Readers' Submissions

Living On 20K Baht / Month

  • Written by Anonymous
  • November 22nd, 2007
  • 9 min read


Black Pagoda Patpong Bangkok


There seems to be an ongoing debate about the cost of living in Bangkok. I think that there are many of us who would like to live there, if our financial health could be assured by a typical THB30K / month teaching job.

I've done a bit of analysis myself, and here's what I come up with for 30-day expenses in baht, at rank minimum:

Furnished studio apartment including electricity and water in a “questionable” or inconveniently-located neighborhood (You can look at the online ads yourself. And you think you can tolerate a roommate? Don't try it. The next farang is even more of a womanizing drunken libertine than yourself.):
15K

Eating 3 meals a day of local food, which is typically either imported from China and tainted with all manner of industrial chemicals, fraudulently labeled as "organic", or loaded with who-knows-what from polluted agricultural water sources in Thailand. (You're nuts if you think you can survive on such food long-term. Go to mercola.com, or some other reputable health site, and find out what this crap does to you. How many 80-year-old Thais have you met? Sadly, I rest my case.)
9K

High-deductible health insurance from a “real” international insurer that will actually pay if you need it (especially if you contract HIV or some awful tropical illness associated with poor sanitation). You can skip this payment, if you're crazy. Expect it to increase at about 6%/year – faster than inflation – because people tend to develop more medical problems as they age:
3K

Transportation (BTS, and the occasional taxi when you need to haul heavy items like groceries):
6K

Funds for the most minimal social life, without which most of us would not want to live in Thailand:
4K

Internet access:
700 baht

Clothing and miscellaneous household supplies:
3K

TOTAL: 40.7K

Now, if you want to live more like we do in the West:

Nicer studio (yes, still tiny) apartment in a safer or more convenient neighborhood:
20K (minus 15K apartment above)

Typical Western medical insurance coverage with a reasonable deductible (assuming that you don't actually use the insurance at all – good luck):
12K (minus the 3K insurance above)

Real organic food without pesticides and industrial effluent (no restaurants, just basic cook-at-home veggies and meats):
16K (minus the 9K food above)

More realistic social life budget:
8K (minus 4K above)

Once-a-year roundtrip ticket to Farangland with no spending money (amortized
monthly). You might do well to see a “real” medical doctor while you're there (not that there aren't good ones in Thailand – just that they look the same as the frauds), in which case add an insurance co-payment here:
2K

Minimal allowance for emergencies, accidents, corrupt police fines, thefts, etc.:
2K

"REAL" TOTAL: 69.7K

So I would conclude that a 30K (after tax) teaching job is simply insufficient, unless one is willing to live a very rough life which would increase one's chances of getting robbed, suffering from serious illness in the absence of "real" medical care, getting injured or killed in a motorbike accident, contracting cancer later in life, or suffering malnutrition.

At absolute minimum, 38K seems to be sufficient, but few of us, on further contemplation, would want to lead such an unhealthy lifestyle. So I think 70K is more realistic.

Mind you, at that level, you save NOT ONE BAHT. You have no retirement funds whatsoever. So unless you're the rare Farang who is willing to return home at some point to work at some underpaid job, the honest number is more like 100K. That's right: We English teachers should earn as much as the ladies of the night, or we shouldn't waste our time!

But what if you've got an incurable case of Thai Habitation Syndrome (THS), in which you cannot help but want to live in Thailand, whatever the cost? Well, you basically have 2 choices: either live a rough life, or save up enough money to make up your 40K-ish monthly shortfall.

Uh… so how much would you have to save to pay that 40K (or more, if you have lots of additional expenses)?

Well, that depends entirely on how good an investor you are, and how heavily your investments are taxed. Please don't plan on beating the world's richest investor, Warren Buffet, who has sustained roughly 20% (compounded annually) throughout his career. That's right. He's one of the richest people in the world, but has only sustained about double the 10% annual return of the popular S&P 500 index of American stocks, over its history. (To be sure, neither return has been constant: both have seen excellent, and terrible, years.)

But to answer the original question: based on the history of the stock prices of large and stable American companies, which is statistically similar to the stock prices of comparably large companies in other countries, we can anticipate an annual compound rate of return of about 10% over the course of a few decades. (I'm assuming that you'll heed my health advice, and plan to live at least that long!)

