On average, residing in Germany is not quite as pricey as one might expect from a highly industrialized country with a good quality of life. In the 2012 Mercer Cost of Living Survey, no German city ranked among the fifty most expensive expat destinations worldwide. So life in Germany’s cities is currently more affordable than life in, for example, Vienna or Milan, let alone the expatriate hotspots of Scandinavia or Switzerland.
In comparison to other European nations, the cost of living in Germany is quite reasonable. In 2013, prices for products and services were only 1.8% higher than the average of all EU member states. Of course, the cost of living in Germany is still far above that in Eastern European countries like Poland or Romania. Nonetheless, Germany is in a better position financially compared to many of its European neighbors.
However, such data doesn’t take the wide range of lifestyles into account, as it does not consider regional or personal differences in income and expenses. In the 2012 Mercer ranking, which only takes well-paid foreign assignees into account, Frankfurt was the most expensive German city (88). It was followed closely by Munich (90), Berlin (106), and Hamburg (109). Stuttgart (119), Leipzig (148), and Nuremberg (163) are fairly inexpensive places. Generally speaking, prices in the former GDR are often lower than in the west of the country.
What about people with far less money than a generous expat salary? The necessary minimum expenditure for an individual has been the subject of heated political debates.
In 2013, German legislation defined the basic cost of living in Germany as EUR 382 per adult per month, which was raised to EUR 391 in 2014. This is the amount that long-term job-seekers and people on welfare receive to cover their everyday expenses. Housing costs are subsidized in addition to that; nonetheless, this sum mostly pays for bare necessities, like food.
If you look at residents with a regular income, the average income amounted to a monthly EUR 2,700 per household in 2011. Please note that this is the net income after taxes and deductions for social security costs. After paying for accommodation and food, an average household could then spend about EUR 1,350 however they wanted.
The difference between these two sums should give you an impression of income, relative wealth, and everyday expenses. In the end, how much you spend will strongly depend on your individual situation, particularly housing, the distance from home to work, and marital status. Singles often can’t share rental costs, and they don’t profit from supersize bargains when grocery shopping. Moreover, married couples benefit from special tax cuts as well.
Before you move, it can be useful to take a look at the expenses that will make up the biggest part of your budget and compare them to the current situation in your country. Note, however, that taxes in Germany and costs for social security funds are relatively high.
An employee has to spend about 21% of their gross income on mandatory contributions to healthcare, unemployment funds, the national pension plan, etc. However, this percentage only applies to salaries under a certain cut-off limit, so the cost of living doesn’t necessarily increase for people with fairly high gross incomes. Germans also pay quite a bit in income tax. However, a good tax consultant can help you find various tax cuts and benefits in the arcane income tax system.
In 2010, people living in Germany spent their remaining income roughly as follows:
The remainder includes miscellaneous smaller items of less than EUR 100 per month, such as personal grooming, pets, individual insurance policies, medication, media, etc.
In comparison with some other European countries, Germans spend less money on food. This is true for two reasons. First, Germans can choose to go grocery shopping at many different small retail outlets and supermarkets. Secondly, Germans have a different attitude towards eating out than, for example, the Italians or the French. Dining in a restaurant is considered a treat rather than a way of life, which helps explain the relatively low monthly expenditures for food.
Prices are more or less stable. In July 2013, the country’s consumer price index had risen 1.9% compared to the previous year. However, prices for fruits and vegetables can vary widely during the year. They may even double in winter when plenty of fruits have to be imported. Moreover, fuel and energy prices keep rising steadily.
You should also keep in mind that the VAT is relatively high in Germany, at 19% of the net price. For selected goods, such as dairy products or tickets for local public transportation, the VAT only amounts to 7%.
As far as the cost of daily necessities and small luxuries goes, you might pay about the following in a larger city: EUR 1.00 for 4 apples, 1 l of long-life milk, or a tube of toothpaste; EUR 1.50 for a pound of pre-packaged bread; EUR 1.50-3.00 for a cup of coffee to go, EUR 7.00-8.00 for a movie ticket, and EUR 15.00-25.00 for dinner at a standard restaurant (main course plus soft drinks).
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