Cost of Living in Portugal: Is It Really as Low as People Claim?

Every real estate agent and visa consultancy in Portugal is hustling to convince you that the cost of living in Portugal is low, especially compared to the US. But how low really depends upon where you are coming from and the kind of life you want to lead here.

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cost of living in Portugal
A few weeks ago, I got a call from my Portuguese bank asking me if I was interested in a deal for a home security system with a four-year contract guaranteeing a discounted price for monthly service.  Upon reading the fine print, however, it become apparent that the deal was structured such that the bank would loan me the total amount of the four-year contract, and I would pay the bank back with interest.  Um, what? This would also amount to about 22 euros per month more than what I paid in the United States for a similar contract, which I could cancel at any time, unlike the bank’s offer.  My banker – in true, Portuguese customer service fashion, as I have discussed elsewhere – politely suggested that I was an uninformed rube, that I did not understand how Portugal, being a smaller economy, had fewer competitors in an industry like home security so naturally – naturally! – the alarm would cost more here, and if I didn’t sign up for the alarm with the deal through the bank, it would cost even more.  I am a middle-aged white lady so, naturally, I got the alarm.
But this got me thinking about one of the single most talked-about subjects I see come up in online forums for people thinking about moving here: the cost of living in Portugal.  The country often ranks as one of the more affordable places in Western Europe, and one of the most common barometers for this affordability comes down to basic measures like a liter of milk and a loaf of bread.  But I am a middle-aged white lady.  I do not drink milk.  I drink organic soy milk.  So, how closely do these cost-of-living calculations line up with what I actually spend money on?  Or what you will?
Reddit threads abound with answers to questions like “can you live in Portugal on $2,000 a month” and despite what posters may lead you to believe, the real answer is: it depends. 
If you’re coming from the Upper West Side in Manhattan, where you were spending $6,000 a month just on rent for a one-bedroom shoebox, almost everything in Portugal will seem ridiculously cheap by comparison, even in Lisbon, the most expensive city here.  But what if you’re coming from South Bend or Jacksonville or Phoenix?
Unless you’re a twenty-year-old minimalist living out of a backpack and without any pre-existing health conditions, you’re going to need some infrastructure.  And infrastructure costs money, even in Portugal.  If you feel “poor” in the United States, that doesn’t mean you’re going to feel “rich” in Portugal, although you may feel more financial flexibility here in certain areas.
In part, that’s because when you think about cost of living, you can’t limit yourself to dollars and cents.  You also need to factor your time and your psychological well-being into what you’re really paying for the things you buy, or don’t.  That’s what we’re going to do in this post.
Below, I consider five key spending areas – housing, healthcare, utilities, groceries, and spending money on “extras” – to help you think about whether you personally, for your age, preferences, and financial ability, will be comfortable with a budget that falls within the average cost of living figures for Portugal that you’ll typically see online.  (I talk more specifically about raising children in Portugal and the costs associated with it here, and hiring domestic workers for home cleaning here.)
Note: I am writing from the vantage point of the average middle to upper middle-class American considering a move to Portugal for an equivalent or better quality of life.  So, if you’re that minimalist backpacker who doesn’t care about creature comforts, you can probably get your expenses down even more.    

