Charting a couple's move from London to Portugal, tales, adventures and moving advice

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Archive for the ‘money’


Moving Back to the UK? What about Currency? 1

Posted on December 09, 2015 by Ben Algarve

It’s been an awfully long time since I last posted on the blog, for which I apologise. We’ve been getting used to life back in the UK, and it turns out all that leaves us with precious little time on our hands!

In the new year, I hope to find more time to keep the blog up to date, especially as I have lots of contrasting experiences to share between the UK and Portugal.

In the meantime, I have a guest post for you from Currency Index, which I hope will provide some very helpful information for those of you who ever find you need to move your money “back” to the UK.

Currency Exchange

When moving back from Portugal to the UK, there is so much to think about that you might miss one of the most important financial aspects – repatriating your Euros to the UK. If you have sold a Portuguese property, you will likely have completion funds either with your Portuguese solicitor, or in your bank account over there. So what is the best way to maximise the Sterling you end up with in the UK?

Even if you have a more modest amount in the bank having rented or are not selling your property, the same principles apply.

The main rule to remember is: don’t transfer your Euros direct to your UK bank.

One sure way to lose money, although you might never know how much, is to ask your notary or your own bank to transfer your Euros back to your Sterling account in the UK. It might seem like the most convenient solution, but it can come with an enormous hidden cost. On receipt of your Euros, your UK bank will automatically convert the funds to sterling for you, but at an unknown and likely very uncompetitive exchange rate. In fact, the rate applied by your bank might be as much as 4% worse than the rates offered by specialist currency brokers – meaning you could lose around £6,000 on a transfer of €200,000 back to the UK for example.

It’s a trap that many people fall in to, but with a little planning, following these tips you can make sure it’s avoided.

1. Do some research and speak to an expert

Have a chat with a couple of currency brokers, as well as your bank, and see what sort of rates are on offer. While you won’t want to secure an exchange rate before you know how much you are moving back to the UK and when, it will give you an idea of the market. Many people still assume that their bank’s exchange rate is just ‘the rate’ – but the reality is that currency prices, like any financial transaction, can vary hugely between providers. Why pay your bank a premium for the same product and a worse service than you can get elsewhere?

2. Make arrangements before you leave Portugal

Once you have departed the sunny climes of the Algarve, Silver Coast or your city abode, it is much harder to control your Portuguese finances from the UK. Banks can be unhelpful, lawyers can be obstructive, and you can end up losing a small fortune. Worse still, you may have to hop on a plane back to Portugal in order to authorise your transfer. It’s absolutely crucial to make sure you agree and instruct your chosen method of money transfer before you leave Portugal, while you can sign forms face to face at your solicitor or bank. Once you are on the plane, your options narrow considerably, and your costs can shoot up.

3. Don’t take a cheque

If you head back to the UK with a cheque made out in Euros and the intention to organise the exchange to Pounds when you get back, you are in for some nasty costs and delays. Banking a foreign cheque in the UK, whether at your own bank or that of a currency exchange company, will take several weeks to clear and incur significant bank charges. There is simply not an efficient system in international banking to clear cheques in countries where they are not issued – you need to insist on a bank transfer from your Portuguese bank or lawyer, to whoever you have chosen to take care of the exchange into Pounds. If your lawyer refuses, then bank the cheque in your own Portuguese Euro account, and make the international transfer from there before you leave – again, a UK-based currency specialist is likely to give you the best exchange rate.

4. Ignore recommendations from anyone involved in your sale

If you have sold your property through an estate agent, they will probably recommend a currency company to use. But beware, there is likely to be a commission payment involved, which is only ultimately paid for by one person – you! By shopping around independently and comparing rates with a reputable and regulated company you have found yourself, you are likely to end up with a better deal.

Whether you moved to Portugal when the exchange rates was €1.01 in 2008, or €1.60 in 2003, it’s important to make the most of your money. You have probably spent a lot of time and energy negotiating the sale of your property or other assets in Portugal at the best price you can achieve – don’t throw it away by forgetting that your exchange rate can make a huge difference to your new life back in the UK.

Currency Index are an independent, regulated currency broker in the UK, having won ‘Best Currency Company’ and ‘Best Customer Experience’ awards in recent years. You can visit their website here and see independent reviews of their service here.

IMAGE CREDIT: Wikipedia

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Some More Random “Moving Home” Observations 3

Posted on April 21, 2015 by Ben Algarve

We’ve been back in the UK a couple of months now, but everything still seems rather alien!

In my last post I was perhaps a little negative about the Portugal we’d left behind, so I’m going for some more balance this week.

