As I mentioned in a previous
entry, the average worker in Taicheng/Taishan earns about $250 USD/mo. Hence, it is not surprising that the cost of living is much lower than anywhere in the developed world. Here's a before-and-after breakout of our budget. For these numbers:
- I assumed my wife would sell her business share to be a stay-at-home-mom (which removes child care expenses) in order to equalize percentages.
- I added in health benefits & payroll taxes paid at the company level as I consider those line items as coming out of my salary.
SF Taicheng
Category USA China
-------------------------------
Income Taxes 22% 17%
Payroll Taxes 12% 12%
Housing 9% 2%
Entertainment 7% 7%
Health Insurance 6% 6%
Living Expenses 3% 3%
Auto 3% 0%
-------------------------------
Allocated 62% 47%
Savings 38% 53%
Income TaxNot surprisingly, income tax is the top "expense" in our budget. Luckily, those who live overseas for 330-days out of a rolling 12-month period can exempt the first $91,400 of earned income from Federal taxes. For this first year, I can only claim a prorated exemption but for comparison purposes, I've listed the full year numbers. There is no overseas exemption for California income tax which I will continue to pay in full as long as my income flows through a California corporation.
Health InsuranceAlthough medical care is very cheap in China, we're keeping our coverage anyways. You absolutely do not let your coverage lapse under current U.S. health insurance system.
HousingIn the U.S., housing is an easy number to calculate. It's simply your rent payment or your mortgage+HOA+property tax+insurance. In China, finding upscale rentals for westerners is hard outside of the major cities (Beijing, Shanghai, Guangzhou, etc.) so we bought a condo with cash since foreigners can't get mortgages. For comparison purposes, I applied a 10-year mortgage on the lumpsum purchase to get a monthly amount.
Entertainment/Living ExpensesEntertainment (dining out, shipping, travel, night life) and living expenses (food, utilities) are much lower in China. A sampling of prices in my area:
- Rice Noodle Soup Breakfast - $0.40
- Home cooked dinner using ingredients from open-air market - $0.50/person
- Noddle/Rice Plate - $1.50
- Full Service Restaurant - $3/person
- Fancy Restaurant - $6/person
- Fanciest Restaurant - $10/person
- Non-Chinese Food - $10/person
- 9-to-5 Cook/Maid - $110/mo
- Live-In Cook/Maid - $150/mo
- 6-month Prepaid Cell Phone Service - $15
- Digital Cable TV - $4/mo
- Phone + 4M DSL - $15/mo
If we shopped at the open air markets and cooked meals at home everyday, our living expenses would be much lower. However, I've budgeted the same dollar amount to account for lifestyle inflation as it is nearly impossible for Westerners to move to a developing country and live 100% like a local.
The Bottom LineSuppose none of my business leads pay off and all I do is stay in my overseas home while working remotely and drawing a US salary. In this scenario, the savings from not having to pay auto and housing expenses combined with the overseas income exemption would increase our savings rate by 15%. (It's not too hard to guess the rough dollar amount by looking at housing prices/housing rentals in San Francisco.) At the moment, our plan is to stay here for a few years before (if) returning to the developed world and the cost-of-living differential would be an injection of nitrous into our long term savings/investment goals.
(Filed in china, cost of living)
Now plenty of things are way cheaper here in China. In this previous post, I listed a few costs of living -- for example, breakfast for 40 cents. But some things are more expensive -- usually luxury goods. Some quick... Read More
The cost of living in China
Posted by Mossy
September 7, 2009 8:18 AM
SF Taicheng Category USA China ------------------------------- Income Taxes 22% 17% Payroll Taxes 12% 12% Housing 9% 2% Entertainment 7% 7% Health Insurance 6% 6% Living Expenses 3% 3% Auto 3% 0% ------------------------------- Allocated 62% 47% Savings 38% 53%Income Tax
Not surprisingly, income tax is the top "expense" in our budget. Luckily, those who live overseas for 330-days out of a rolling 12-month period can exempt the first $91,400 of earned income from Federal taxes. For this first year, I can only claim a prorated exemption but for comparison purposes, I've listed the full year numbers. There is no overseas exemption for California income tax which I will continue to pay in full as long as my income flows through a California corporation.
Health Insurance
Although medical care is very cheap in China, we're keeping our coverage anyways. You absolutely do not let your coverage lapse under current U.S. health insurance system.
Housing
In the U.S., housing is an easy number to calculate. It's simply your rent payment or your mortgage+HOA+property tax+insurance. In China, finding upscale rentals for westerners is hard outside of the major cities (Beijing, Shanghai, Guangzhou, etc.) so we bought a condo with cash since foreigners can't get mortgages. For comparison purposes, I applied a 10-year mortgage on the lumpsum purchase to get a monthly amount.
Entertainment/Living Expenses
Entertainment (dining out, shipping, travel, night life) and living expenses (food, utilities) are much lower in China. A sampling of prices in my area:
If we shopped at the open air markets and cooked meals at home everyday, our living expenses would be much lower. However, I've budgeted the same dollar amount to account for lifestyle inflation as it is nearly impossible for Westerners to move to a developing country and live 100% like a local.
The Bottom Line
Suppose none of my business leads pay off and all I do is stay in my overseas home while working remotely and drawing a US salary. In this scenario, the savings from not having to pay auto and housing expenses combined with the overseas income exemption would increase our savings rate by 15%. (It's not too hard to guess the rough dollar amount by looking at housing prices/housing rentals in San Francisco.) At the moment, our plan is to stay here for a few years before (if) returning to the developed world and the cost-of-living differential would be an injection of nitrous into our long term savings/investment goals.
(Filed in china, cost of living)
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Now plenty of things are way cheaper here in China. In this previous post, I listed a few costs of living -- for example, breakfast for 40 cents. But some things are more expensive -- usually luxury goods. Some quick... Read More
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