One of my biggest forms of culture shock upon moving back to the United States was cost of living. It felt like everything in the United States was way, way more expensive than Shanghai.
In my previous post, I calculated and compared the cost of living between Los Angeles and Tokyo, and I found that living in Tokyo could actually save you 10,000 USD per year compared to life in Los Angeles. I’m a huge advocate for living abroad to not only broaden horizons, but to also save money.
So how does life in Shanghai fare when it comes to cutting costs?
First Off, Let’s Talk Salary
Like Tokyo, the level of salary you’ll receive in Shanghai is much less than what you would make in the United States. In fact, Shanghai’s wages look so low you’ll actually question how people in Shanghai even survive at all. Also keep in mind, the wages listed below are real wages that my friends and I have earned, and reflect the foreigner’s salary and not the local Chinese salary. Believe it or not, locals in Shanghai only make 7k RMB per month (1,000 USD) on average, which is considered a “high” salary.
Again, this scenario is based upon the typical salary of an English teacher in China since that is how most foreigners get their foot past the great wall. The average salary for an English teacher in Shanghai is about 110,000 RMB per year, or roughly 22,524 USD per year.
We all know that living in Los Angeles on 21,000 USD per year is madness, so instead I’m going to compare with the same salary benchmark we used in the Tokyo scenario, which is 35,000 USD per year.
The following scenarios are based on a single individual living in each respective city on the above wage. An exchange rate of 1 USD – 6.3 RMB will be used for calculation.
Housing & Rent
Housing in Shanghai is a mixed bag. If the stars align and your luck is on the rise, then you might strike gold like myself and find a single, 3,000 RMB (500 USD) per month apartment (all utilities included) in the heart of downtown Shanghai.
Otherwise, a single bedroom apartment in downtown Shanghai will cost you. The average price for a decent, one bedroom apartment probably averages out to about 5-6K RMB (700-850 USD) per month. The truth is, few of us foreigners actually live alone–when I later changed apartments, I shared a 3 bedroom apartment with 2 roommates for, again, 3,000 RMB (500 USD). If you want to save on rent, living in the outer neighborhoods of Shanghai (40 min train commute to city center) will cut your rent by at least 30%.
But hey, let’s pretend you hate roommates, you gotta live downtown, and you had crap luck finding a nice apartment–so you’re stuck paying 5,000 RMB for a single room. A single room in Los Angeles (no roommates), on the other hand, will set you back 1,500 USD.
Monthly Shanghai Housing Costs: 750 USD
Monthly LA Housing Costs: 1500 USD
Now, this is where you save big.
Public transportation in Shanghai, compared to Europe and Tokyo, is dirt cheap.
The great thing about Shanghai is its condensed size. It’s possible to get anywhere in the city center within one hour by metro. It’s absolutely amazing. In fact, Shanghai is smaller than Tokyo making it a lot more accessible and far easier to navigate for us foreigners (with just one look at the map, it’s easy to see that Shanghai is much more manageable than Tokyo)!
The metro fare in Shanghai varies by distance, but a one way trip will run you 3-5 RMB (.75 cents).
A one way bus ride in Shanghai is equal in price, panning out to about .75 cents
After hours, and when we’re just too damn lazy to take the metro, many foreigners hail a cab. A cab in Shanghai is much more expensive than the metro, charging 13 RMB (2 USD) for the first 3 kilometers and 2.4 RMB (50 cents) for every kilometer thereafter. Basically, to get from point A to point B within the city center of Shanghai, it will cost 30-40 RMB one way (5-10 USD). A trip to the airport from the city center (a one hour fare) usually set me back about 200 RMB (32 USD).
So, let’s pretend you live in Jing ‘ An Temple (a hip, happenin part of Shanghai) and you had to commute to Pudong for work (not a great commute, but life happens). The daily fare would be 6 RMB (1 dollar) per day or 120 RMB/month (18 USD). Life is more than just work, so let’s add on another 300 RMB (46 USD) per month for leisurely travel expenses and taxi fare.
Business commute and leisurely travel combined, you’re spending about 420 RMB (65 USD) on transportation per month in Shanghai.
In Los Angeles, having a car is essential. Although it is (maybe?) possible to live in Los Angeles without a vehicle, your life will be utterly miserable.
Let’s pretend you found an awesome deal on a used car and you pay 200/month to pay for the car loan. Add on another 100 USD for car insurance and 100 USD for gas (actually, gas would cost more than this but let’s pretend you drive a Prius like me) and you’re stuck paying roughly 400 USD per month for transportation.
Monthly Shanghai Transportation Costs: 65 USD
Monthly LA Transportation Costs: 400 USD
Food and Restaurant
Contrary to popular belief, eating out in China–especially Shanghai–can be costly. In fact, it can be just as expensive as in the United States.
Here’s a quick break down of the average costs of food in China:
Cost for bowl of noodles on the street: 10 RMB (1.50)
Cost for a nice dinner out: 100 – 150 RMB (15-20 USD)
Cost for a Tsingdao Beer: 5 RMB (1 USD)
Cost for a nice cocktail: 60-70 RMB (10 USD)
If I had a bowl of noodles on the street every day, I would save an ungodly amount of money. However, if you want to socialize and make friends, it’s simply not possible to eat street food for all of your meals. You’ll need a nice dinner out every now and then, with a price tag of about 100 RMB (15 USD). All in all, this price is really not that different from the United States.
