UPDATED: 5/30/15 with some changes to current cost of living.
One of the most common questions that people considering a move to Panama usually have is about the cost of living. Panama has frequently been billed as an affordable retirement/living destination by just about every publication out there. If you read my article “Is Panama Right For You?” you will know that I believe this largely to be true, depending on the type of lifestyle you try to live, but it can vary widely. When the question of monthly budgets gets asked in ExPat forums, I’ve seen answers ranging from $1100 a month for a couple in the countryside to $8000 a month for a family of 4 in Punta Pacifica (a high priced area of Panama City). So there is definitely a wide variation in cost of living.
My wife and I (and our cat) currently live in Panama City on about $2500-$2600 a month. Sometimes we go lower, sometimes higher, but it is pretty consistently in this range. This is about almost 50% less than our cost of living in Tampa, Florida, while our quality of life has improved. In this blog post, I’ll walk you through our budget, both in Panama City and the US, so you can get a sense of what our costs are and where we are saving money.
Panama Tampa $1100 $1400
UPDATED 5/30: I’ve decided to use for better comparison purposes the larger apartment we were living in for most of our time in Tampa. I was previously using a smaller 1 bedroom that we lived in for 6 months while we transitioned to Panama, but the 2 bedroom I lived in was for 3 1/2 years was a more accurate comparison. I also owned my condo outright and only paid homeowners and taxes, but for the purposes of this article, I’m using market rent to give you a better comparison.
Our current apartment rents for $300 less than our prior aparment. They are both the same square footage at about 1100 sqft, but our Panama apartment is a 3 bedroom/2 bath apartment vs a 2/2 apartment.
My previous apartment was in a good nightlife area, but it was not as conviently located to basic necessities like supermarkets and warehouse clubs as my current apartment. I also lived on the first floor of a 3 story walkup, and now I live on the 18th floor of a highrise building A similar apartment in Tampa would have cost at least $2000 a month.
In Panama apartments are rented both furnished and unfurnished. Since we are planning on staying in Panama long term, we decided not to rent a furnished apartment. There are plenty of options to rent furnished, but they will cost you a couple of hundred extra a month. I recommend renting furnished if you are only planning to stay short term. If you plan on staying a while, buying your own furniture and renting unfurnished will give you a better deal.
It’s important to note, that like many other things in Panama, rents are usually negotiable. The asking price for our apartment was originally $1250, but our real estate agent was able to negotiate it down to $1100. The list price is not always the final offer. If you try to negotiate, you may end up saving yourself some money.
Panama Tampa $175 $75
UPDATED: 5/30. Electricity rates are up somewhat significantly. Our current rate is a ridiculous $0.26 per kilowatt hour, however we receive a subsidy in our bill, that reduces rates by about 25%. So in reality, we pay about $0.20 per KW/h. I’ve kept our overall electricity budget the same, as the longer we’ve lived here, the better we have gotten at conserving energy, so we don’t use quite as much. But I wanted to note the new rate increase.
Electricity is one of the things that is usually more expensive in Panama than in your home country. In Tampa, we paid $0.11 per kwh (kilowatt hour), and here in Panama, we pay $0.165. Our electricity usage has also increased when we upgraded to a larger apartment.
I will say this: electricity prices range all over the place in Panama. The prices are different based on which neighborhood you lived in. There may be a rhyme and reason to electricity prices, but I haven’t really figured it out yet. One thing I have learned is that the nicer the area, the more they will likely charge for electricity. Electricity in Panama is sometimes subsidized, depending on where you live and if you stay below a certain usage threshold. I’ve seen bills as high as $300-$400 from ExPats, but I’ve also seen the opposite. One of my wife’s Panamanian co-workers pays $8 a month for electricity. So depending on your usage and location, this will vary widely.
Panama Tampa $80 $150
Cable and Internet is cheaper in Panama, albeit for worse service. Gone is our Verizon Fios with 200 channels including Showtime and Cinemax, and our lightning fast internet speeds. Instead we have CableOnda, which provides adequate service, but is probably the best in Panama (I have not heard good things about the other major provider, Cable and Wireless). We get good download speeds (up to 25mbs, but more commonly 15mbs), but terrible upload speeds (1mb or less). The cable channel selection is okay, but to tell you the truth, we are probably going to cancel it. The channels that play US programming usually get shows that are outdated, and you can get Panamanian news for free with a digital antenna. You are better off for US programming to just use Netflix and get a VPN service so you can watch Hulu and shows on US TV websites.
Panama Tampa $300 $1300
Reducing transportation costs is one of the main ways we really are able to save in Panama. This is because living in Panama has allowed us to go from owning two cars to owning none. Gone are two car payments, two insurance payments (which I’ll admit were a bit higher than normal due to some speeding tickets and a teeny-tiny accident) and the days of constantly filling up the tank. Now we make do with all of the many transportation options available to us in Panama.
