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Demystifying Cost Relativity In Budget Travel Destinations

Updated: Oct 26, 2021

Living in a Caribbean resort town in Mexico, I sometimes hear tourists or expats gripe about how "some things are as expensive as New York" around here.

Sure, the Mayan Riviera is one of the costlier places to visit / live in Mexico, but, as someone who left New York to live on a small fraction of a New York budget in Playa del Carmen, I have to protest against such unfair characterization and set the record straight about how "affordable" things are in these parts, as well as in other budget destinations, for travelers.

Now, I am not even talking about the "tourist tax" visitors pay in most budget destinations around the world. Obviously, when you look like a tourist, don't speak the local language and only hang out in the touristiest part of town, you'll be getting "ripped off" left and right. It's not a terribly nice thing, no. But that's what you signed up for as a visitor from a "rich" country to a less financially prosperous one, so I wouldn't get too steamed about that, as there are worse injustices in the world than tourists paying an extra $0.50 for a mango or $3 too much in cab fare.

The complaints I'm referring to are not just about the overpriced trinkets and munchies sold on the main tourist drag -- they extend to certain goods and services and retail stuff in brick-and-mortar stores around town. Like, I've heard people say that supermarkets here are as expensive as anywhere in the US. Wat?! This pronouncement seems all kinds of wrong to someone like me who can't afford almost anything in US grocery stores but can afford almost everything in a Mexican supermarket.

So, how is it possible that I, a backpacker of very limited means, consider this place cheaper than people significantly wealthier than myself??

"Luxury" Is (By Definition) Expensive Everywhere

Anything that falls under the rubric of "luxury" -- renting beachside penthouses, buying designer accessories, chartering a yacht or a private plane, etc. -- can cost as much and, in certain categories, more in "budget destinations" as in any "rich" country.

If you think about it, it make sense. Those upmarket service providers patronized by wealthy tourists are not typically even owned by local people willing to cut deals. They are owned by international "hospitality" conglomerates who are obscenely rich themselves and, therefore, can afford to take a loss rather than dilute their brand with discounted prices that will bring in shabbier, sub-caliber clientele (as they snobbishly see it).

For locals, maintaining "luxury" services for tourists is extremely costly, in terms of maintenance and repair of equipment, rent of space, bribes to the local organized crime, etc. So, they are not in a hurry to undercharge for what they offer.

And, let's face it, nobody is overflowing with compassion for "rich people problems". Nobody likes wealthy people who can afford whatever they want demanding discounts. On what basis do they think they "deserve" to pay less? The answer is elitism and greed -- and ain't nobody got sympathy for that (least of all, other rich people!)

Even if you're not strictly "rich", but you're well-off enough to aspire to a discount on the exclusive "luxury" lifestyle (whatever that means by local definitions), you're still likely to run into a wall, if you're looking for a price break. Because, as far as the renters / restaurateurs / boutique sellers are concerned, if you want to live the high life, you've got to pay accordingly. After all, they didn't get into the luxury business to give discounts: they got into it to get rich off of rich people!

Now, this "luxury" pricing doesn't just extend to mansions and Michelin-starred restaurants: it applies to lower-level "fancy" stuff too. For instance, in my local supermarkets, I can afford the majority of what I see on the shelves -- until I hit the "fancy cheese" section and, suddenly, we're looking at Whole Foods Manhattan prices! The logic is that nobody needs imported European cheese for survival -- there are plenty of super-cheap and delicious local cheeses available for the rest of us mere mortals -- so, let the moneyed tourists / expats pay through the nose for the stinky stuff! They can afford it and they're not in the habit of saying "no" to themselves when it comes to eating well, so they'll shell it out (and they do!)

You see how these rumors of expensiveness start? If you're a tourist from New York who came to a supermarket in a Mexican resort town and made a beeline straight for its gourmet section of imported delicacies and liquors -- indeed, you'll see very familiar pricing and start telling others that Playa del Carmen is nearly as expensive as home. But those high prices only apply to a small subsection of "upscale" goods and services offered in our town, so this impression is incredibly misleading!