Life in the UK has been good, but with an undulating backdrop of homesickness. It doesn’t help that I still do a lot of writing work about Portugal, and having to write about beaches I am no longer just down the road from isn’t the most fun way to begin a working week!  Suffice to say I really don’t think it will be that long until we pop back to the Algarve for a visit.

That visit would probably feel more urgent if it weren’t for the glorious weather we’ve had in England, and that’s where I’ll begin my list of random observations:

1. The weather here isn’t that bad at all.

I know we’ve been lucky with a dry April, but we’ve just spent a long weekend visiting family and we’ve been happily outside for rather a lot of it. Yesterday we had a pub lunch in a beer garden and I woke up today with a tanned face. That was NOT something I was expecting!

Delightful weather in England

Delightful weather in England

The other pleasant surprise is that even when the headline temperature looks low, it’s actually perfectly warm in sheltered spots. Of course I miss the Algarve weather, but what we’ve had since we’ve been back is more than acceptable, and actually far more practical for our baby son.

2. The UK mobile network is APPALLING!

I said that these would be random observations, so now we go from weather to phone signals!

Last weekend on our big family trip, there wasn’t a single house we arrived at where we could get decent data reception. This includes an area covering Kent, Outer London, Essex, Suffolk and Norfolk. 3G reception on motorways was rubbish too.

I don’t know if it’s just that the UK’s network struggles with the number of people, but by comparison Portugal’s mobile infrastructure is fantastic.

Lots of Traffic and no Phone Signal

Lots of Traffic and no Phone Signal

3. We still have Portuguese “muscle-memory”

I don’t know how long this is going to last, but we are both still often convinced we are going the wrong way around roundabouts, and occasionally find it hard to remember the English word for something (my wife struggles particularly with “coentros,” which is coriander).

Worst of all, we’ve yet to shrug off the continental “hug and kiss on both cheeks” greeting, which in the UK results in either a near-head-butt or the recipient thinking you’re going in for a snog, neither of which comes across as particularly dignified…

4. England is expensive

This is a complicated point, but overall it’s a very good job there are more earning opportunities in the UK, because it’s far harder to live on a budget.

It’s not that all day-to-day things are more expensive. Groceries, for example, are probably cheaper than in Portugal, and as I’ve said before there is far more variety. Our utility bills are less too, but that’s completely cancelled out by a council tax bill of nearly £200 per month.

Where the budgeting unravels is in entertainment. Back in the Algarve, ten Euros could mean a good long trip to the bar and a bite to eat to take home. Here, that ten Euros won’t come close to buying the first round.

At the moment we’re spending every weekend catching up with friends and family, so our spending pattern isn’t typical, but suffice to say we keep having to top up our entertainment budget, and the credit cards are coming out far more than they did in Portugal!

Seafood - Available in the UK as well as Portugal - for a price

Seafood – Available in the UK as well as Portugal – for a price

In addition, working longer days and commuting means being more tired, and that’s when the lure of the takeaway menus becomes strong.

Finally, there’s just so much in the UK that you CAN do! After years of missing the theatre, and the easy access to gigs and festivals, we feel like we want to do it ALL. To do so we must work hard to earn it – and on that basis it’s easy to identify the start of that slippery slope back to the rat race. We must proceed with caution!

5. We’ll probably visit Portugal sooner than we thought

One thing that did come up during our manic weekend was the rather sad realisation that once we’d done everything we had to do, we’d be going “home” to elsewhere in England, rather than “home” to Portugal.

This was actually quite a good thing to realise, because it reminded us that we still have plenty waiting for us in Portugal: somewhere to stay; all of our friends, and all the places and things we miss. I even still have my two most beloved Portugal purchases – my moped and my Weber barbecue! There’s absolutely nothing stopping us going and working from there for a few weeks whenever the “homesickness” gets too strong.

Well, there is one thing stopping us, which is that while we continue to socialise “UK style” every weekend, we’ll never have the time nor the money. So, on that note, I shall sign off and get some more work done 🙂

Please take a look at our book!

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same

Or find it here on Amazon.COM, for US readers:

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same

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A Few Reasons why we Left Portugal 15

Posted on April 14, 2015 by Ben Algarve

Just a quick post today, but one that I’ve really agonised about writing.

Last time I posted, I was discussing our mixed feelings about being back in the UK, and alluded to a certain sense of homesickness for Portugal.

I’m pleased to say that (for now at least) the homesickness has abated. Right now I don’t think I could possibly be more certain that we’ve done the right thing.

Of course, the fact the weather in the UK is glorious today (and significantly warmer than the Algarve!) has a part to play.

Weather in the UK

Weather in the UK

However, it’s actually more been related to a succession of recent reminders as to why we decided to leave.