I will have another blog post in the future fully dedicated to the many ways to get around in Panama City. Right now we use a combination of taxis, Uber, buses, and the metro. Taxis cost $2-$3 most areas within the center of the city. To the farther areas of the city like Amador and Casco Viejo, they usually run about $5. Uber is a little more expensive, but you still have to travel pretty far to get it over $10. The buses cost $0.25 per person, and the Metro costs $.35
Even on a day with a lot of travelling, living without a car still ends up being a good deal. Yesterday, my wife and I went from our apartment to Cinta Costera, then to Casco Viejo, then to meet friends in El Cangrejo, and then back home. Uber was $5 to Cinta Costera, The cabs were $3 to Casco Viejo, $4 to El Cangrejo and $3 home. So in total, all that travelling only cost $15. Later that night we used Uber to travel there and back to our church, which is close to the Panama Canal at the edge of the city, which cost $15 round trip. So in total, we spent $30 for a really busy day of travelling across the city. An average day is much cheaper. I work from home, and my wife either gets a ride to work from a coworker, or takes the bus. So at most, that’s $0.50 on your average day. Even when we go to the grocery store, we walk there, and then take a $2 cab ride back with all of our groceries. By comparison, we were spending $30 a day to just keep our cars at home parked without even driving them. It was more if we had to take them anywhere and use gas.
Living a car free lifestyle hasn’t led to a decrease in quality of life at all, and has saved us over $1000 per month.
Panama Tampa $500 $500
The comparison between Panama and Tampa is misleading, because we eat a lot more of our meals at home here than we did in Tampa. So in reality, we are getting a much better deal in Panama. This number includes all of the food we buy to cook at home, food for the cat, and any basic household goods (toilet paper, paper towels, toothpaste, etc). You will hear a lot about the cost of food in Panama, and a lot of differing opinions among ExPats over how cheap it is. I tend to side with those who say grocery shopping here in Panama is affordable. In fact, I think it’s possible for 2 adults to spend quite a bit less on groceries than the $500 a month we do. I have no doubt that many ExPat couples could probably live on about $300 a month in groceries.
First off, I blame our picky, high maintenance cat for part of why our bills are so high. Seriously. He only will eat wet food, and that’s one item that you’ll find is significantly more expensive than the US. In fact, a can of Friskies is about double the price. Between his food and cat litter, he’s responsible for about $100 a month of the $500 we spend.
As far as human food goes, I think there’s one simple rule for affordable shopping. If it’s local, it’s cheap, if it’s imported, it’s expensive. The more you cling to eating the same foods, particularly processed and package foods, that you did in the US, the more expensive your shopping experience will be. Likewise, the more you eat like a local, the cheaper it will be. That means buying local meats, seafood, deli meats, cheese, bread, milk, fruits, vegetables, local packaged foods, and locally made foods like corn patties and empanadas. We try to shop mostly local foods, while occasionally buying some of our favorites from back home (I love my peanut butter and jelly).
Your cost also depends on what stores you shop at. We shop mostly at the supermarket Riba Smith, and sometimes at Super 99 and PriceSmart. Riba Smith is generally known as the fancy, more expensive supermarket. So our food costs are somewhat higher because we shop there. We shop there primarily because we like their meats and produce sections, and because it is in walking distance of our house, so we don’t have to worry about transportation. Items there are definitely more expensive than if you are shopping at other supermarkets, or at local fruit and meat markets. Even so, it’s still a pretty good deal if you stay away from the expensive imported items.
UPDATE 5/30: The longer we have lived here, the better we get at moving away from imported items and saving money by buying local. We still have splurges, but overall, trips to the supermarkets are cheaper now.
There are also certain local food items that are price controlled by the Panamanian government. A total of 24 different items fall under the “control de precios,” which was signed by President Varela as his first act after taking office. Stores are not allowed to sell items on that list for more than the maximum listed price. This only applies to one local brand for each specific item. You can find the full list (in Spanish) and their maximum prices here.
Also, one last note. If you are from the US, you may initially have sticker shock for meats, produce, and deli items. That is because items here are priced per kilogram, not per pound. A kilogram is equal to 2.2 pounds, so if you find something listed for $8 per kilo, it is really only about $3.60 per pound.
Panama Tampa $400 $1500
This is the other major way that my wife and I have found savings in Panama. Part of it has to do with costs in Panama, the other part has to do with making a conscious lifestyle change. Back in Tampa, we were the type of people who were always too lazy/busy to cook most of the time, so we ended up dining out. Alot. We definitely ate more meals at restaurants than preparing them ourselves. That can get especially expensive anywhere, but it seemed like it was more so in Tampa. Ringing up $50 or more on two meals, without either of them being good, was common. When we went for a nice meal, it could push $100 if we had drinks and tax and tip were included. That didn’t even count any non-food related entertainment. This is one area we wanted to make sure we changed when we moved to Panama, and for the most part, have been very successful.
Spending a lot of money dining out/on entertainment is a trap that a lot of ExPats can find themselves in while in Panama. It is very easy to spend a lot of money here if you are not careful. While Panama has a lot of affordable places to eat at, there are definitely places, particularly those targeted to ExPats, that are overpriced. You can spend $5-6 dollars on a good piece of meat with several sides at a local restaurant, or $15 on a burger and fries at a trendy pub. How much you are into the nightlife will also play a big factor in how much you spend. While my wife and I will go out occasionally with friends, we’re the type of people who would usually prefer to spend the night watching Netflix than going out and dance it away. Alcohol is generally cheaper here than it is in Western countries, but it goes without saying that the trendier the establishment, the more expensive it will be.