Housing

Far and away, the biggest living expense you’ll encounter in Portugal is housing.  I go into pretty extensive detail about the Portuguese real estate market here – if you’re looking to buy, also check out my posts on getting a mortgage in Portugal and a Portuguese real estate agent – but the bottom line is that it’s increasingly expensive to purchase or even rent a home in Portugal because there just isn’t enough housing to go around.
To get a handle on this in comparative perspective, let’s take a look at this cost of living index for 91 European cities comparing them to New York City, which they assign a baseline of 100 in their index.  This means that any city clocking in at less than 100 on the index is that much less expensive than NYC, relatively speaking, and over 100 be prepared to shell out. 
Overall, Lisbon comes in at 49.7, about half as expensive as New York, and Porto even better at 46.1 (the lower the rank, the cheaper the city).  However, when you look only at their rent index specifically, Lisbon shoots up to 14th place in the index at 34.1 – in other words, it’s a lot less pricey than NYC, but there are 77 other European cities on this list that are cheaper to rent in than Lisbon, including Madrid, Berlin, Rome, and Prague. 
One of the main reasons people move to Portugal is the weather, and the weather is consistently warmer and sunnier in Lisbon and south of it.  You can also enjoy that weather on the beach more days of the year the closer you are to the coast.  However, and not coincidentally, Lisbon and coastal Portugal is where the most expensive properties are located, whether to rent or buy.
How expensive? Well, you can find out exactly on Idealista, the main real estate platform here, searching according to what type of housing you’re looking to rent or buy, what kind of amenities you want, and then locate the places on a map.  This is really the only way to know how much house you can afford and where.
But unless you’re a Gates or a Bezos, you will always be giving up something, so the real question is, what are you willing to give up?  Ocean views? Easy access to a lively downtown full of restaurants and shops? Close hospitals in case of emergency? Good public transportation?  A place where other expats live? Only you can decide that. 
OK, so where is it cheaper?  In the interior of the country, especially farther away from larger cities.  You gain quiet, calm, and nature at the price of some of the conveniences of urban life. 
What’s it like to live in the interior of Portugal?  I have no idea.  But consider this article on Idealista, which talks about the cost of living in the Algarve, and recommends Monchique as a low-cost inland alternative you might want to consider.  Now, I’ve been to Monchique.  It’s lovely.  All five blocks of it.  And blazing hot in summer.  Not throwing any shade on Monchique because, well, there’s not enough shade there to escape from that August heat.  Just something to keep in mind when you read online about how “easy” it is to live on $2,000 a month in Portugal. 
My strong recommendation is that you don’t pay much attention to the averages on Portuguese housing prices you see online. Know what region of the country you’re most interested in, know what the maximum you’d be willing to pay for a house or apartment is, and then go see what you can afford in the neighborhoods you like best.  (Google street view is your friend here to get a feel for neighborhoods you’re not familiar with.) Maybe you’re the type of person who would be perfectly content in a tiny Portuguese village smack in the middle of the Alentejo where you can buy a house for a song.  But then again, maybe you’re not.

Healthcare

Lower healthcare costs are one of the principal motivating factors for many Americans relocating to Portugal, and Europe in general.  Compared to the United States, you can theoretically receive 100% of your healthcare through the public health system, available to all citizens and legal residents, at little to no cost.  However, many people in the professional classes, and those with higher incomes, supplement the public system with private health insurance and receive care at private hospitals.  Unlike the United States, though, it is not possible for 100% of your medical needs to be met through the private sector because the healthcare system here is not structured that way.  Vaccines, certain medications, and some major surgeries or treatments are generally administered only through the public health system.
Why would you even want private health insurance or to receive care at private hospitals?  The basic reason is convenience. 
By now, you’ve probably heard that the United States spends more money on healthcare than any other similarly wealthy country but has worse life expectancy and overall health outcomes.  Meanwhile, in Portugal, which spends a fraction of this amount, healthcare is as good or better than in the United States, according to various international rankings
Of course, I don’t want to paint too rosy a picture here.  The Serviço Nacional de Saúde or SNS, the government health agency, faces some pretty steep challenges right now.
For one thing, maternal healthcare has plenty of room for improvement, falling below the EU averageThe closing of maternity wards for lack of medical personnel is not an uncommon occurrence. In fact, the lack of doctors in the SNS is not a problem only in the obstetrics specialty: a shortgage of médicos de família, family doctors or what we would understand as general practitioners in the United States, continues to be a major issue.
Why are there so few doctors in Portugal?  Actually, there’s plenty of doctors in Portugal.  In fact, Portugal is ranked second in the EU for the number of doctors per 100,000 inhabitants.  It’s just that more and more of them aren’t in the SNS.  They’re in the private sector.  Why?  Pay and working conditions. 
Last year doctors in the SNS went on strike because of overwork and underpay.  This problem was a long time coming but became more acute in the wake of the COVID-19 pandemic, here and in many other European countries.  As of the date of this writing, doctors are threatening to strike again
So, what does this all mean for you?  Well, it can take longer to get an appointment in the SNS than at a private hospital or clinic, that appointment may get cancelled and have to be rescheduled, and you’re not going to be having a long, leisurely conversation with your doctor. 
If you are young and healthy and don’t mind waiting for an appointment, you’ll probably be fine just using the SNS.  If you are a little less young and healthy, you may want to consider supplementing the SNS with a private health insurance plan and using providers in private hospitals or clinics.
It’s important to note that you do not need to have private health insurance to go to a private hospital or clinic, and even if you pay out of pocket, it costs wayyyyyyyyyyy less here than in the United States.  How much less? You can check out any hospital’s tabela de preços or preçário and see what they charge for exams and procedures for particulares, individuals not covered by a health insurance policy.  By law, hospitals and clinics have to publicly display these prices on site, and many also do online.  Here’s an example for a private hospital in Porto.  By US standards, we’re talking peanuts here.  Can you even imagine seeing a price list in the United States at a hospital?  Bet it would be much harder for them to try charging you $1,000 for a toothbrush.  
Then, the question becomes whether you should also purchase private health insurance.  In my opinion, it has two important advantages going for it: it will reduce the already low costs of medical care at private hospitals and the insurance itself doesn’t cost very much.  There’s plenty of competition in this market now, and a single, healthy, young adult can usually get a plan for around $50 a month.
Here’s how I handle all this.
Our family of three has a “Cadillac” private health insurance plan through Medis that currently costs 288 euros a month.  It covers pretty much everything that can be covered in a private plan – remember, some stuff stays in the public system – including huge reductions in care at a hospital in Spain or Johns Hopkins in the United States.
Me or the kids get sick?  I don’t even bother trying to get an appointment with the SNS, or a private doctor.  They won’t have anything for days.  Instead, I take the kids to pediatric emergency at the private hospital and take myself to the adult ward.  It’s high quality and fast.  With insurance, it costs 50 euros.  (Without insurance, it’s about 100.). That 50 euros is well worth not waiting for a slot in the SNS.  The average visit to the ER in the United States will set you back $2,715, so my calculus back home would be entirely different.
After my husband died, I got All The Exams and Tests humanly possible to make sure I didn’t leave my kids orphans.  I make timely appointments for all the recommended routine screening tests.  And I’ve never paid more in a year than what we paid in the United States – through an employer-sponsored healthcare plan that was heavily subsidized by my husband’s employer. 
All three of us still have a yearly check up through the SNS.  This is especially important for the kids so they can stay up to date with their vaccines, which, as mentioned above, are administered through the SNS anyway.  I also want my health records in the SNS to be current, and my contact info as well, so the next time there’s a global pangolin virus I need to be vaccinated against, they can find me.

