Without a doubt, one of the first things a person goes through when moving abroad is fretting about the unknown. I didn’t know much about the country of South Africa but if I was to move my life to another country, I wanted to know as much as I could. I went on sites like Numbeo to gauge what my expenses would be like, how it compared to my expenses in NYC, and how it compared to the salary I was getting paid in the US. Obviously NYC is one of the most expensive cities in the world and South Africa can’t touch that cost of living, so taking a pay cut seemed natural, but how much is right? It’s been almost a half a year since I’ve lived here now! Time flies for sure, but I’ve also pretty much settled into my new life and have most things figured out.
For a cost of living for Cape Town, click here.
South African Economy
South Africa, has a GDP Per Capita of around 7,500$, meaning the average person earning something around that a year. This is significantly lower than the US or other first world nations but is considerably higher than the rest of Africa. Sandton, the wealthy suburb of Johannesburg, is likely the richest area in all of South Africa. It is in this suburb that I’ve lived at for almost half a year that I’ve deduced how ridiculous the income standard deviation of this country really is. Sandton is incredibly first world, and would be nicer than most parts of America if put to the test. It could have a GDP Per Capita 10x higher than the rest of the country and I wouldn’t be surprised. Right next door in the township of Alexandra however, it could have something 1/10th the average and I would not be surprised. So living in Sandton, it is not as cheap as I thought it would be, although nothing shocking. If you’re planning on moving to Sandton, realize that you’ll be living in the wealthiest area of the country and people here certainly do not live remotely resembling of the country’s GDP.
Taxes in SA is similar to the US in that it is a tiered tax structure. The highest tax bracket is 40% and this starts at something like R620k/year. However, only income earned above 620k will be taxed at that rate. Everything below that is taxed at its respective level. I’m not an expert on taxes but I am an expert on seeing my paycheck diminish from taxes and getting owned by the government. An interesting fact I’ve learned about SA is that because of the huge income disparity, only about 10% of the population pay taxes that makes up for the other 90% of the population. It’s always a topic of discomfort but after living here for awhile, I can totally see it being true.
Here is a breakdown of my monthly expenses. Note that this is really only helpful for someone in a similar position to me in that you’re not married, do not have any dependents, and living the bachelor’s life. If you have kids, this guide is not for you! However, there are plenty of Joburg blogs out there started by people with kids like JoburgExpat that will be more helpful.
Rent – 10,000R
Without a doubt any New Yorker’s biggest expense. I remember living in NYC and it would not be uncommon to see someone spend 50% of their take home pay on rent! Renting an apartment, like one of my previous blog posts will go into detail, is cheap compared to New York, but really not as cheap as you’d think. If you’re willing to live OUTSIDE the main city area, like Fourways and Sunninghill, it is cheap. Otherwise, you’ll be quite surprised at just how expensive a 2 bedroom apartment is in Sandton. Yet, if you are not from around here, and hence do not know many people, living on your own in the booneys just to save money is unappealing as well. Sandton is a farcry from a big urban center, but it is about as close as it gets for expats in Joburg and probably where most ex-pats will want to live. It’s like moving to NYC for the first time, and living in Queens. Plenty of people do this because it’s so expensive, and nothing against Queens, but it’s no Manhattan. Because there are so many expats who likely don’t have any possessions to their name, furnished apartments are in high demand and do not come cheap.
An average furnished 1 bedroom in the Sandton/Morningside/Rosebank area runs something around 12,000R. This won’t get you anything spectacular either; just your basic slightly above average apartment. If you want something with style, add another 3,000 onto that price tag. If you can find a roommate however, a 2 bedroom apartment becomes significantly cheaper in proportion to the 1 beds. I’m fortunate enough to be one of those people and the apartment I have now, in the Sandhurst Towers, is amazing. Certainly something I would never be able to live in in NYC. At 10,000R (20k split two ways) a month, most South Africans would never want to pay this, and it was a bit more than I had initially thought I would spend, but a little bit of the good life never hurt nobody.
Car and Car Insurance – 2400R+630R
A car is an absolute necessity in this city. After buying my first car ever, I actually started to enjoy driving. It also doesn’t hurt that my car is a BMW and has some power. Nevertheless, it’s been a few months now and the novelty has worn off, but the car payments have not. With a car costing 150,000R, my car payments come out to something around 2,400R a month. In addition, car insurance is a necessity in this country as traffic can get hectic and people can drive pretty crazy. Getting my insurance through Hollard, I pay 630R a month which is incredibly reasonable, especially for an expat.
