“If you earn $1,000 each month, you’ll be able to drive a compact car, occasionally take your family to reasonable dining establishments, and spend weekends visiting places like this.” This was a casual remark from my Nicaraguan guide Pablo while we were at the viewpoint admiring Lake Apoyo situated between Managua and Granada. “With that income, you belong to the middle class here.”
Indeed, Nicaragua is economically challenged, and not a place I wish to reside in at this moment due to the Ortega regime, yet it is just one among many where $1,000 monthly qualifies as middle class by local definitions. Thus, if you generate a few thousand dollars a month through a remote position, an online venture, or retirement pension/savings, you’ll swiftly transition from middle class to “wealthy” if you decide to settle in one of these regions or travel between them as a digital nomad.
I publish an annual article along with specific country summaries on the most affordable places around the globe, and they all have one crucial thing in common: a majority of residents in those countries earn significantly less than individuals in your home country. Consequently, your living expenses are reduced by half.
The broader perspective is genuinely that straightforward. If you originate from a nation where the average yearly income is over $40,000 after taxes, as seen in the USA, Canada, or Australia, you will undoubtedly feel more affluent if you reside in a place where the median income hovers around $12,000 per year. This remains true even if you’re solely relying on Social Security or a pension check.
If you move to a location where the average earnings drop to $600 monthly, you might find yourself in the top 2% of income earners.
Of course, these official statistics can be somewhat awkward, whether discussing median income, per-capita GDP, or daily consumption averages. Some forms of “work” aren’t accurately represented, bartered commodities are excluded, and naturally, individuals often underreport their actual income to avoid tax liabilities. Nonetheless, whether the average worker in Nepal earns $200 annually or $800 annually doesn’t significantly affect my argument. In comparison to the Nepalis, you appear affluent, even if your income mirrors that of a fast-food worker.
However, if you’re residing in a more expensive area, the wages you earn hold less value. Your purchasing power diminishes due to the elevated cost of nearly everything. Per-capita GDP might approach six figures in Norway before taxes, but relocating there means you’ll face high expenses for nearly everything you spend your money on. Additionally, income is taxed at a high level (though in exchange for significantly improved government services).
For instance, while a large lunch in Cambodia might set you back $3, that same meal in Norway could cost about $20 because of higher wages, rent, taxes, and ingredient prices. This brings us to consider overall purchasing power: how much people can afford based on average salaries.
In the USA, it’s essential to account for health care expenses, which are exorbitant if you lack a company health plan, as is the case for many gig workers and the self-employed. This illogical, profit-driven structure is largely absent in the rest of the world. Moreover, the situation is deteriorating as I write this in 2025, with significant reductions in social programs, support for rural healthcare facilities, and veterans’ benefits.
How Cost Structures Affect Expats
Returning to my travels in Nicaragua from a decade ago. I was working on several articles for assignments, so I had an English-speaking guide who drove me, having grown up in Miami before relocating back to Nicaragua in high school. He aspires to return to the USA eventually to take his children to Disney World, but he plans to stay where he currently lives. His electricity bill typically amounts to eight or nine dollars. His home is fully paid off. His family enjoys excellent meals on his earnings.
Now, picture if you encounter that cost environment but are arriving with dollars or euros in thousands per month. I shared a coffee with a retired couple residing in Granada during my visit. “My pension alone is 3-4 times the average Nica’s salary,” Jim shared with me. “We spend approximately $1,800 monthly, which is considered lavish by local measures. We live in an expansive air-conditioned house with a swimming pool and pay $650 each month for rent. We dine out whenever and wherever we please.”
“Medical care is so affordable here that we don’t even carry insurance. We simply pay for services as needed. I had to undergo surgery at the top hospital in Managua, and it was inexpensive enough that I charged it on a credit card,” he explained.
Another couple I spoke to for my book on living abroad initially lived in Leon, Granada, and later resided