What is the cost of living in Portugal?
Are you considering moving to Portugal? Do you want to know if you can afford to study in Lisbon, or maybe you would like to know if you can live a comfortable life earning a foreign salary? In this post I will give you real life examples and actual prices so that you can make an educated decision.
In this article I will break down the cost of living in Portugal by accommodation, cost of food, transport, Portuguese salaries and taxes.
How expensive is renting in Portugal vs rest of Europe?
Living in Portugal can be very cheap, but it can also be pretty expensive depending on where you want to have your home: as a general rule, Portugal is cheap compared to other countries in Europe, except certain selected areas in Lisbon.
In the graph I show next to this text, you can see that Lisbon falls low in the list of most expensive cities to rent in Europe. But surprisingly it is cheaper to rent in Brussels and Vienna? If you want to take a closer look at a more comprehensive list I have linked below where I found the data.
Link to rental price per square meter in European cities, year 2023 & 2024
Cheapest region in Portugal to rent?
If you are contemplating where in Portugal you want to settle down it is worth to keep in mind that within Portugal the rental prices change too. Below is a chart from Statista.com which sorts the Portuguese rental prices according to region. If you want to take a closer look you can find the data here: Link to rental price per square meter by Portuguese region, year 2023 & 2024
As an example, I was renting a 10-square-meter room in a shared flat (for 8 people) in the center of Lisbon at €400/month with utilities recently. If you are looking for a 1-bedroom apartment to yourself expect paying €800/month, at least. But bear in mind that Lisbon is the more expensive in Portugal, so living in the center in Porto or even in the central region is cheaper than the examples I gave (as a general rule of thumb)
If you want to read more about accommodation in Lisbon read my article on the subject here on this link.
What about buying a home in Portugal: a good investment?
This question merits an article to itself. However, I will try to give my own opinion on this so take it with a grain of salt. Investing in real estate in Portugal is not a bad idea: but the market in Lisbon is saturated. Many Europeans as well as Americans have bought real estate in recent years and driven up the price considerably before the pandemic in 2020. Since then, inflation has caught up and the demand is lower since then: but prices are still high.
How much do you spend on food in Portugal?
While accommodation in Portugal might not be the cheapest, the good news is that food is inexpensive: especially outside of Lisbon!
You will be surprised when travelling the countryside and having lunch at a Portuguese “taverna” by the road would only set you back €10 for starters, main and dessert, as well as a glass of wine and a little espresso! While, this is usually only seen outside the city it is a good illustration of the reality.
Cafés in Portugal are a treat as both coffee and pastries or salty bites are very cheap, therefore it is very common that people have breakfast at a café on their way to work.
In regard to groceries, it is no exception. Prices at grocery stores and also other stores are generally considered low compared to other European countries. Still, the gap is narrowing so don’t expect Portugal to be that much cheaper than compared to Spain or even France. As an example, I used to spend less than €200 on groceries (eating fish and meat occasionally).
How expensive is public transport in Portugal?
In short, it can be very cheap depending on how you travel. In the Lisbon metropolitan area (which stretches from Cascais all the way south to Setúbal) you can travel as much as you want for a monthly traveler’s pass of €40, for students under 23 years the card is even free. Porto has a similar card and the monthly pass is also at €40 for adult travelers. See links below for more info on prices.
Prices of the Navegante card used in Lisbon
Prices of the Andante card used in Porto
Portugal also has regional trains connecting Algarve all the way up to Porto and even Galicia, Spain. These trains can cost as low as €10 for a Lisbon – Porto (if you buy well in advance). Moreover, Flixbus and other bus companies like Rede Expressos allows for more destinations across Portugal for prices usually under €10.
"If life is cheap in Portugal what's the catch?"
Enter the Portuguese salaries and taxes.
How much is the average Portuguese salary?
I won’t sugar-coat it, earning a good salary in Portugal can be tough and maybe even impossible (if you are moving from another European capital).
The average salary in Portugal in 2023 was €1,833/month or €22,000/year.
However to put into perspective, I read somewhere that 70% of Portuguese earn less than €1,000 per month. Considering that a 1-bedroom flat in Lisbon costs around 800-1000€/month it is no surprise that young Portuguese are the latest to move out from their parents home compared to the rest of Europe.
The lesson here is that the cost of life in Portugal is cheap: but it is not for the local Portuguese, especially for the ones living in the cities. My recommendation would be to earn a foreign salary and ideally not for a Portuguese firm
How are the taxes in Portugal?
Historically, Portugal has been very generous when it comes to taxing foreigners. There is a Non-Habitual Tax Residents (NHR) which gives some tax cuts for foreigners who work in Portugal (popular among Americans that immigrate to Portugal). In some cases you would only pay 20% of your salary and in others you might even be completely exempt (link below for info on NHR)
Another example, many retirees from Britain or even Sweden and Denmark moved to Portugal to live on their pensions which were taxed at (only) 10% by the Portuguese taxing agency. Within the EU, these tax evasions are growing scarce so don’t assume you will pay less tax automatically.
However, Portuguese are growing discontent with foreigners and with new governments the taxing policy can change very fast, so bear this in mind when starting a company or retiring in Portugal.
How is the cost of living in Portugal in short?
Life in Portugal can be very comfortable if you are a foreigner with a decent salary. If you have seen the numbers above, most Europeans earn more than the regular Portuguese and should be able to manage to live a decent life. However, salaries in Portugal are low, thus it is more challenging if you are working for a Portuguese firm and living in the center of Lisbon. So if you are on a real tight budget, moving to the central region or Alentejo would allow you to find excellent deals on accommodation and generally lower expenses.