After living here for a few months, I’ve concluded that people here are much more car obsessed than people back home. People would gladly spend the majority of their paycheck on their car instead of their accommodations. Cars here are like a status symbol, which is likely why I see more German luxury cars here than in Germany. If I took half of the money I put into my rent (5,000R), and added that into my car payment instead, so 7,500R, I could likely drive a Porsche. I could also live somewhere decent for 5,000R as well (not in Sandton of course).
Gas – 500R
Gas prices are everyone’s least favorite topic of conversation. Prices never seem to want to go down, and you can’t stop using it, especially in this country. There is no public transportation, no bicycling culture, and certainly no carpooling. Gas is as about as inelastic of a commodity here as water. No matter how much you have to drive, you just have to suck it up and pay the costs; there really are no alternatives. Gas prices currently hover around 13R/liter, which equates to about $4.80/gallon. Keep in mind gas prices are not only attribute to the price of crude oil but also to that of the usd zar exchange rate as all energy commodities are quoted in dollars. So even if crude prices decrease, if the rand depreciates (which it has been big time recently) against the dollar, gas prices in SA may still increase!
A full tank on my Diesel car costs me about 700R-750R. Thankfully, living in Sandton has its perks and my commute to work is about 10km round trip. Couple that the fact that I just don’t drive much in general, and I can fill up my car every 6 weeks or so. People are shocked when I tell them this as people drive around so much and regularly fill up their cars every week.
Sometimes I wonder how the average person in this country affords gas if the GDP Per Capita is somewhere around 7,500$. Gas isn’t cheap and even if you’re only driving say 100$ worth of gas a month, that’s still a huge chunk of the paycheck gone.
Gym – 800R
Without a doubt, something a man cannot live without. This was one of the first things I sought out upon moving and am glad to be gyming where I am. At 800R a month for Planet Fitness Platinum, this is expensive but this is one of the top gyms in the city so a premium is expected. Less fancy gyms can cost much less and there are even more expensive gyms like Virgin Active Alice Lane running at something like 1600R/month! I’ve actually been to both clubs now and they are definitely on par with each other. The Alice lane gym is smaller than Planet Platinum and in my opinion does not warrant the premium it charges.
Cellphone – 70R
Without a doubt, one of my proudest money savings moments. I’ve figured out how to live cheaply in a market dominated by expensive cell phone prices and plans. Purchasing an unlocked cellphone from the US before coming here, I’ve essentially paid much less for the phone itself than I would have here as electronics run a 30-50% premium. Coupled with the fact that I really do not call anyone, have wifi at home, work, and the gym, I signed a contract for 500mb a month for 39R/month with Vodacom. Add another 30R for talking and that’s about all I need for a month. People here regularly pay over 1000R a month which is just ridiculous.
Electricity – 400R
An utility one can’t do much about but just pay for, I split this two ways and have deduced that we usually use about 800R a month. Because our electricity is pre-paid, I have a meter right next to my door telling me how much electricity I have so I’m now so much more conscious about using power than before where I would just get a bill of surprises at the end of the month.
Wifi/TV – 450R
My TV programming is actually included in the rent price of my apartment but I will be honest, the TV here is shit. It’s mostly recycled garbage American TV shows no one cares about, movies from 10 years ago, and a few random South Africa channels. Not that I watched much TV back home, I suppose one could wish that they’d have ESPN in this part of the world :(. Internet is a mission to set up. It’s a necessity for most people and certainly for me. It took me about a month to get it all squared away. With Afrihost, I’ve managed to secure about as cheap of a plan as it gets for fast speed internet around 900R a month. Expensive for any 1st world standards, especially since we only have 10mbps, but that is how it is here.
Here is the big one. Anyone that’s lived in New York would agree with me that a huge part of one’s salary goes to these two things. It’s actually quite alarming if you pull your credit card bill into excel and sum up all your nights at dinner bars. It isn’t the rent, the phone bills, the transportation, or even quick take out meals for lunch and dinner, but rather the times you are out eating and drinking with friends. Nights will easily add up to 100$ and then some before you’ve even feel like you’ve spent 20$.
