How to compare cost of living between countries

You just got a job offer in Taiwan paying $100,000 per month. You quickly convert this to your native currency and compare it to your current salary. But you ask yourself... will I spend more money in Taiwan compared to my home country? Will I spend less money? It turns out that determining how much money is worth in one country compared to another country is much more complicated than simply converting currencies.

In this post, I will explain how the amount of money we spent changed when we moved from the USA to Taiwan to try to give you a feeling for how much it cost us to maintain our former standard of living in a new country.

Let's look at each category of our spending and see what changed.

Rent

Rent can get costly very quickly... but don't think that you need to break the bank just to afford a decent apartment. If you want to live close to conveniences (food, MRT, etc.) you'll find yourself paying for it. If you want to save money, try finding a place which is not terribly close to an MRT station. But if you start looking too far away, you'll find some rather expensive communities inhabited by wealthy families who own cars. So, you want to find a sweet spot, which is going to be about a 20 minute walk.

We spend $20,000 per month in rent. But many people spend far more than this. This interactive map might help you find a sweet spot where you can save on rent in a place near where you would most like to live.

Groceries

Back in the States, we spent about $10,450 per month on groceries. In Taiwan, that went down to about $8,200. While our spending on groceries went down, don't be deceived into thinking that food is cheap here. On the contrary, many expats find them spending more on food because maintaining an American diet in Taiwan gets expensive. Our first month, we found ourselves spending a lot on food. Then, we realized that we needed to cut down on meat and eat more soy. That brought our spending down.

I dug through receipts and compared the cost of groceries at our local grocery store in Taipei to our local grocery store back home:

	Taiwan	USA
Eggplant (1 count)	$016	$040	Save 60% in Taiwan
Potato (1 count)	$012	$027	Save 56%
Broccoli (2 heads)	$049	$092	Save 47%
Soy milk (1858 ml)	$055	$096	Save 44%
Onion (1 bulb)	$018	$032	Save 44%
Tofu (300g)	$037	$054	Save 31%
Rice (3kg)	$129	$163	Save 2%
Quaker Instant Oats (100g)	$309	$289	7% more expensive in Taiwan
Shredded mozzarella cheese (300g)	$139	$106	31% more expensive
Cheddar cheese slices (200g)	$086	$048	79% more expensive
Eggs (10 eggs)	$089	$041	115% more expensive
Small steak (100g)	$049	$027	81% more expensive
Cow's milk (1858 ml)	$166	$061	172% more expensive
Boneless chicken breasts (100g)	$220	$027	715% more expensive

Note that all units in the above table have been converted to what you'll find sold in a Taiwanese grocery store.

Here's the same table again using the units you'll find sold in an American grocery store:

	Taiwan	USA
Eggplant (1 count)	$016	$040	Save 60% in Taiwan
Potato (1 count)	$012	$027	Save 56%
Broccoli (2 heads)	$049	$092	Save 47%
Soy milk (half gallon)	$055	$098	Save 44%
Onion (1 bulb)	$018	$032	Save 44%
Tofu (18oz)	$063	$092	Save 31%
Rice (3kg)	$120	$123	Save 2%
Quaker Instant Oats (42oz)	$3,679	$3,441	7% more expensive in Taiwan
Shredded mozarella cheese (8oz)	$105	$080	31% more expensive
Cheddar cheese slices (10 slices)	$098	$054	79% more expensive
Eggs (12 eggs)	$107	$049	115% more expensive
Small steak (10oz)	$139	$077	81% more expensive
Cow's milk (half gallon)	$166	$060	172% more expensive
Boneless chicken breasts (1 pound)	$998	$122	715% more expensive

If you're in love with meat, be prepared to find yourself spending a lot on food in Taiwan. But if you're willing to adapt to the Asian way of life, you'll be fine.

Eating out

The abundance of street vendors makes Taiwan a very convenient place to live. However, be warned that if you visit these vendors every day, you will find your wallet hurting. Back in the States, we ate out roughly once per month and spent $1,120/month. Here in Taiwan, we eat out about twice per week and spend $3,500/month. We have managed to keep our total food bill (groceries + eating out) the same in Taiwan as it was in the States. We didn't particularly struggle to keep costs down back in the USA... but here in Taiwan, we have to be very careful because our expenditures on food can get out of control all too easily just because there is so much delicious food readily available.