I’ve yet to go into that much detail about all the reasons and motivations behind our decision, but one of them was definitely that the slow pace of life we’d moved to Portugal specifically for came to be one of our major bugbears. We just weren’t ready to slow down that much, and the fact we came from London, rather than a small town, made the difference even more pronounced.

Examples of this have come through thick and fast this week: Our Portuguese accountant said we’d have our tax estimate “in the first week of April.” It was therefore annoying to politely ask when to expect it at the end of the second week, only to receive a curt response saying it wasn’t done yet – with no commitment whatsoever to another date when we could reasonably expect it.

Deadlines - Often Missed in Portugal

Deadlines – Often Missed in Portugal

Then, following on from having our Portuguese car cleaned and valeted, we relisted it for sale, with the price clearly marked. This hasn’t stopped at least three people asking for the price. One wonders how they are ever going to complete a vehicle transaction if they can’t read three paragraphs of text.

Then there are the expat chancers who think a “sensible” offer for a car is nearly half your asking price.

My wife’s fun and games have involved our Portuguese bank, where getting them to answer the phone, let alone send a simple, promised email, seems completely beyond their capabilities.

Then there’s the clear contrast between doing business in the two countries. I’ve just increased my hourly consultancy rate by the equivalent of €14, with the full approval of every UK client I’ve asked. In Portugal I’ve had people object to paying that for a morning’s work.

Portugal - we still miss this beautiful place

Portugal – we still miss this beautiful place

Let’s get something clear. I love Portugal. I adore it, and miss it every day. But I don’t miss any of this nonsense. There’s just too much short-termism, too much vagueness, and too many people who think that working for cash instead of doing things properly is subversive and clever, rather than something that just goes to ensure they will never have a stable economy they can truly thrive in.

Shortly after I moved to Portugal, someone told me something. They said that if a Portuguese business has a target of taking €100 per day, but somehow takes €200 on the Monday, they won’t see it as smashing their target; Instead they’ll close on the Tuesday and take it easy.

There’s nothing wrong with this. Nothing at all. But it’s not us. It’s never been us, and I can’t imagine that it ever will be.

I’m prepared for flack for writing this, having seen how defensive people were when I dared to suggest there was more choice in UK supermarkets than those in Portugal! However, I’ve always set out to give an honest account of my experiences.

There are loads of comebacks to what I’ve said here. I should be more patient, perhaps, or try harder to understand the culture of the country I moved to? Both are fair comments, to a point, but I’m trying to paint an honest picture for people thinking about moving to Portugal.

If you’re prepared to slow right down, put up with people continually missing deadlines without getting irritated by it, and are content to quibble about sums of money that wouldn’t buy you a weekly London TravelCard, then you’ll be perfectly happy. We weren’t as prepared for this as we thought we were, and life got frustrating. I hope at least some readers appreciate me pointing this out.

One final point: You obviously cannot write a post like this without some generalisation. There are clearly thousands of highly dynamic Portuguese people who meet their deadlines and reply to emails when promised. There are probably even some expats who do everything by the book, rather than cherry-pick the rules that suit them. I’m only sharing our experiences, not seeking to tar everyone with the same brush. So please bear that in mind before attacking me in the comments 🙂

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Portugal Cost of Living – An Insight 6

Posted on March 19, 2014 by Ben Algarve

When it comes to the cost of living in Portugal, I must confess that I have often been “that guy” on the expat forums, telling prospective immigrants to Portugal that they shouldn’t be under any illusions that Portugal is a cheap place to live.

In many ways, it’s not. Petrol costs more than it does in the UK (seriously), and the price of cars is truly shocking. Utility bills are often higher too—we have to keep our homes warm in winter and cool in summer.

HOWEVER: The other night I thought of all of this in another way.

Portugal Cost of Living

Portugal Cost of Living

So far this year, my wife and I have done OK.  My wife, especially, has carved out a very successful freelance career since her redundancy just over a year ago. We feel “comfortable,” but when I actually do the sums, we’re not even approaching the income we had in London back in 2009.

But then I thought about it another way. In London, our rent was £1250 per month. Where we live now costs €450 (£375)…and this place is enormous by comparison.

So, we save £875 per month, just in rent. That’s £10,500 per year.

We also lived in the London borough with the second highest council tax. That was another £200 per month. Yep, that’s another £2,400 per year. We don’t pay any here.

As we lived in “outer London,” we also had to pay for an annual travelcard to get to work. This one really will blow your mind: £2288 each–£4,576. Let’s face it, that’s basically five grand. Here, we work from home.