There are expensive things in every country. The beautiful thing about budget destinations is that not everything is expensive! As someone who is used to living on a tight budget, the upmarket stuff / entertainment just don't exist for me -- and, frankly, I can't say I'm suffering horribly form it. I'm no fan of the commercial notion of "luxury" for its inherent classist exclusivity -- so I never feel like I'm missing something special by staying on the out-side of the velvet rope.

Instead, I stick to the inexpensive foods, drinks, thrills and joys, of which there are plenty in this tropical paradise. I keep finding new ways to cut costs and it's the cheapest I've lived in years (under 1K USD per month) -- not just comparing to New York but in general.

The Cost Of Living / Goods / Services In "Rich" vs. "Poor" Countries Is Not The Same Across All Categories of Spending

When we start categorizing countries as "rich" and "poor", important nuances of national economics get overlooked. In reality, in "rich countries", not every single thing is expensive and in "poor countries", not every single thing is cheap.

What's "cheap" and what's "expensive" in rich vs poor countries seems to have an inverse relationship: the things that cost the most in wealthy countries are quite reasonable in budget countries -- and the other way around -- many of the things that cost the most in cheap countries can be found for cheaper in wealthy nations.

If I had to reduce it to a generalized formula, I'd say that the inexpensiveness / affordability beak-down typically goes as follows:

Affordable Things in Budget Destinations (countries on the lower end of living costs)

  • Hotel / housing rent

  • Food / produce / restaurant meals (including simple but healthy / nutritious options)

  • Labor (fixing / building / cooking / cleaning / driving / etc.);

  • Public transportation

  • Local guides for tours / cultural experiences

  • Movies, national theater, musical, arts and folklore performances

Affordable Things In USA (and other "wealthy" nations, I'm sure, but I can only speak for USA)

  • Retail clothing / shoes / bags (including designer apparel and accessories)

  • Technology / gadgets / appliances

  • Home goods / furniture

  • Designer cosmetics / perfumes that can be found at major discounts

  • Certain ethnic foods / ingredients / restaurants

Notice, if you will, that in the "budget destinations", the most affordable items are centered around social / public services and life, while the cheapest stuff in the USA is mostly, well, stuff...

To be clear: when I say that the above categories of goods and services can be found "cheaply", I don't mean that they're all cheap -- just that a reasonable selection of the inexpensively-priced versions of those goods and services is financially accessible to the general public.

In other words, if a poor person wanted to rent a hotel room for a night, is there an available selection of basic, ultra-cheap, quarter-star hole-in-the-wall hotel rooms a poor person could afford? In the United States, the answer is no. In my experience, in US hotels, you're either paying a nightly $100+ for a decent room or $100+ for a glorified crackhouse: either way, it's too much money (don't get me started on the American land-grab monopoly among hotels -- as well as their evil practices toward the homeless...)

Likewise, can a lower-class person afford to eat a nutritious meal -- not at a five-star restaurant -- but somewhere, anywhere, that offers inexpensive healthy meals? In the US -- again -- not so much! I've lived in the so-called "food deserts" myself -- good luck getting all your vitamins without breaking bank!

On the other hand, an American person of little means can be quite well dressed, compared to their counterparts in budget countries. Because "stuff" -- what is sold, donated and even thrown away -- is usually plentiful and of decent quality in the USA.

In the less economically wealthy countries, "stuff" can be expensive (and hard to find) because, while manual labor may be cheaper, material goods could still cost more to manufacture or import.

Most recognizable global designer brands are always quite limited in selection and sold at higher prices in Central / South America than in the US. Furniture, for example (even the crappy, cheap stuff), is quite pricey. For budget countries, bringing in "stuff" from abroad is a costly business and a ton of the shipping and taxation costs are passed down onto the customer. If a globally popular company doesn't have presence in a given country (like Apple stores), you could be paying significantly more than you are used to in the USA for brand-name electronics and fashions -- and twice or more for the latest / limited editions.

As Americans, we truly take it for granted that we are the largest buyer of virtually everything in the world (retail, food, drugs, entertainment) -- and that we're swimming in the kind a perverse consumerist over-abundance that most of the world, including other rich nations, simply don't partake in.

A savvy budget shopper can clean up quite well in stores and online in the USA. When I lived in New Jersey, the good old TJ Maxx and outlet shopping kept me clothed. Living in New York City, sample sales, ratty shacks in Queens packed with designer overstock and a secret Salvation Army location with Italian couture pieces buried in the racks kept me happy.