BUT, as I also mentioned in the Tokyo post, tipping is what makes the USA much more expensive in terms of dining. There is no tipping in China. The service is god awful, but at least you won’t have to tip. At all. For anything. (In China, there is no tipping for hair salons, massages, taxi, restaurant, bars, etc..).
Let’s take a look at your average food outing prices in L.A.
Cost for Chipotle: 10 USD
Cost for nice dinner out: 35 USD (including tip)
Cost for Beer: 7 USD
Cost for nice cocktail: 15 USD (including tip)
Like Shanghai, if we had Chipotle or McDonalds’ 1.00 menu for our meals everyday, I’m sure we would save a lot more money (unlike China, however, we’d be stuffing ourselves with fast food and get diabetes in five years). Eating fast food everyday is a tad unrealistic so let’s throw in the costs of a few nice meals for sanity’s sake.
After returning to the United States, I was dumbfounded by the inflation of restaurant prices. Before I moved to Asia seven years ago, it was possible to get a nice dinner and pay $40 for two persons. Now, if the bill is under $60 for two persons, I feel like I got a ‘good deal.’ Going out to eat in Los Angeles is stupid expensive.
Plus tip. Good god. Tip for a $60 meal is close to $7-8 USD. Ugh.
As for groceries…
I’m not going to break down the cost of each vegetable, but let’s just say buying fruits, vegetables and other supermarket items is way cheaper in China.
In China, I spent roughly 500-600 RMB on groceries each month (100 USD).
I spend about $400 USD per month on groceries in the USA.
So let’s pretend that we usually cook meals for lunch and dinner during the week, but go out to restaurants on the weekends and have a happy hour or two after work.
Let’s put the food/restaurant budget for Shanghai at 1,300 RMB (187 USD), assuming we spend 500 RMB on groceries and 800 RMB on going out (which is very doable in Shanghai)
For America, let’s put that budget at $700 (400 for groceries with the remainder for restaurants and drinks). It sounds like a lot of money, but trust me, going out for $15 dollar cocktails and $30 dollar meals will add up. Fast.
Monthly Shanghai Food Costs: 203 USD
Monthly LA Food Costs: 700 USD
So, what’s the damage?
In Shanghai, the monthly rent of 750, transportation costs of 65, and food costs of 203 dollars will add up to costs of 1018 dollars per month (let’s just round up to 1,020 USD for short).
On the other hand, the monthly rent of 1500, transportation costs of 400, and food costs of 700 dollars will total to 2,600 USD per month.
Annual Salary in Shanghai: 22,524 USD
Monthly Cost for Expenses in Shanghai: 1,020 USD
Annual Cost for Expenses in Shanghai: 12,240 USD
Savings: 10,284 USD (not counting healthcare and taxes)
Annual Salary in Los Angeles: 35,000 USD
Monthly Cost for Expenses in Los Angeles: 2,600 USD
Annual Cost for Expenses in Los Angeles: 31,200 USD
Savings: 3,800 USD (not counting healthcare and taxes)
So even if you make a meager 22,000 USD per year in China, you will save a whopping potential of 10,000 USD per year by living in Shanghai.
Remember, this is based on the scenario that you actually go out and have a social life, not live in a deluxe mansion or take taxis everywhere for your main source of transportation. Lifestyle will greatly affect how much you actually save in each location.
Still, if you look at the cost of living in Los Angeles, the gap is definitely very wide.
And while some of you may think: There’s no way you could make such crappy pay in Los Angeles.
30-35k annual salary in the Southern California is not only possible–it is a very sick reality.
Not only is Shanghai cheaper than Los Angeles, but in terms of night life, having fun, and enjoying a big city it blows Los Angeles out of the water. While you may have to fight a crowd of people on a packed train during rush hour in Shanghai for 20 minutes tops, it sure as hell beats a 1-2 hour daily commute.. across a 15 mile (24 km) distance.
Shanghai is walkable. Bars and clubs in the city make everything in Los Angeles look like a kiddie wading pool. World class restaurants. Live music. An international community.
It’s one of the most dynamic cities in the world.
Many of us have the notion that moving abroad is going to burn a hole in our pocket–but in reality, it can actually help us save more in dollars!) and discover more of the world.
Don’t forget, you can also save 10,000 by living in Tokyo as well. It’s a much cleaner, more sanitary place than Shanghai–but still, I much prefer China.
*As I mentioned above, healthcare and taxes are not covered in the above scenario.
Although I don’t have the exact numbers, I know for a fact that taxes in Shanghai are much lower than in Los Angeles. The state of California has the highest tax in all of America, much to my chagrin. I think taxes in Shanghai might take an extra 1,000 RMB off your paycheck (156 USD) per month. Overall, it’s not bad.
Healthcare is a toss up. In China, healthcare is extremely affordable. Even without insurance, you can see a doctor for less than 5 bucks and buy prescriptions for under 50 USD. However, the quality of care in China is very, very poor. You will be in hospital rooms with zero privacy and get many ten minutes tops speaking with the doctor. Equipment will be old, and the facilities will be dirty. It is not clean and sanitary like the United States.
However, in the U.S., lack of health insurance can bankrupt you, or literally kill you (some who don’t have enough money to pay for a procedure just go untreated). Many employers will provide health insurance to employees, but this is quickly being phased out. Fewer and fewer employers are willing to front the costs for healthcare and looking for shortcuts around providing this service.
Finally, keep in mind that Shanghai is struggling with pollution issues. While you can save a lot of money there, no amount of money is worth the cost of your health.