Sadly not everyone can work from home in Portugal

Sadly not everyone can work from home in Portugal

So what do we save every year on these things alone? £17,476. And we needed all that money AFTER tax. With tax taken into account, we’re talking about the equivalent of just a little below an entire UK average wage.

That’s quite impressive already, as an annual saving. Obviously the balance is redressed somewhat by the fact that our income tax is a little higher BUT, consider this:

–       A beer after work? That used to cost me £3.50 (€4.20). Now it costs a Euro.

–       Cigarettes that cost £8.50 (€10!) in the UK cost €4 here.

–       You can get a good meal out for €8.

–       Nobody in Portugal would have the audacity to charge you to park in a shopping centre car park.

Beer IS cheap in Portugal

Beer IS cheap in Portugal

I’m not going to add up the totals from above. If I did, I’d have to be honest about my personal consumption of beer and cigarettes – with you, and with myself! However, it’s clear that in many ways, life in Portugal is, indeed, cheaper.

Now of course this doesn’t mean life here is easy. Building up our freelance incomes has been a seriously hard slog, and we have both done plenty of assignments at rates that wouldn’t even come close to a UK minimum wage. However, now we’ve paid our dues and proved ourselves, we do OK.

Before I finish this post, I must state some caveats, however. If I didn’t, I’d be painting an irresponsibly positive picture of how expat life can be. Consider the following:

1. Not everyone can start a freelance career from nothing. My wife and I are both fortunate that we have skills and experience that translate well to home working. If you don’t have these skills, you should disregard everything I’ve written here and pay attention to the fact that many people in Portugal earn little more than €500 per month before tax if they speak Portuguese and manage to find a job.

2. The comparisons I make are with London life and Algarve life. Few places are as expensive as London, so the net saving for many people will actually be substantially lower than ours.

Even so, working out these figures has given us a huge reason to be cheerful. Even if the numbers on our spreadsheets still look rather pitiful compared to the numbers we had when we lived in the UK, the one thing that’s for sure is that we feel we get far more LIFE for our money. And surely that’s what our move to Portugal was supposed to be all about?

If you want to find out more about the cost of living in Portugal, check out this article.

For even more about the practicalities of life in the sun, please consider buying a copy of our book:

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same

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Property in Portugal – Could it be the Right Time to Buy? 6

Posted on April 30, 2013 by Ben Algarve

During our time living here we have seen first-hand that property in Portugal can be a tricky subject. The apartment block where we live has, like many developments across the Algarve, suffered from the economic crisis. Of the apartments on our road, only two or three are occupied fulltime. Others are owned as holiday rentals, but the majority of them have been empty and unsold since they were built. With this in mind, I took a more in depth look this week at the property market across the country…

Property in Portugal - balcony

Property in Portugal – time to own your own balcony?

The property market in Portugal has suffered in recent years, in line with the country’s economic hardships. Prices have fallen and the average property takes some 16 months to sell. In our part of the Algarve, there are countless developments where either the building has been finished but the flats are mainly unsold and empty, or where the building work has simply stopped halfway through, ready to be continued once Portugal’s financial situation improves.

However, it seems as though some positive news may finally be on the horizon for the Portuguese market. The Royal Institute of Chartered Surveyors (RICS) Portuguese Housing Market Survey February 2013 has highlighted that although prices are continuing to fall, confidence in the market is on the up. Inquiries from buyers are at their highest rate since the monthly survey began back in 2010 and the national confidence index (based on a combination of prices and sales expectations) is at its highest level for over two years.

The survey observes that the lettings market is also showing signs of strong demand, although, as with the sales market, prices are continuing to fall. This is good news for anyone looking to move to Portugal and initially rent their accommodation.

Property in Portugal

Property in Portugal

So is it the right time to buy property in Portugal? Perhaps. Prices are low and the market is showing the first signs of recovery, so now could be the time to pick up a great bargain. Of course, it’s certainly possible that prices will fall even lower, so it might be that even better bargains could be had for those willing to wait a few more months.

With rents continuing to fall, those looking to move to Portugal would do well to consider renting initially, regardless of whether the plan is to buy somewhere eventually. Renting allows you to get to know an area and be sure it is right for you before committing to purchase property. After all, going somewhere on holiday and living somewhere are two very different things. Just because a particular town or village is the perfect holiday destination doesn’t mean it will be the ideal place in which to live fulltime. Renting also affords you the time to make contact with your local estate agents, to ensure that you have the chance to explore all of the suitable properties in your area before deciding which one to buy.

Buying property is often a difficult and stressful business, but whether you choose to buy immediately or rent first, try to enjoy the ups and downs of the process, safe in the knowledge that your dream property in Portugal is just around the corner!