If I want to buy "nice" threads where I reside in Mexico, there aren't too many good budget options with national brands. Some of the bargain garments look fashionable enough, but are made out of lowest-grade fabrics that feel like sandpaper against the skin, bleed colors and fall apart or pill up in a matter or weeks / months.

Since I've been here long enough, I've had to get creative by going to free clothing exchange events, second-hand stores and Sunday flea markets. Looks like I'm getting the hang of it too: why just the other week, I scored the cutest pink chocolate BCBG slip dress and a pair of "so-bizarrely-disfiguring-it's-fashionable" fake Chanel capris for just a few bucks each. So, there's some hope for finding quality cheap stuff here, but the pickins are quite slim and you've really got to invest your time into sniffing them out.

(This is why, by the way, every budget destination expat in the world has a wish list for very specific objects and foods they couldn't find in their adoptive countries for love or money. But they're not all what you'd expect! For instance, I've heard any number of US expats in Mexico express a genuine longing for Chef Boyardee's Ravioli and Beefaroni canned meat / pasta foodstuffs. Yeah -- exactly -- the junk food they ate when they were teenagers! Despite limitations and shortages of certain quality goods in budget destinations, it's usually not so much the fancy or the practical -- but the nostalgic, symbolic and comforting things homesick people wish for when they're peering out of the foreign window into a foreign sky. How about that?)

Economic / Industrial Factors

Although I've had a hard time scoring nice and affordable mass-manufactured clothing or bedding in Mexico, I recall that India -- another budget destination -- was, in contrast, a phantasmagoria of beautiful and pleasant-feeling fabric-wear. Even the cheapest stuff there was made out of pretty dense thread-count, soft, airy cotton and other natural fibers. These things were high quality and inexpensive because they were basically made and sold "at the source" of where most of the world's best textiles comes from.

This is to illustrate that economic and geopolitical specifics play a huge role in the pricing realities of individual budget destinations. Depending on what the country produces and which other countries it trades with, some things can be crazy cheap in comparison to pretty much the rest of the world.

Just off the top of my head:

  • In most Asian countries, electronics will be cheap and abundant (as opposed to, say, most parts of South America, where those same things are quite limited and pricey).

  • If you're in Venezuela, you'll be paying pennies for gassing up the car.

  • In Thailand, a professional tailor will make you a perfect replica of your favorite couture designer suit, customized to your specifications, for a small fraction of what it would cost elsewhere.

  • In Cuba, you can buy the cheapest Cuban cigars. While not the cheapest cigars in the world, Cuban cigars are, by global consensus, the best cigars in the world -- that cost mere dollars to buy at the source (the authentic, good stuff is hard to find and more expensive outside of Cuba).

  • If you're in the magical town of Mompox, a hidden gem on the fabled Magdalena River in the lush interior of Colombia, you'll find the country's (and possibly the continent's) finest and widest selection of filigree accessories (intricate jewelry woven from fine silver or golden threads), many of which are almost unreasonably inexpensive, considering how much skill and time they take to make.

  • And if you're in China -- well, I haven't been (yet!) -- but I imagine that you can find just about any thing for sub-market prices, if you look. 'Cause it's China: the country that makes everything for everyone -- at the lowest cost of manufacturing, in unholy amounts, across the entire garbage-to-perfection quality spectrum. It's gotta be a budget shopper's paradise and I can't wait to experience it myself!

In short: most destinations, "budget" or not, have a "niche" product that is superb, plentiful and cheap, just because the country is up to its ears in it for one reason or another.

The Psychology Of Travel Budgeting: The Frugal Backpacker / Nomad vs. The Tourist-On-Vacation Spending Mentality

It's worth mentioning that different categories of traveler / expat use completely different budgeting heuristics when abroad, which result in different spending outcomes.

People on vacation (and sometimes launching into retirement) in foreign countries have a different mindset than financially strapped backpackers / wanderers such as myself. When those tourists are on holiday, they are compelled to "treat" themselves because it's a special occasion and they earned it by all the hard work that lead up to this moment. Their reward is time off from reality and its pressures, essentially. So, they give themselves permission to spend more than usual, even when they are in a "budget destination" where that's not necessary.

