Luxembourg is an expensive country! But is it really? Is it expensive relative to what? Here are my two cents about the cost of living in Luxembourg.
Expensive or not expensive is always a relative term.
If people compare the spending between 2 countries, they also need to reflect on the income side.
I like to analyze things based on percentages.
The Household Budget
Statec, a state website that provides statistics about Luxembourg, releases every year an example of a household budget according to the family members.
I have to say that I really enjoy reading their reports and be aware of the country’s economic and social situation. And the best thing is that most of their data is available to anyone.
We can see the table that is provided on their website here:
We can immediately see that the cost of living doubles, if we compare a single man to a couple with 2 children.
Makes total sense. Having children is expensive even on countries where education and healthcare are available for free.
In my case, I live with my wife, so the budget for a couple applies. Our reference monthly budget is then 2912€.
Here are the major expenses, ordered from the highest to the lowest:
Let’s focus on the first 4 categories.
I would say we need to split needs from desires. We might argue that we need leisure activities, but these are not critical for our survival.
Housing, food and transportation are our most important daily needs.
Healthcare should be included as a need. However since healthcare is practically free (we pay small fees depending on the consultation or treatment), I choose to remove it from the basic expenses.
The 3 category budget translates into 2314€ per month.
How Do I Compare?
Breaking down into the 3 major categories, I see the budget for housing to be accurate according to my spending.
Living in a modern 70 square meter apartment with a garage, 15 min away from the city center, would roughly cost you that including electricity, heating, and water.
Real estate prices however can really vary from region to region and how old is your rental contract. If I was to find the same conditions today, I would likely pay at least 100€ more than the reference value.
As with every country, we can choose to live in expensive areas or cheaper areas. As Luxembourg is a small country (it can take 45 minutes to cross it), nothing is really far away.
Food is also very personal. As recent vegetarians, we can can cut the food costs into half. The fact that we do not eat meat or fish at home, helps us to cut the cost on the second biggest expense.
I would say we spend roughly 300 to 400€ per month, excluding dining out.
As for transportation, I own a small city car. I do not have a monthly payment so I only spend on fuel, insurance, and maintenance.
Again, everything here depends on which car you drive, how expensive is your insurance and it’s maintenance.
In my case, I would say my cost would average 250€ a month.
When living in the city center, a car is really a luxury and not needed.
The same applies to areas with good train or bus connections to the city center. In my case, I need the car to commute every day, so I would say the budgeted cost is reasonable and realistic.
Living Below the Reference
So adding everything up, my monthly spending for housing, food, and transportation translates to 2050€.
If I add 450€ for all the other expenses, this would turn into 2500€ per month.
So how much is this amount compared to the minimmum average salary for skilled persons?
The reference gross monthly wage, is 2570€. More info here.
It means that a skilled couple should generate at least 5640 gross per month. That leaves at least 50% to be saved per month (gross).
If a couple is able to save 50% on a reference income, then I would not say Luxembourg is an expensive country by itself.
Our personal choices make it expensive or not!
How is it in your country? Let me know in the comments below.