Image credits: flickr.com

 

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Turning tax into charitable donations 4

Posted on April 11, 2013 by Ben Algarve

After getting over the shock of the size of our latest Portuguese tax bill, I was excited to read in the Portugal News recently that it is possible to pay less tax in Portugal. Well, not less tax as such, but less to the tax man. The concept is a simple one – you complete your annual tax return and tick a box stating that you wish to give 0.5% of the total to a charity or religious institution.

Tax

I got straight on the phone to our accountant who confirmed that it really was that easy. Once the relevant box was ticked, all we had to do was pick an organisation from the authorised list. That was it. It may have been the first time I felt good about having to pay a tax bill!

According to Paulo Alves, who is campaigning to raise awareness of the scheme, €7.14 million was donated to charitable and religious institutions in this way from the 2011 tax year, with 900 organisations applying to receive donations. This year, the number of organisations applying has doubled, as the scheme grows in popularity.

With 4.9 million tax declarations submitted for the 2011 Portuguese financial year, it seems that awareness amongst the tax-paying public certainly needs to be raised. The scheme provides a means of giving to charity without individuals paying out any more than they would have done anyway – the cash is essentially just re-routed to good causes.

Charity tin

If you want to know more about the scheme and take part to benefit one of Portugal’s charities, just ask your accountant when completing your Portuguese tax return and choose the organisation that you would like to donate 0.5% of your bill to. It’s a simple gesture, but the more people that do it, the bigger the difference we can all make.

Want to learn about our early years in Portugal? Please check out our book:

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same
Image credits: Flickr

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Ben’s Portugal Blog Update 5

Posted on March 18, 2013 by Ben Algarve

It’s been quite a weekend for us here in Portugal.

It started on Friday with a visit to our accountant. This is an annual meeting, which reveals the provisional figure for our tax bill.

Suffice to say the news wasn’t good. We have a gargantuan bill to pay in the summer and sadly, due to the fall of sterling, something of a shortfall to make up between times.

Portugal Blog - Saving up for the tax bill

Portugal Blog – Saving up for the tax bill

If you’d have told me late last year that it would have made better sense to keep our tax savings in the safety and security of a Portuguese bank, I probably would have laughed. We left it in a UK bank. However, a run of bad news out of the UK this year has hammered the pound. On a Portuguese tax return, your UK-based earnings are converted at the exchange rate on the last day of the tax year. For 2012, that was about 1.23. We ended up moving the money at 1.15. Well, it doesn’t take a mathematical genius to work out that that’s a pretty crappy turn of events does it?

Now, the events in Cyprus have seen the Euro struggle a bit, so we may make back some of our losses in the coming months. But this does go to prove that living in one country and continuing to earn money from one with a different currency can put you in some precarious situations. You win some, you lose some.

“Still, at least we have the sunshine,” my wife said. This proved rather ironic when at 9am on Sunday morning we were woken up by an apocalyptic hail storm, featuring stones the size of marbles.

This weekend, we’ve also spent a lot of time on the phone with various friends and family members planning their holidays in Portugal. Strangely, we don’t get an awful lot of visitors in the winter(!) but we have a flurry due in the next month or two. Hopefully, summer will make an appearance soon for us as well as them, as right now you can’t predict what’s going to happen from one day to the next.

Portugal Blog - More days like this soon please

Portugal Blog – More days like this soon please

So, for now, it’s time to get our heads down and make up the tax bill money as quickly as possible, which means switching to frugal mode. The irony here is that we actually rather enjoy the lean times – being economical yet inventive in the kitchen, and being forced to enjoy free (and healthy) outdoor activities. We just need it to warm up a bit. The beach costs nothing – but it’s not much fun in a hailstorm.

PS. We’ve had some great (and enlightening) responses to our Portugal Blog Survey, posted last week. Soon we will publish some details of the responses, and start to tailor some posts based on requests readers have made.

Euros image credit: Wikimedia Commons

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Portugal Cost of Living Update 26

Posted on May 29, 2012 by Ben Algarve

Back in 2010, I produced a Portugal cost of living post, which has turned out to be one of the most widely read posts on the blog.

While much of the article is still relevant, some costs have changed. As cost of living questions are still very popular amongst newcomers to the expat forums, I have decided to revisit this topic – both to dispel some myths and to help those considering a move to this wonderful country.

Cost of living is about far more than the simple cost of individual items and services. One mistake many new immigrants make is to focus too much on comparing “like for like.” If you plan to move to Portugal only to eat English food, drink English drink and watch English TV, then things will get far more expensive than they need to.

Living like the locals enriches the experience of moving abroad, so you will notice that I have added some tips on where savings can be made.