Groceries

Sometimes, I’ll be in a grocery store in Portugal, my cart stocked up with 300 euros worth of groceries – and I *know* I’ll have forgotten at least four things because no list can compete with the vacuous emptiness that has become of my memory – and while I’m crossing my fingers that this haul will last more than a week for three people, I’ll see someone standing in line ahead of me with a single item in their hands.  A package of chicken.  One box of pasta.  And all I can think to myself is: am I doing this wrong?
Now, obviously it’s possible that the person with one item is holding the exact number of items that they can afford: one. Inflation has hit Portuguese households hard, and the Portuguese now purchase groceries more frequently and buy less each trip than they used to.  Meanwhile, I remain a “throw everything in the cart you can conceivably want to eat in the next two weeks” American who should probably revisit the twin subjects of aspirational vegetarianism and food waste. 
There are many different figures out there to represent what the average Portuguese household spends per month on groceries – they vary according to whether you include alcohol, what counts as a household, etc. – but most converge somewhere in the range of 200 to 300 euros per month (about US $216 to $324).  In the United States, a family of four spends between US $1,000 and $1,600 per month.
Is this fantastical difference just because groceries are vastly cheaper here?  Sorry, Charlie.
In the average month, I spend anywhere from 800 to 1,200 euros (about US $866 to $1,299) on groceries for one adult and two children.  Months I spend less in the supermarket I spend more in restaurants and Uber Eats.  I spend more in December during the holidays and less in January when I’m recovering from the holidays.  But I’m never remotely close to spending only 200 euros.
Are you a foodie? Do you buy organic? Do you like shellfish or free-range beef or imported cheeses? You’re not going to be spending 200 euros a month in Portugal either.
Do you sometimes forget to eat because you’re too busy? Did you go through an “I’m only eating foods that are white” phase when you were a child? Do you not know the difference between bouillabaisse and cassoulet – or care?  You can probably get by on 200 euros a month.
Most people are probably somewhere in the middle.  You can estimate this with a little more precision by going online and visiting the websites of the largest grocery chain here, Continente.  You’ll need to be able to read Portuguese, or have Google Translate on standby, but just fill your virtual cart with a typical week’s worth of groceries for you, look at the total, and multiply by four.  That will give you a sense of your average monthly grocery bill.  Of course, there are other grocery chains that are less expensive than Continente (Mercadona, Lidl, and Pingo Doce) and if you live in a more urban area, you can probably shave this down even more by visiting your local mercearia (small grocery shop, similar to a New York bodega) or fruteria (fruit and vegetable stand).  But this virtual shopping exercise will give you a decent baseline to work with.