Food and alcohol are cheaper in this South Africa no doubt. Lunch costs me on average 30R and dinner will run be around 50R. However, a quick lunch and dinner in NYC would cost me 15-20$. It’s not the casual meals that killed me in NYC but rather going out to dinner at a proper restaurant and having drinks with friends. This would regular run me 100$ a night. Because of the strong social culture in NYC, coupled with the fact that it’s easy to go anywhere without worrying about drinking and driving, these nights occurred quite often.
Enter South Africa. In the span of about four months, I’ve managed to hit up almost all the nice and high end restaurant in Joburg and a very good meal with alcohol cost 400R. There’s not a shortage of restaurants in this city, but it’s a farcry from my restaurant experience in NYC. However, the culture is much different. Because you must drive, you cannot go out and drink to your heart’s desire. Things are incredibly spread out here and a cab out will be easily 200-300R. Spontaneity goes out the window because you must plan every little detail of the night and there is rarely that one restaurant that just opened down the street with the rave reviews. So what does this all mean? Many less nights out, and much less money spent. A night in NYC where you weren’t planning on going out, a friends text at 11pm changes your mind, leading to 100$ spent that night for no reason. This just does not happen here.
After completing the Joburg culinary scene already, I have little desire to go out for dinner. Going out here is fun but again, it requires planning so many times I am content to stay at home and not get pulled over by the cops. Overall, I’d say my food and entertainment bill is somewhere around 5000R a month. Quite high for most South African standards and obviously this can change with one big night out but it is still a fraction of what I spent before.
Adding It All Up
Rent – 10000R
Car – 2400R
Insurance – 635R
Gas – 500R
Gym – 800R
Internet – 450R
Cellphone – 70R
Electricity – 450R
Food/Entertainment – 5000R
= 20,305R/month for all regular expenses
Obviously there are just random things every month you end up paying for but this about sums up the must pay expenses of my life in South Africa so far. So what happens to the rest of the money? Life in SA is pretty good as long I sit my ass in this chair that I’m writing this blog post for the rest of my days, but I have many places that I’d like to see in Africa and it isn’t cheap.
As soon as you start traveling around Africa, you realize a few things:
- No Africans travel around Africa and hence
- Africa is NOT a cheap place to travel around because:
- It is all catered to Europeans/Americans/Australians all earning Euros, Pounds, and Dollars
- You realize just how poor you are earning rand when you are comparing yourself to these people and doing the same trips that these guys are doing
- Most trips around Africa are quoted in USD or EUR and the exchange rate is currently shit
- Africa is NOT a cheap place to travel around because:
What do things cost?
What do most things cost here? Well it’s entirely dependent on where you are. Sandton, where I live commands the ultimate premium for all things in South Africa. So here are some examples from Sandton, and you can expect noticeable discounts if you go further out of the city, or to another city like Durban or Pretoria.
- Beer: 20-25R
- Glass of Wine: 30-45R
- Shot of non top shelf liquor: 20-30R
- 300g Fillet at steakhouse: 150-200R
- Cinema Ticket: 60R
- Taxi ride from Sandton CBD to Rosebank: 150R
Feeling a little discouraged after reading this post? Worry not, there are ways to make money here likely not available back home. I’ve only recently discovered this but now is a good of a time as any. South Africa has a ridiculous inflation rate hovering somewhere around 6% a year. Being a 3rd world country, with people going on strike more than they work, the country is seen as a riskier investment than others. While American banks currently pay less than 1% on a certificate of deposit, and pretty much nothing on a savings account, South Africa is the opposite. Savings accounts at banks will regularly yield 4%!!! And if you’re not cash strapped, and can invest your money for a few years without having to touch it, there are bank CDs here paying almost 6+%!
The highest I’ve seen is a bank called African Bank that will pay you 9.5% on a 5 year CD! That is ridiculous. 9.5% is higher return than most mutual funds generate over a year. Capitec, another SA bank, is a close second with 8.5%, and the rest all have CDs returning 6-7% per annum. Also, these CDs all give you the option of taking the interest payment in cash, or reinvesting it to compound the interest! That’s like a 50% return on that African Bank 5y CD over 5 years! I suppose this is the one positive aspect of getting paid in Rand, a currency that’s depreciated almost 15% against the dollar since I moved to the country, that I can invest in things like this.
For the follow-up article to this comparing New York and Johannesburg, click here.
Note: South Africa has a high rate of inflation and this article will likely appear outdated with its numbers in the years ahead. Please feel free to leave comments of what costs you currently see in South Africa!