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How to live on a budget in Paraguay

Anyone planning a life in a new country needs to take into account their daily expenditures and costs, in the context of the country’s general cost of living standards. Paraguay is a relatively inexpensive place in which to start a new life – not to mention a great place to seek out dual residency and make the most of the country’s attractive tax regimen – however an understanding of the country’s basic cost of living is vital in order to avoid any unpleasant surprises.

The good news is that while cost of living in Paraguay has increased in recent years, due to increased interest from abroad and a rise in investment and immigration, it is still extremely reasonable when compared to its Latin American neighbours, and indeed the rest of the world. It is also the only South American country with no taxes on foreign income, which means saving possibilities for foreigners with an external source of income.

In this article, we’ll look at some of the main costs associated with living in Paraguay, and some tips for living on a budget in this often overlooked South American nation, in order to make your time there as hassle-free as possible.

Cost of living in Paraguay

Paraguay’s cost of living is generally considered to be lower than in many other South American countries. However, it will inevitably vary depending on the city and region you decide to live in, and your chosen lifestyle.

The monthly cost of living for an individual living in Paraguay is estimated to be USD$ 555 – 1.68 times less expensive than the world average. Prices for basic provisions can be as low as 30% below other countries in South America. Food, in particular, is noticeably cheaper than elsewhere on the continent, especially meat, bread, rice, eggs, fruit, and other basic produce.

Other everyday expenses like electricity, gas and other utilities are higher, and comparable to European countries, since Paraguay is a landlocked country with limited resources. Despite this, most foreigners based in Paraguay tend to report an above-average quality of life and eminently affordable prices for expats.

Here are some general cost of living estimates for Paraguayan residents:

  • Accommodation: Renting a one-bedroom apartment in a city center like Asunción’s can cost around PYG 2,000,000 (approximately USD 285) per month, while renting a similar apartment outside the city center can cost around PYG 1,300,000 (approximately USD 185) per month.
  • Food: Basic food items are relatively inexpensive in Paraguay. A meal at an inexpensive restaurant can cost around PYG 30,000 (approximately USD 4), while a meal for two at a mid-range restaurant can cost around PYG 150,000 (approximately USD 21).
  • Transportation: Public transportation is generally affordable in Paraguay. A one-way ticket on a local bus can cost around PYG 2,000 (approximately USD 0.30), while a taxi ride can cost around PYG 30,000 (approximately USD 4).
  • Healthcare: Public healthcare in Paraguay tends to be affordable, although the quality of care provided may vary. As in most other countries, private healthcare is a more expensive option, with a visit to a doctor costing around PYG 250,000 (approximately USD 35).
  • Utilities: The cost of utilities in Paraguay can vary significantly depending on the season and your usage. The average monthly cost of utilities (including electricity, water, and gas) for a one-bedroom apartment can reach around PYG 600,000 (approximately USD 85).
In addition, Paraguay is noted throughout South America for its liberal stance on physical residency, and its straightforward, attractive tax requirements. These include a 0% tax on income earned outside the country – of particular note for foreign residents who collect income from external sources – and a complete lack of wealth and inheritance taxes which are taken for granted elsewhere.

Paraguay has the lowest corporate income tax rate in the region – just 10%, way below booming economies such as Brazil and Chile whose rates average 30% – making it extremely competitive when it comes to attracting foreign business. Value-added tax (VAT) is one of the lowest in the region too, all of which creates an attractive, welcoming environment for setting up a business, and contributes to a relatively low cost of living for individuals too.

Tips for living on a budget in Paraguay

Due to the low cost of living described above, it’s possible to live on a budget in Paraguay with a little forward planning and effort. Here are some tips to help you get started:

  1. Create a budget plan: The first step to living on a budget is to create a plan. Start by identifying your income, your inbound earnings and outbound expenses. Make a list of all your fixed expenses like rent, utilities, and transportation costs, and compare them to the national averages mentioned above. Then, create a list of variable expenses like groceries, entertainment, and clothing.
  2. Save on housing: Housing is usually the biggest expense for most people. Consider sharing an apartment or house with others to reduce costs. You could also consider living in a smaller or less expensive area to save money. You can find a handy guide to the best places to rent in Asunción here.
  3. Use public transportation: Paraguay has an efficient and affordable public transportation system. Consider using buses or trains instead of taxis or private cars to save money on transportation costs, which can add up over time.
  4. Shop at local markets: Shopping at local markets – which are typically held on mornings throughout the working week all over the country – is usually cheaper than shopping at supermarkets. You can find fresh produce, meat, and other products at lower prices.
  5. Cook at home: Eating out can be expensive, and cooking at home is a great way to save money. Plan your meals in advance and buy ingredients in bulk to save money.
  6. Avoid unnecessary expenses: Avoid buying things you don’t really need. Before making a purchase, ask yourself if it’s really necessary. This can help you save money in the long run.
  7. Find free or low-cost entertainment: There are many free or low-cost activities you can do in Paraguay. For example, you can go for a hike, visit a local park or attend free concerts and events. The best way to find out about these activities is to make friends with the locals and ask them for advice based on your shared interests.
  8. Use credit cards wisely: If you are using a credit card in Paraguay, make sure you pay your balances on time to avoid interest charges. Consider using a credit card with a low interest rate or a rewards program that can help you save money.
As is the case anywhere, living on a budget in Paraguay requires a little self-discipline and sacrifice, but it is definitely possible. By following these tips, you can save money and live a more comfortable life within your means, in one of the most affordable and welcoming countries in South America. And crucially for foreigners, any earnings from outside the country are exempt from income tax, which makes life in Paraguay even cheaper on a yearly basis for citizens with dual residency.

Get in touch with Strategicasa for more tips on how to make the move to Paraguay today!