ACCOMODATION COSTS IN PORTUGAL

An excess of empty property has pushed down accommodation costs in Portugal. As before, I won’t try to provide sample costs of property for purchase, as estate agent’s websites will give you a far better idea than I ever could.

Despite some bargain prices, unless you have a hefty deposit, the economic climate may preclude you from getting a mortgage. This isn’t necessarily a bad thing right now.

Continuing instability in the Eurozone and the chance that prices may get lower still means that renting for a while can be a good plan. For new expats, this should always be the strategy anyway – why not give yourself a chance to check that Portugal is definitely right for you before committing, and get a feel for the exact area you wish to live in?

Portugal Rental Property can be Very Affordable

Portugal Rental Property can be Very Affordable

Rents have come down a little since I produced my cost of living in Portugal article back in 2010. In our area of the East Algarve, a good two-bedroom apartment with shared pool can be found for around 400 euros per month. In more rural / less touristy Portugal, you will find options for less than this, while more urban areas will be more expensive.

1000 euros per month still puts you into “villa with a private pool” territory. Given that you can pay more than this for a poky flat in a nasty area of London, this is one of the areas where Portugal can still be considered cheap.

TIP: You REALLY need to be in Portugal to find the full selection of available rental options. In our area, almost everyone you meet knows someone who is renting apartments, and few of these ever find their way onto English language websites.

UTILITY COSTS IN PORTUGAL

While rental property has gone down a little, our utilities are up.

Obviously, I can only guide you based on our experiences – everyone’s utility usage differs. Our costs are based on two people, year round, in an apartment with 2 bedrooms and 2 bathrooms. We work from home so are in all day, and we don’t hold back in terms of using air-conditioning or heating. We run various computers, a fridge freezer, cooker, washing machine and dishwasher. Our gas is purely for water heating and the hob. For around eight weeks of the year, there are four or more people here due to guests staying.

Utility bills in Portugal can be high

Utility bills in Portugal can be high

Our costs currently average out at:

Electricity – 80 euros per month (includes TV license).
Gas – 35 euros per month.
Water – 35 euros per month.

TAXATION IN PORTUGAL

As part of Portugal’s austerity measures, taxes are up significantly since I last discussed the cost of living in Portugal.

In our own experience, with earnings that are mid-range for the UK but very high for Portugal, we pay significantly more income tax than we would in the UK. Across our entire income, we pay around 36%.

It’s impossible to go into much detail on taxation, as everyone’s situation is different. Some professions can take advantage of the non-habitual resident scheme and pay a flat rate of 20%. Married couples with only one worker can combine their allowances and perhaps end up better off than in their former country. The only thing I will say is that everyone needs good accountancy advice. It took us a long time to find an accountant we could rely on – so contact me if you need the details.

Social security should be mentioned here too. If you are self-employed and working on green receipts (reciebos verdes), the minimum monthly social security payment in most circumstances is around 185 euros. The size of this bill shocks some people – it doesn’t, however, kick in until you have been self-employed here for around 13 months.

MOTORING COSTS IN PORTUGAL

It shocks our friends when we tell them that petrol in Portugal is as expensive, if not more so, than it is in the UK.

Driving in general is expensive here. Road tolls are widespread and the free roads that can be used as an alternative are no fun at all. To give you an idea of toll costs, a one-way journey from the Algarve to Lisbon costs around 19 euros in tolls, and a trip from one end of the Algarve to the other on the A22 is around 9 euros.

All this, of course, is if you have a car, and there comes the biggest shock of all.

Cars are Expensive in Portugal

Cars are Expensive in Portugal

Cars are terrifyingly expensive, and this is particularly relevant at the lower end of the market. The kind of cars that go for £500 in the back of the Autotrader will set you back up to 4000 euros here. This is offset a little by the fact that the climate means cars don’t really rust, but the concept of finding a “cheap little runner” doesn’t exist here.

Even when talking about nearly new, costs differ massively with northern Europe. Our car cost around 11500 euros – and we could probably have found the same for around £7000 in the UK – the exchange rate does NOT cancel that out!

Car tax is dependent on emissions – we only pay about 70 euros per year. However, relatives with a gas guzzling sports car almost have to place an extra zero on the end of that figure!

PUBLIC TRANSPORT IN PORTUGAL

Portugal’s public transport system is cheap and reliable. Just like London, Lisbon is a place where car-free life is possible and arguably easier. Daily travel cards for the Lisbon area only work out at around 4 euros a day – a pleasant surprise to someone used to paying well over £10 in London.