"Not necessary" only matters to those who can only afford the "necessary" -- but that's not everybody by a long shot! There's a seductive quality to feeling richer than you are when you can afford to throw a little money around on vacation. And not all vacationers, exhausted from the daily grind, want to exert themselves on doing extensive "homework" about local pricing and bargain spots. So, they pay the "tourist tax" because it's worth the peace of mind and the lack of effort. And that's entirely their prerogative!

Compare this outlook to a significantly less financially secure traveler like myself who, half the time, moves around because she actually can't afford to live in the country of her citizenship. It's a totally different mental orientation, I tell ya, driven by survival concerns, not desire for self-pampering. For me, travel / expat life is the opposite of an excuse to "splurge" -- it's an opportunity to live on even less than back in the States, so I never, ever just relax, let loose and "make it rain", no matter where I am.

Don't get me wrong -- I have an amazing time and chill and party in so many ways -- just not expensively, as it's simply not an option. I'm quite used to being financially limited like that and don't find it unbearably oppressive as long as I'm still calling the shots in my own life and my basic / essential needs are met. Also (as I keep hammering in throughout the Hack Solo Travel guidebook), I believe that world cultures exist on the level of the humble working people of each nation, while all the elites of the world just share the same bland culture of consumerism (and a pathological fear of "the rabble"). So, not only do I not mind, I hands-down prefer spending time with locals outside of "luxury" social settings.

Another thing that happens with tourists is that, when they show up to budget destinations, it can feel like they've landed at a liquidation sale. So, they end up spending a ton more money than planned -- because they get into the "everything is SO cheap, it would be a crime not to buy it" bargain spree mentality (been there myself...)

Consumer decision-making is objectively anything but rational (though it might make perfect [subjective] sense at the moment). How people budget and prioritize spending when traveling is no exception. Unless they deliberately commit to understanding local prices, most travelers to budget destinations, automatically use the following rule of thumb:

"As long as it's cheaper than back home, I won't question it, 'cause I feel like I'm getting a bargain already!"

In reality, though, they could be getting fleeced for 2-10 times the price of what the "normal people" (i.e. locals and frugal travelers who bother to do their research) are paying for the same and superior goods and services.

Look, it's a felicitous occasion when both the seller and the buyer walk away feeling like they've each won, regardless of how overpriced the transaction was. I don't actually mind overpaying on certain things myself because I want to support local economies and industries (especially since the pandemic crushed so many!) All I'm saying is: tourists mindlessly overpay for things and then tell others about their costs, which contributes to the misleading rumors about certain destinations being more expensive to visit than they have to be.

* * *

Cost relativity cuts in many directions. Things are "cheap" or "expensive" not only relative to what they cost in other places but depending on how much money each person has to spend. Things that seem "dirt cheap" to visitors from expensive countries may still be largely unaffordable to the local population. A $1 beer may seem like the cheapest beer in the world to a New Yorker used to paying $12-16 for it -- but to a day laborer making $90 per month, it might as well cost the same as in New York since they can't afford it either way. To a billionaire, on the other hand, it doesn't matter, if that beer costs $16 or $16,000 -- if they want it, they can afford to drink it -- and it still costs them proportionally muuuuch less than that $1 beer costs you or I.

Economics is a complicated science but I think it helps for travelers to grasp at least some of the economic underpinnings of the destinations we visit. If nothing else -- in order to save some dough. But preferably -- to also be able to make sense of what we witness when we travel; to see where we fit in with all of it -- and, hopefully, to spend money with a conscious intent to support local budget establishments.

Since the pandemic hit, many "experts" have been predicting that budget / backpacking travel was going to plummet. Let's not let that happen, people!! Let's keep traveling to budget destinations, staying in cheap (safe & central) crashpads, eating at cheap (delicious) restaurants, employing cheap (super-knowledgeable) tour guides, attending cheap (brilliant) performances and buying cheap (stunning) handicrafts! They may be inexpensive, but a lot of skill, love, local history and culture backs those goods and services, tirelessly offered by people who take pride in who they are and what they do.

Here's to keeping budget travel going stronger than ever!


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