The Expat Learning Curve: Managing your budget in Mexican pesos

The following article was written as a part of our series called “Your New Life in Yucatan.”  Because the topic of learning to manage money in a new culture is so vital to success in business we are also posting this article as a part of our “Investment Yucatan” series as well.

To read more articles about investment in Yucatan click here.

To read our articles on how to make the most of your new life in Yucatan click here. 

Taking time to convert pesos to dollars and back again can hurt your brain and your budget

“Mexico is SO cheap!”

If you come to live in Mexico from countries like England, Ireland, Canada, Australia or the US you will likely notice that some things are much cheaper here than they are back home.   This is especially true when you compare prices for services like car repair and home maintenance.  Generally dining and entertainment is considered a bargain as are prices for buying and renting a home.  For many expatriates the lower standard of living may be one of the primary reasons they chose to move in the first place.  Mexico is known as one of the best places to live a high quality of life for the least amount of money.

This concept can be a blessing or a curse.

The fact is that your ability to live the life you want to live in Mexico requires you to think about all your spending decisions in pesos- not in the currency you used back home.  Let me explain this with a story about my experience.

To give you some background I am a thirty (something) guy who moved to Merida in 2010.  My intention was to live and work in Mexico.  Although my situation may differ when compared to some expatriates here, I feel the experience I am describing is a universal one- especially for those living abroad for the first time.  The “learning curve” associated with survival in a foreign country differs from person to person.  Most experienced expats will agree, however, that the sooner one learns to budget based on the currency and standard of living in their new country the more successful and rewarding their experience will be.

The Naïve Expat

I chose to live in Merida, Yucatan while I finished the second year of my graduate program.  I was working remotely as a graduate assistant and receiving about $500 US a month in pay.  When I first arrived here I stayed with a friend and began a search for my own rental home.  My first thought was to convert my pay to Mexican pesos to see what I was working with.  This seemed like a good first step.

I saw several homes and eventually found a great two bedroom condo that was fully furnished with air conditioning and all appliances including a washing machine.  The best part of it all was that it was located in a beautiful North Merida colonia (neighborhood) close to my work, many restaurants, shopping and Centro.  The rent was $3,650 pesos monthly (about $300 US depending on the changing conversion rates).  When thinking about my budget I simply converted the rent to US dollars and thought, “WOW! This condo is a STEAL!  I could never afford to live in such a nice home in a neighborhood like this in Chicago!”  I made my deposits and moved in right away.  I thought I would stay there forever.

I began my studies and started to teach English at a local school on the side.  Since dining out was so “cheap” when compared to back home I decided I could eat out more.  I also found myself going out to bars and to the movies more often too.  When I started to feel a little “poor” I would go shopping for food to cook at home.  Walmart was the obvious choice as there are many of them around town.  Walmart was cheap back home so it was cheap here too, right?  I looked at prices for food and simply converted them to US dollars in my head.  If it seemed reasonable I would put the items in my cart and buy them.  Since everything seemed so cheap I found myself buying the “high end” brands.  Hey- I could afford them, right?  I also found myself visiting Costco to get brands I was used to back home that I could not find at other retailers.

This lasted about four or five months.  For some reason I always seemed to have a hard time at the end of each month making my bank account balance my spending habits.  I began to truly look at my spending and asking local friends about how they spend their money.  They asked me about my rent and I got several surprising looks of shock- not for the reason I expected either.  They told me I was spending too much.    I slowly began to realize that all this converting of pesos to dollars and back again was a true experience of being “lost in translation.”  The fact is that you can’t properly convert a standard of living.

Sure- this is a familiar place to shop but is it the cheapest? Something to consider.

Finally Living in Pesos

I should have been thinking in pesos the whole time.  Experienced expats told me to do this and I thought, “Yeah, yeah- I do think in pesos.”  But that was not completely true.  I thought in pesos only to convert it to dollars.  After my graduate program ended so did my job that paid in US dollars.  Talk about a reality check.

I he began to live my life differently- like local folks.  I get what I need and I look for the best prices.  I save my money for a few good things instead of every good thing.

I have since moved out of that condo and into a house in a less “fancy” but equally safe neighborhood.  I am no longer as close to Centro or major shopping centers and I have to take a bus to get to work every day.   I make plans to see friends at their homes instead of going out for dinner or drinks.  My social life has certainly not suffered with my new budget.   I shop at Chedraui and Super Aki (supermarket chains) and buy items on sale whenever possible.  I also try and compare prices to determine where I can find the best deals on items I use the most.  I find that there are many small, family stores that have the best prices out there.  Sure, I don’t always get the convenience of “one stop shopping” but I am able to make my ends meet.  Most importantly I compare prices in pesos.  I almost ever convert to dollars anymore.

You may think that I did this only because I had to and you are partly right.  Sure- I can visit friends in their homes because I have had more time to make friends here.  You might also say that I moved to a less expensive home and budgeted my shopping because I no longer make the money that can support a more excessive lifestyle.  OK…

If you find yourself using one of these less often you might find life gets a little more rewarding in paradise

Understanding the Big Picture

I think my situation (luckily) coincided with access to people who helped me understand the way things “are” here.   The necessity to change my lifestyle was matched with knowledge on how to do it successfully.   Many of my friends are professionals and have great jobs.  They earn great wages when compared to the standard of living.  The important thing I had to understand was that a direct comparison of a “good paying job” in the US to a “good paying job” in Mexico revealed a big discrepancy.  Many of my friends are very comfortable- they own homes, have nice cars and enjoy a great quality of life.  At the same time they also are careful to budget where they can so they can save their money for a few, nice things.  When it comes to their lifestyle they seem to value what is around them and spending time with people than simply spending money with them to have a good time.

Every expat who lives here may not be in the same situation.  Some work and some do not.  Some have a regular income in US dollars while others have the same in pesos.  Some can afford to go out to dinner every night and some can’t.  Either way, I hope that expats in Mexico work hard to convert their ideas about spending rather than converting the peso to dollars every time they pull out their wallet.  If they don’t they might find they are not getting such a good deal after all.

Not making this vital connection can really put a damper on the whole idea of “moving to Mexico to live the good life in paradise.”  I have met my fair share of folks who came down here with the best intentions but never made this connection.  This was me for a few months.  Luckily I snapped out of it.  Some can afford to delay this realization and others can’t.  Unfortunately those in the last category are no longer my neighbors.  I was sad to see them go.

When did you learn to live in pesos?  Was there an “ah-ha” moment or was it something you learned over time?  Do you have a funny story to share about your own experiences or the experiences of friends?  Please feel free to share them here or on our Facebook page or Twitter feed.   


  1. Kurt Wootton says:

    What I particularly like about your article Mark is that you write eloquently about how you changed your thinking over time as you moved more deeply into the social and cultural fabric of Mexico. The move from “thinking in dollars” to “thinking in pesos” is becomes a metaphor for the the kind of shift I think we all need to make when living in a new place as we become more deeply engaged in life in a new country. In a new culture we are all as you say “lost in translation” and it seems the greatest journey we can take is to move from translation to experience.

    1. YCC Writers says:

      Hello Kurt! It is true that the journey of exploring and connecting to a new culture is a holistic process. It is not just about “pesos and dollars” but about deeper and more meaningful connections in a new context. Many perceptions change and our thinking changes right along with it. Thanks for your thoughts! We are glad to have you!

  2. Marisa Faietta says:

    Great advice! I will be traveling to Merida in a couple of weeks to do some graduate work as well, and I find that as I’m working out my budget I keep converting my expenses to dollars. Time to start thinking in pesos (and in Spanish!)

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