Of course, public transport is only of use in areas it covers. Even here in the Algarve, there are places with only a very infrequent bus service. Some bus routes don’t run at all at the weekend. The Algarve’s single train route is better, but very slow from end-to-end, taking at least double the time of a road journey. In addition, many of the Algarve’s stations are nowhere near the towns they serve, landing foot passengers with a bus or cab journey at the end.

Public Transport is Inexpensive in Portugal

Public Transport is Inexpensive in Portugal

So, while Portugal has good public transport, a car is a necessary evil in many areas – making it doubly important to take notice of the motoring costs.

FOOD AND DRINK COSTS

In terms of food and drink, there have only been small changes since I last discussed the cost of living in Portugal.

It’s still possible to live cheaply, IF you are prepared to eat “Portuguese style.” This means concentrating on pork and chicken, basic fresh salad ingredients and vegetables, in-season fish and lots of beans and rice.

Once you get into imported items, things get more expensive, though perhaps not as much so as a couple of years ago.

Supermarkets seem to be wising up to the items that expats want and things like curry pastes, Mexican ingredients and Heinz baked beans have got a little (if not much) cheaper. Of course, British expats in the Algarve also now have Iceland in Albufeira!

Some Food is Good Value in Portugal

Some Food is Good Value in Portugal

The longer you live in Portugal, the more you learn to spend less on food and drink. First off, many people here have families with land. Once you get to know people, you may find you have more free oranges, apricots and figs than you know what to do with!

You also get a feel for what to buy where. It’s possible for us to spend either 1 euro or 4 euros on the same jar of pesto within 5 miles of our front door, depending on the supermarket we choose.

It’s all about visiting the markets and getting friendly with stallholders. Finding out who to go to for clams and when the ladies come round with the huge, cheap boxes of strawberries. Portugal is a perfect place for those who can visualize that huge box of strawberries as a cake, a sorbet and a few jars of jam.

However, those who want convenience food and UK-style supermarket shopping are likely to pay heavily for the privilege and miss out on what Portugal really has to offer.

Onto drink; yes, wine is still cheap (we are currently working our way through a very drinkable red Capataz that came in a 5 litre box for just 5 euros!) Beer is cheap too, if you stick to local brews, but if you start picking up Corona and Carlsberg, it can be more expensive than in the UK. If you’re struggling to find the GOOD cheap wines, take a look at Food and Wine Portugal’s wine section.

Food and Wine Portugal

Food and Wine Portugal

A final tip: much of Portugal is very close to Spain. It’s worth getting used to the things that are cheaper or better there. We go every couple of months and come back with Mexican ingredients, Iberico ham, asparagus and good cider. International shopping can be fun.

ENTERTAINMENT COSTS IN PORTUGAL

If entertainment means eating out, then Portugal can still be a bargain, with many places still offering bargain 3 course meals and “pratos do dia.”

Of course, in the cities and the touristy parts of the Algarve, the sky’s the limit. We have Michelin-starred restaurants and beachfront bars that aren’t scared to charge €8 for a mojito, but it’s possible to have cheaper fun almost everywhere, if, of course, you have the self-discipline to stick to the cheaper restaurants and bars.

For expats, entertainment often means spending time with friends from back home, either in Portugal or in another country. Here things get expensive.

Flight costs are on the up. When we first moved to Portugal in 2009, it wasn’t unusual for my wife and I to manage to both get to London and back for under £100 off-season. Bargains like this just don’t seem to exist any more. Baggage charges and other fees have started to get daft too.

Even worse can be trips back for work or weddings, when travel dates are non-negotiable – £400 each to London and back is not unheard of.

When friends and family come to Portugal, things get expensive too. Essentially, you have to get used to being with people who are ON HOLIDAY several times per year. Wonderful though this is, people on holiday want to go to beachfront bars, eat in good restaurants and drive to see the sights.

Beach Views Sometimes come at a Price

Beach Views Sometimes come at a Price

Although people invariably pay their way, it’s impossible to avoid the fact that being “on holiday” is expensive, even if you live in the country. All expats should be aware of this.

As before, I’m going to finish off with the costs of a selection of random items:

1 Bottle of Super Bock in a supermarket – 60cents
1 Bottle of Corona in a supermarket – €1.30
Pack of 6 thin (bifana) pork steaks – €1.50
2 x fillet steaks from an English butcher – €15
1 bottle of mouthwash – €6
Paracetomol (16 pack) – €2.50
Cough Syrup – €15
6 fresh sardines from market – €1.50
Bottle of drinkable red wine (Real Lavrador) – €1.50
Bottle of rather good red wine (Monte Velho) – €3.80

Want to find out more about moving to Portugal – buy our book!

