, they say the opposite is true.

“We travel a lot,” said Joch. “We eat out a lot.”

They recently took a trip to northern Portugal for a local event—they booked a hotel, rented a car and explored the area for a few days.

Experiences like this are much easier to fit into their budgets now—even later.

The biggest improvement, however, may be psychological.

“It’s very easy to make money here,” said Jeff. “Back in the States there were a lot of unknowns.”

Unexpected medical expenses, home repairs, or car problems can quickly disrupt the budget.

He says: “In Portugal, those surprises are easily controlled.”

That peace of mind has made retirement much less stressful.

Joch says: “There’s no worry of wondering if we can fit everything in next month.

Today their monthly expenses tend to run around 2,500 to 3,000 euros compared to $5,000 to $7,000 in California.

Joch laughs, “A month worth 3,000 euros is a month in which we travel, eat more, or enjoy more local events and dramas than we would on average.”

For them, the move brought what they had hoped for: a richer—and more affordable—lifestyle.