But a 10% return gets eaten by inflation and taxes: Assuming that 2 of those 10 percentage points are eaten by tax (which is roughly consistent from one country to the next), and 4 of them are eaten by inflation (another long-term historical average borrowed from American economic history), that leaves you with all of 4% to withdraw annually. This 4% should grow by roughly 4% each year, to keep up with inflation. In other words, if you withdraw 100K this year, you can expect to withdraw 104K next year, but the buying power of that money will remain about the same. (Mind you, there are horrendous ups and downs in the stock market, so these values represent a very long-term average. Year-to-year returns may vary by 20% or more, sometimes in the negative direction!)

So we said that we'd need 40K per month. That's 480K per year. Using the “4% Rule” described above, we find that 480K is 4% of 12M. That's right – TWELVE MILLION BAHT! If you have this kind of money, pat yourself on the back, get a plane ticket, and sign up for a teaching job. (Just beware the vagaries of the stock market, and keep a tight grip on your discretionary spending. Oh, and read the rest of this article. It's not that simple!) If not, it might be worth your while to suffer a bit longer in Farangland.

But there's more… because stock market returns vary from year to year, and expenses tend to increase somewhat faster than inflation as people age (because they tend to get addicted to ever-higher standards of living and expensive medical care), the 4% Rule is unrealistic. The 3% Rule, i.e. withdrawing only 3% of principal per year, is probably more honest. So 16M baht might be more reasonable.

And sorry, there's yet another pitfall: we computed the 12M baht value based on the assumption that you only need 40K per month, because you're making 30K from teaching. If you plan to stop working at some point, you're going to need a lot more money in a month due to higher expenses in the absence of a job. So, uh… 25M baht?

On the other hand, if you withdraw less than 2%, you might not be living at the quality of life that you could. And even as a teacher, you can expect to earn about 60K if you're good, or work a longer week. So less than 12M baht might possibly suffice (but I doubt it).

One other note… the 4% Rule assumes that you have all of your money in a set of stocks that behave approximately like the S&P 500 index. But most people are too conservative to do that. They have a large portion of their investments tied up in heavily-taxed, low-yield bonds with uninteresting after-tax returns like 3%. After accounting for inflation (and possibly exchange-rate losses), such investments can easily depreciate in buying power year after year. That's right: your 6% bond yield can actually cost you money!

You could, of course, save more money and try desperately to find a more lucrative job in Thailand before leaving Farangland. Alternatively, you could head for a part of Thailand, or a neighboring country, which is so primitive that it's not even polluted, so that you could live in a healthy fashion on very little money (assuming that you still had some reserves for an annual visit to your doctor back in Farangland). Unfortunately, we humans are all working very hard to make this planet uninhabitable, so the amount of land area which is non-polluted but sufficiently productive to sustain human life is rapidly shrinking.

Incidentally, don't make the tempting assumption that you could just scurry away to, say, Chiang Mai, in order to enjoy lower living expenses. You could, but you'd also lose a lot of modern conveniences, and about 15K in monthly income for the same teaching job. I've done a considerable amount of research in this area, and I think Bangkok is still the least money-losing career proposition in Thailand. (Again, notice the words “least money-losing”. You don't make money, in any real and sustainable sense, by teaching English in Thailand, unless perhaps you're raking in 100K a month from an international school.)

No doubt, my analysis is likely to frustrate a number of Farangs. I hear you: it's getting expensive out there (not to mention polluted beyond belief). So I share your frustration. But I don't have any better suggestions than to face the financial reality that I've detailed, or bear the consequences of living a hard life. Hopefully, this will stir some discussion. Surely, there are some idyllic cities in Southeast Asia that are just barely on the map, and thoroughly underappreciated. Let's hear from the Stickman community…

Stickman's thoughts:

I spend 50K – 55K baht a month. That is the total figure I spend and I have a very pleasant life. That includes a VERY nice one bedroom apartment very close to a major downtown area, which accounts for about a third of my total monthly spend. It includes eating out all the time, and sometimes at some of the city's finest restaurants. It includes drinking out once or twice a week and it includes my penchant for Australian red wine and New Zealand cheese. I do not go whoring so there is no "spillage" there but then neither do I eat on the street either.

While your calculations are well thought out, they are VERY conservative. I you work full-time you really do not go out that much. At the end of the day a nice meal is about all I have energy for. Going out drinking is very much a weekend thing.