Cost of Living: Europe vs the US, Honestly Compared

“Europe is so much cheaper” and “Europe is expensive now” are both true, which is exactly why averages mislead. The honest answer has three parts: which Europe, which costs, and which life.

Which Europe: the three price tiers

• Genuinely cheaper (roughly 30–35% below the US average with housing included, more against a big-coast US metro): Portugal, Greece, Croatia, Slovenia, much of Spain and southern Italy — the classic value destinations.
• Cheaper-ish (10–25% below): France outside Paris, northern Italy, Belgium, Austria, Germany — real savings, less dramatic.
• Comparable or above: Ireland, the Netherlands, the capitals everywhere — and Switzerland, which out-prices almost anywhere in America.

What the index actually says

The most widely quoted crowd-sourced cost-of-living index, at its 2026 mid-year reading, scores the United States at 69.7 without rent and 54.8 with rent. Here is how the usual destinations line up on the same two measures — without rent, then with rent:

• Portugal 48.7 / 37.1
• Spain 51.4 / 38.1
• Italy 61.3 / 41.9
• France 66.9 / 45.7
• Germany 68.0 / 47.0
• Ireland 70.8 / 57.4
• Netherlands 73.0 / 56.0
• Switzerland 109.8 / 81.5

Two things jump out. With housing included, Portugal and Spain sit roughly 30–32% below the US average — the tier-one story, confirmed. Germany and France sit 14–17% below the US with rent but at parity without it: the German supermarket basket costs what the American one does. Ireland and the Netherlands come out slightly above the US once rent is in — about 5% and 2% respectively — and Switzerland is above it on both counts.

Which costs: where the savings actually live

Dramatically cheaper in most of Europe: healthcare (the big one — often 50–65% less all-in in southern Europe, and roughly a third to 40% less in Germany, the Netherlands and Switzerland, details), rent outside capitals, fresh food and eating out in the south, universities, childcare, and the quiet category nobody prices: not needing a car for every errand.

Similar or more expensive: electronics and appliances, cars and fuel, clothing brands, utilities in some countries, and anything imported from your American life — including flights back to it.

The structural difference: US budgets are dominated by housing + healthcare + cars. European life compresses all three — that compression, not cheaper groceries, is where the 30–40% comes from.

The saving is housing

Read the Germany and France lines again: everyday prices at parity, total cost well below the US once rent is in. The whole gap is the roof, which has two consequences most comparisons skip.

First, the saving is only yours if you take it. Rent a flat sized and located the way locals do and the index applies to you; rent the expat-district apartment with the American kitchen and you’ve paid the difference back. Second, if you’ll own outright on both sides, the rent line vanishes and your saving shrinks towards the without-rent figure — near zero in Germany, still substantial in Portugal and Spain.

Healthcare by the OECD’s numbers

Healthcare is where the “dramatically cheaper” claim needs its own evidence, and the OECD provides it. Health spending per person in 2024, in purchasing-power-adjusted US dollars: the United States 14,823; Switzerland 9,927; Germany 9,584; the Netherlands 8,696; Portugal 5,375; Spain 5,349; Italy 5,337. Southern Europe spends about 64% less per person than the US; Germany, the Netherlands and Switzerland roughly a third to 40% less.

One caution before you paste that into a budget. Spending per person is what the whole system costs, not what lands on your card — a resident in the public system, a newcomer on visa-compliant private cover and a visitor on travel insurance experience the same country very differently (the difference matters). What the number does capture is the absence of the premium-plus-deductible-plus-surprise-bill stack, which is the American structure it is really measuring.

The tax line that anchors the budget

Cost-of-living comparisons quietly assume take-home pay stays put. It doesn’t: you’ll be taxed where you live, with US filing on top. The anchor on the American side is the Foreign Earned Income Exclusion: $132,900 per person for 2026, with a separate foreign housing amount capped at $39,870 for qualifying housing costs above a base amount. A working couple can each claim the exclusion.

Notice what it excludes: earned income. Pensions, IRA withdrawals, dividends and rent from the house you kept sit outside it, taxed under the normal rules plus whatever your new country does with them. A retiree’s cost-of-living saving can be real and their tax bill higher at the same time; run both before you cheer.

Which life: the honest multipliers

Your savings depend on choices: capital vs regional city (Lisbon vs Coimbra is easily a 30% gap), imported lifestyle vs local lifestyle, and household size — families save disproportionately on healthcare and education, singles less. A “same as now” lifestyle transplanted to a European capital can surprise you; a locally-adapted life in a regional city almost never does.

What the numbers add up to

Put the three sections together and the pattern is consistent. Portugal and Spain are cheaper on every line — everyday prices, housing and healthcare — before tax enters the picture. Germany and France are cheaper on housing and healthcare only, so the saving there depends on renting the way locals do. Ireland and the Netherlands offer no saving on this index and have to be chosen for other reasons. And whichever country it is, the index never counts flights home, US tax preparation, the transition budget or an emergency fund in two currencies; families should also read why families save disproportionately before treating the healthcare line as a bonus. Add those back, run your own numbers, then cheer.

Run your own numbers, not the internet’s

Skip the averages entirely: our free Moving-Abroad Financial Calculator takes your actual US spending, your destination and your lifestyle intention, and returns your estimated monthly cost, surplus and savings runway in two minutes — nothing stored, no signup. Then stress-test the result against currency swings (why) before you commit.

Beyond the averages: the costs people forget

• Transition costs: visa fees, apostilles, flights, shipping, deposits, duplicate insurance during the switch — budget a real one-time line for the move itself.
• Two-system overhead: US tax preparation gets more complex abroad; some US costs continue (see paying US bills).
• Currency conversion: handled badly, a silent 2–3% tax on your whole life (fix it once).

Want your specific picture — destination shortlist, real budget, income and visa thresholds — mapped properly? That’s the Expat Money Assessment; destination choice itself is our sister brand Quantum Jetset’s specialty.

This article is general information. Costs vary by city and change over time — verify current local prices before deciding.