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same

US Readers can find it here

CURRENCY TRANSFERS TO PORTUGAL

If you are moving to (or from!) Portugal, you will be well advised to find an efficient way to transfer money from the UK. Like in Britain, Portuguese banks very in the exchange rates and charges applied to international payments. The difference in rates between different banks and brokers when sending money to Portugal can be up to 4%, which makes a huge difference if you are transferring a large amount across to buy a property for example.

Usually you will be best off using a currency broker for any transactions over a couple of thousand Euros. Not only will this give you access to preferential exchange rates, which can save a small fortune, but you will receive a personal service along with low (or zero) charges for your transfers. If you have a large transaction to undertake, a reputable company will also keep you informed of rate movements and help you decide when to secure your exchange rate.

You should only use UK currency companies if they are classed as “Authorised Payment Institutions” under the FSA, which ensures your funds are held in safeguarded client accounts. One such company is Currency Index, who offer some of the best exchange rates around, and are well versed in the Portuguese banking system as well as that in the UK. You can get in touch for a free consultation and quote on your own transactions, at www.currencyindex.co.uk

If you have any questions about the cost of living in Portugal, please feel free to leave a comment below, and I will get back to you.

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Moving Money to Portugal 1

Posted on May 03, 2012 by Ben Algarve

As you can probably imagine, I get approached by a number of currency exchange companies wishing to promote their businesses. As someone who regularly transfers money from the UK, I have always been curious as to the benefits of using these firms instead of my bank, but have stuck to what I know due to a lack of knowledge.

So when a good friend of mine put me in touch with the managing director of Currency Index, I thought it might be a good time to do an interview, ask some pertinent questions and make a cheeky enquiry as to what the Euro / Sterling exchange rate may do over the coming months. On with the interview:

How would I benefit from using a currency exchange firm to move money to Portugal, rather than my bank?

Essentially, it’s about better exchange rates and lower charges. When you use a bank to transfer funds abroad, even if they offer you a ‘commercial’ exchange rate, you will usually find that a currency broker will be able to beat the exchange rate by anything up to 4%. Needless to say, that can make a huge difference if you are transferring a large sum. In addition, a currency company will alert you when rates are good, and work with you to try to minimise your exposure to the markets; not a service that you will find banks offering.

Banks are not the only option for currency exchange

Banks are not the only option for currency exchange

Can I have a real world example? Say I wanted to move £10,000 from the UK, right now – what could you save me?

Banks vary so much that it is hard to say. This morning we have sold Euros at 1.2161, so £10,000 would buy you €12,161 – and checking NatWest’s commercial rate this morning which is 1.1941, the same amount of Euros would cost £10,184.24, so a saving of £184.24. Against a tourist rate, which some banks give even for larger amounts like this, the saving could be as much as £400.

Is there any benefit to using a currency exchange firm for a regular monthly transfer – say £1000-2000 per month?

Yes – although the saving on the exchange rate is obviously less for smaller volumes, the difference adds up over time. And a UK bank will charge anything up to £40 for an international transfer – that’s £500 per year in bank charges which can be eliminated or vastly reduced by using a currency company.

How do you make YOUR money?

Since Currency Index buys and sells large volumes of currency on a daily basis, we can command a wholesale rate from our counterparties. With a small margin applied, which keeps the lights on in the office, this means we can offer very good rates to our clients but still have a small margin in the transaction. Effectively, we are doing the same as a bank would when selling you currency, just at a smaller margin, so there’s no need for us to charge commission on top.

How do I get started?

Simple – you can register for a trading facility with us at www.currencyindex.co.uk. There is no cost or obligation in registering, but it will set your trading facility up so that we can offer you quotes whenever you like. If you decide to place an order, we will buy your currency at the agreed rate before you send us a penny, so  you will always know what you are getting before you make a commitment. You then settle the order, and we will transfer on your Euros at your instruction. It’s safe too, as Currency Index is FSA Authorised and operates safeguarded client accounts.

What are your predictions for the sterling / euro exchange rate over the coming months?

Much will depend on 2 main themes: the recession vs recovery in the UK, and the Eurozone debt crisis. If the UK economy is in better shape than the recent GDP figures suggest, and the Eurozone crisis refuses to go away, then we could see further improvement in the GBP-EUR rate. But my feeling is that the EU will do whatever it takes to stop Spanish debt becoming an even bigger problem than Greece, which in the medium term should strengthen the Euro, and the UK’s patchy recovery is far from secured, so on balance I think the Euro is good value at the moment around 1.20. If I had to guess, I would think we could see it drop back to 1.15 again by the end of the summer – but there are no crystal balls unfortunately!

Image credit: f650biker

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