Panama also has plenty of cheap things to do in terms of entertainment. Movies are cheap (Cinepolis at MultiPlaza is $5.50 for 2D, $8.25 for $3D), and 2D movies are $3 across the country on Wednesday. Panama City has many great parks that are free, such as Cinta Costera and Parque Omar. I practice with an Ultimate Frisbee Rec League every Monday for $0.50 cents each week. Tourist areas like Panama Viejo and Casco Viejo are free as well. There are plenty of ways to be entertained in Panama without breaking the bank.
So how much you spend on dining and entertainment is really up to you. It’s possible to enjoy yourself on a budget, as we have mostly managed to do, but it’s also possible to spend significantly more. Overall though, restaurants and entertainment here is cheaper than their comparables in the US.
UPDATE: For information on dining out in Panama, check out my blog post “Dining Out on a Budget“
Cell Phone Service
Panama Tampa $30 $100
UPDATE 5/30: We’ve both upgraded to monthly plans, which are more expensive but still a better deal than the us. For $33 a month each, we get 2gb of data and enough texts and minutes to last us for our moderate use.
Cell phone service is another area you can save some money in Panama. Both my wife and I use pay-as-you-go plans with the cell phone company MoviStar. $15 a month gets us 1gb of data (which expires after 30 days). We find that’s all we need. It also gets ua $75 of promotional credit (which rolls over month to month) to use for calls and texts. The rates are really high on that credit, but we find it’s all we need for the month. One thing you’ll find out very quickly when you move to Panama is that very few people call, and almost nobody texts. Pretty much the only texts you’ll get are from your cell phone company sending you endless promotional messages. Everyone here uses the app WhatsApp to communicate. If you’re not familiar with it yet, you will be very shortly after you move here.
Panama Tampa $25 $250
This works a little different for us than for most ExPats, since we get health insurance through my wife’s job. Her insurance is completely covered, and it costs $25 a month to put me on her plan. If you do not have insurance through an employer in Panama, you will need to find a private plan. Private plans are generally cheaper here than they are in the United States, but be aware that they almost always don’t cover pre-existing conditions, and they often have stipulations that they won’t cover certain conditions/illnesses until you have been on their plan for a set amount of time. Make sure to read the fine print. Medical care is also generally cheaper in Panama than the United States, and basic/preventative care is usually not too expensive out of pocket, even without insurance. However a major illness/surgery is still a major illness/surgery, and even if it’s cheaper than the US, it will still set you back thousands of dollars if you are uninsured.
If you come from a country where health insurance is fully provided to you by the state, you may be in for in for a surprise in Panama. Please make sure you fully research and understand the Panamanian Healthcare System and what you will be responsible for if you decide to move here. Also, if you are from the US, it’s important to know that while Tri-Care is accepted in Panama, Medicare is not.
Additional Monthly Expenses
Panama United States $50 $50
This is really just an add on category to make sure when you’re budgeting, don’t forget about things like Netflix, Skype, Magic Jack, a VPN, hosting this blog, etc. The little things add up, and should be accounted for.
Total Monthly Expenses
Category Panama Tampa Rent $1100 $1400 Electricity $175 $75 Cable/Internet $90 $150 Transportation $300 $1300 Groceries $500 $500 Dining Out/Entertainment $350 $1500 Cell Phone Plans $65 $120 Health Insurance $25 $250 Additional Expenses $50 $50 Total Monthly Expenses $2655 $5345
UPDATE 5/30: After redoing this for current expenses, I found I spend about $100 more than I previously thought, mostly accounting for that I had underestimated transportation expenses. My new monthly cost of living is $2655 from $2560. However, when I updated with my more realistic rent in Tampa, it shows that we are saving almost exactly 50% by living in Panama. Obviously there is still some variation month to month.
Overall, I honestly feel like my quality of life is better. While we may not own a car or dine out as much, we are still living a very comfortable and enjoyable life, in a beautiful apartment in a culturally diverse city.
So the big question that I had hoped to tackle in this blog is: “Is Panama an Affordable Place for You to Live?” Hopefully you can do a comparison of my expenses to your current expenses/lifestyle, and see where it falls. A lot retirement websites sell Panama as a destination where you can live on $2000 or less for an adult couple. Can you do that in Panama City? I think the answer is probably, but you would have to live a tight, no frills lifestyle. There are certainly expenses we have that others could do for cheaper. Living on that budget is certainly doable in the countryside, most likely for even less. But it is also very possible to live in Panama City and spend a lot of money if you fall into common ExPat traps.
For further reading on the subject of the cost of living in Panama, there are a couple of other blogs I recommend you check out:
1. The Panama Adventure documents how a couple is living in the city of David, Panama for $1200 a month.
2. Panama For Real put together a budget snapshot of a number of different potential living scenarios, both in and outside the city.