Our stay in Lisbon Portugal was our first time ever in Europe, and we have generally enjoyed living here for the past five weeks. While this post will focus on an expat budget, it’s easy to see why many expats choose this as their destination for non-financial reasons.

Strolling through the winding hilly streets with all of the beautiful old buildings creates an atmosphere unlike anywhere else we’ve been this year. There is plenty of great food, you can drink the tap water, it’s safe, and the conditions are generally very sanitary. Before this trip we would have taken those things for granted, but we don’t anymore.

If you ask me how affordable Lisbon is, I wouldn’t have a quick single answer. There are so many variables depending on who you are and what your goals are. Do you want to live here just for the 90 day allowance as part of a slow travel plan? Do you want to seek residency, do you want to buy or rent, are you single?

This breakdown is going to be slightly more involved than those for other locations due to all of these factors. It will however remain based on our actual spending in Lisbon.

Assumptions

I will be making the following assumptions to simplify the scenarios presented:

• You are selling everything and moving to Lisbon Portugal
• You will not own a car and will rely on public transportation and Uber/Bolt
• Scenarios requiring residency will assume you are using a D7 passive income visa. More detail can be found here, but the basic requirement is 920 euros per month of passive income for one person, and 1,932 euros per month for a family of four. Portugal has other interesting visa options like digital nomad, or a golden visa if you invest in certain ways in Portugal.
• Tax implications are not factored into these numbers. US citizens are subject to citizenship-based taxation and must file US returns regardless of residency. The interplay between US and Portuguese tax obligations, including the Foreign Tax Credit, Portuguese taxes on investment income, and required foreign account reporting, is significant and warrants consultation with an international tax professional. This topic deserves its own dedicated post.

Apartment Lease Or Purchase

The units we will be renting or buying in the scenarios presented are shown below. A few notes to call out:

• The same long term rental will be used for the family and single person, with the single person expected to have two roommates sharing costs equally.
• The full cost of the family apartment purchase is $595,294 between the purchase price and one time taxes
• The full cost of the single person apartment purchase is $247,529 all in

The family Airbnb will be our actual Airbnb from Lisbon which runs $2,942.12/month.

Family Of Four – Expenses And FIRE Number

If you aren’t familiar with the term “FIRE number”, it’s the amount of money that invested property, is required to sustainably support a given lifestyle. You can find this number by multiplying your monthly expenses by 300, or your annual expenses by 25. That provides you the number at which you can withdraw 4% of your starting portfolio value each year, adjusted for inflation each year, while being historically sustainable indefinitely.

Analysis

The Airbnb scenario at over $5K a month is just not practical for FIRE purposes, at least not for the majority of us who fall into the lean FIRE group. There are more interesting places in the world where you could FIRE for far less. I think this illustrates the gripe that many locals have and show by hanging “less tourism, more neighborhood” banners on their balconies. The rush of tourism in the past ten years has driven housing prices through the roof.

The apartment purchase scenario’s numbers are also bad if you want a short runway to FIRE. You would need a grand total of $1,407,899.63, with $595,294 of that accessible in cash to buy the property.

Renting a long term apartment is the only practical option among the three, with a family of four being able to FIRE in Lisbon for the reasonable total of just over 1 million USD.

Single Person – Expenses And FIRE Number

Single people always have a cost advantage in FIRE scenarios. Lisbon is no different, and that contrast will be on display here.

Analysis

Single people aren’t immune to the crazy Airbnb prices in Lisbon, and due to that, the short term rental comes in at the unreasonable FIRE number $829,882.50. For that amount there are more interesting places in the world for far less.

The apartment purchase is a little more interesting, requiring $532,984.75 between the purchase price and the investments to sustain it. That’s not a rock bottom value, but once you buy the property, the $285,455.75 in investments to sustain your life is worth consideration. It becomes on par with Vietnam in terms of ongoing investments required.

A long term rental is also a very affordable option, only requiring $364K in investments. As a single person I would absolutely do a long term rental in Lisbon. That FIRE number is among the lowest in the world. Not only would you get to FIRE as quickly as possible, but you’d do it in a place with an amazing quality of life.

Final Comparison

Lisbon has a lot going on with the numbers. Airbnbs are prohibitively expensive, there are interesting residency options, and the single person advantage is large. This is the only place that has run the complete spectrum of FIRE viability. Completely unaffordable in some situations, and your fastest path to FIRE in others.

Here are all of the scenarios side by side.