Utility Bills

Electricity costs $01.63 per kilowatt hour for the first 240 kilowatts, and costs $210 per kilowatt hour after that. This is well below the average cost of electricity in the USA ($3.96 per kilowatt hour is the national average). But remember that you might find yourself using much more electricity in Taiwan blowing air conditioning in the hot summers. When we made a constant effort to conserve, we did find our electricity bill lower in Taiwan by about half, even in the hot summers. In Taiwan, we spend anywhere between $650 and $1,500 per month on electricity. Compare this to our spending in the States, which varied anywhere between $1,600 and $4,000 per month.

Natural gas costs $15.15 per cubic meter in Taiwan. Compare this to the USA national average of $10.91 per cubic meter (the US uses cubic feet but I've converted units here). We only use gas for cooking, so we haven't seen a huge difference between gas bills in the States vs. Taiwan. Our gas bill is around $300 per month.

For water, the base fee is $260. We get a pretty consistent bill of around $350 per month.

We spend far less on cellular service here in Taiwan than back in the States.

More on our utility expenses can be found here.

Diapers

A box of 180 diapers from Costco costs $1,231 in the US. The same box (also from Costco) costs $1,239 in Taiwan.

A big box of 900 wipes from Costco costs $677 in the US. The same box from Costco costs $685 in Taiwan.

The price of diapers is virtually the same on both sides of the ocean.

Taxes

You don't normally think to budget for taxes... but when there's no sales tax, no state tax and a tax rate of around 6% (depending on your income), money goes a lot further in Taiwan. In the USA, most states charge a combined state tax and sales of somewhere around 7% (If you're lucky enough to live in a state without sales tax, you probably have a higher state tax... so it evens out). Additionally, social security and medicare take another 7.65% out of the paycheck of USA salaries. Below is a table which compares take-home salaries in the USA and Taiwan. Please note that the table below assumes that you are married filing jointly using the standard deduction with two children.

Gross (Annual)	Take-Home (USA)	Take-Home (Taiwan)
$600000	$555160	$598600
$800000	$725860	$788600
$1000000	$896560	$978600
$1200000	$1054964	$1162440
$1400000	$1204128	$1338440
$1600000	$1350805	$1514440
$1800000	$1497512	$1689000
$2000000	$1644221	$1849000
$2500000	$2010991	$2249000
$3000000	$2376168	$2648200

Some notes:

• Taiwan does, actually, have a sales tax rate of 5%. But if you're smart, you won't have to pay it often. You don't pay it when eating out or shopping at traditional markets. You only pay sales tax when shopping at Western-style stores, such as department stores. Live like a local and save money.
• The table above has not taken into account government assistance programs (such as EIC) available in the USA. If you're poor, America is a great place to save money.
• The table above also doesn't include income levels above $4000000/year, where Taiwan's tax rate soars to 40%.
• If you live in Taiwan for less than 183 days in a calendar year, your tax rate is a flat 18%. If you earn a typical expat salary and you arrive in Taiwan halfway through the year, this is going to hurt. But if you earn millions of NTD per year, you'll find yourself wanting to take a long vacation each year to keep taxes down.

Medical Expenses

Medical expenses are a lot lower in Taiwan... however, on a month-to-month basis, you'll probably end up spending the same amount you did back in your home country just because you'll go to the doctor more often because of the convenience. That's what everyone does here.

Conclusion

It's very difficult to compare the cost of living between countries. In our case, we have found that our cost of living has remained almost exactly what it was back in the States. But that wasn't by accident. Rather, we learned how to cut back in places where it saved the most in Taiwan and have begun splurging in places where it doesn't cost that much.

A lot of people expect their spending to drop significantly in Taiwan. But don't count on that. While I do believe that it is easier to save money in Taiwan than in the States, this doesn't mean that saving money will become natural as soon as you step off of the plane. In fact, many expats find that their spending increases in Taiwan. But with some diligent efforts to save, you can see your spending drop a satisfying amount.