Utilities

Electricity is expensive in Portugal.  Full stop.  If you want a climactically controlled living environment – warm in the winter, cool in the summer – you’re going pay for it. 
In March of 2023, the per-kilowatt-hour cost of electricity was US $0.18 in the United States compared US $0.27 in Portugal – and in Portugal that’s lower than it was in 2022.  Among its southern European neighbors, Italy and Spain were worse at US $0.46 and $0.37, respectively, but Greece better at US $0.20.
Many people relocate to Portugal for its Mediterranean climate, but if you look at a map of the country, you’ll notice that Portugal is not actually on the Mediterranean.  The southern, and particularly south eastern portions of the country in the Algarve, are more strongly influenced by the Mediterranean Sea because they are closer to it, but most of the population lives along the coast in the Atlantic climate.  That generally means not quite as warm as most people imagine, more wind, and, in the north, more rain.  The interior of the country – where all the cheap housing is, remember? – tends to have colder winters and much hotter summers (see also: Monchique).  You can even get snow in the Serra da Estrela mountains, but they make up for it with excellent cheese.
What does this all mean for your electricity bill?  Well, this depends upon a combination of factors: where in the country you live; whether you follow Portuguese practices of shutting the house up tight during the most extreme heat (and cold) of the day; and how much you’re willing to pay for heating and cooling.
I spend most of the year in Porto.  Many homes in Porto, and a good part of the rest of the country, have neither heat nor AC.  Same for anything but the largest businesses and many government offices.  If I go out for lunch in February, chances are I will be freezing when I get home to my warm, comfortably heated house.  (I put together this handy flow chart to help you figure out whether you’ll be cold in Portugal, too.) It doesn’t usually get as hot in the summer here as in the Algarve, but there’s always at least a couple of weeks in the 90s, and you can bet your bottom dollar I have the AC on, though I don’t keep the house like an ice box, American style. 
This means that for about four months in the winter and early spring, and maybe two months in the summer – in other words, half the year –  I’m running heat or air conditioning.  So, half of the year my electric bill is around US $250 to $350 and half of the year it’s about US $150 to $250.  This takes into account a washer, a dryer, a sizeable fridge, and a boatload of devices.  (My plan includes electricity from 100% renewable sources, but that doesn’t add very much to the total cost.)
Now, if you don’t think 40 degrees Fahrenheit on winter night warrants turning on the heat, your heating bills might be less than mine.  They may also be less if you only heat the room you are in, one at a time, which you can do because most Portuguese homes with heating have wall-mounted radiators that turn on individually (if they’re newer, they can be pre-programmed).  Likewise, if you do as the Portuguese do, and close your persianas, aluminum blinds, tight during the day in summer, it might keep out enough heat for you to sleep comfortably at night with the windows open, especially if you’re not in a heat spell.  These things will all depend upon you as an individual.
As for water and gas bills, water is comparable to the United States, and gas is not used as frequently for stoves or heating, so you’re not likely to feel the pinch very strongly here. 
On the other hand, internet and cable are much less expensive in Portugal, so you’ll pick up some savings here.  I pay about 100 euros a month for internet, cable TV, and a data plan for two cell phones with unlimited data.  I pay about US $200 just for cable and internet back home.
Finally, although it’s not a utility, driving is expensive here.  Portugal is one of the least affordable countries in Europe to own a car, in part because of taxes.  Furthermore, gas and highway tolls are substantially more expensive than in the United States.  (Check out my post about driving in Portugal here.) This is another factor you’ll have to consider if you’re going to try to beat the Algarve real estate market and relocate to Monchique.

Spending Money on “Extras”

Your discretionary spending will probably be the category most dependent on your personal whims. Since this is sort of an open-ended, subjective, “feels” kind of area, I’ll talk here about three places/things I’ve felt that Portugal comes out ahead in concerning cost.
  • Cafés: Portugal boasts a vibrant café culture, as I discuss here.  In most cafés – excluding those aimed at tourists that don’t offer the typical Portuguese café menu – you can get a meia de leite (basically, a latte), a juice, and a Portuguese croissant or some other pastry for 5 euros or under.    Plus, Portuguese cafés won’t kick you out if you want to linger so they’re a cheap way to pass some time.  Starbucks has made inroads here but you can only get a drink for about 4 or 5 euros, depending on the location.
  • Alcohol: Portugal has a long tradition as a wine producing country.  You can generally get a drinkable bottle of wine for 5 or 10 euros at the grocery store that will be much better than a 5- or 10-dollar bottle in the States.  Plus, restaurant mark ups aren’t as exorbitant either, so check out this post on how to order wine in a Portuguese restaurant and enjoy.
  • Portuguese Restaurants: In general, Portuguese restaurants offer pretty good value for your money, especially if they are traditional.  (I talk about picking a restaurant in Portugal here and Michelin Bib Gourmand restaurants in Portugal here.) However, there are two exceptions to this rule: 1) restaurants serving international food, which tend to be more expensive unless we’re talking about pizza; and 2) high-end restaurants which can be so much more expensive that they aren’t noticeably different from the United States.  After all, luxury is a global market.
Happy spending!
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