Tips to Making Your Money Go Further in Mexico


When we decided to move to move to Mexico, I told my wife that if we ran out of money we would have to return to the United States and get real jobs. I can hear her mumbling those words under her breath whenever she is debating whether or not to buy a new bedspread or a chair for the condo. It seems to be working because we have yet to buy a new bedspread or chair.

We took a hit to the family budget when we decided to move to Mexico. Our monthly family income is now less than 38% of what is it was in the United States. In spite of this cut, our quality of life is better now than it was when we were both slaving away at full time jobs back home.

Many people ask us how we accomplish this. Well, it is not rocket science. We just have to be budget conscious and smart with our money. Here are a few simple techniques that we use to help us save money without dramatically negatively affecting our lifestyle:

Tip #1: Determine Your Disposable Income and Track Expenses

This method works if you have a finite amount of money coming in, such as with a pension or annuity. The way to determine your disposable income is to calculate and subtract what your monthly bills should be: electric, water, sewer, gas (propane), insurance, mortgage, and car payment. To be safe, calculate on the high end. Then subtract the minimum that you would like to save each month. For example, if you would like to put at least $100 into savings a month for a rainy day, deduct that right at the beginning. The amount that is left is your disposable income for the month.

You need to track your expenses to know if you are on track. I recommend installing an app on your phone like Expense Tracker and putting the disposable income into the app on the first day of the month. Every time you spend any money at all, you need to put it into the phone as an expense.

You can then divide the the amount of disposable income by the number of days in the month to determine what you can spend that day. This amount includes everything from coffee in the morning to groceries. It is possible to exceed the daily budget but it means that you will have less per day after that.

If you spend under the allotted amount, you will see your daily average increasing each day. You can use this surplus to take a trip at the end of the month or just carry the surplus over to the next month. By the way, if you spend too much you need to carry the deficit over to the next month.

Tip #2: Take Advantage of Happy Hours

Whether or not you are a drinker, happy hours are a great way to save a lot of money. Why pay more when you can adjust your meal times to get 50% off the regular prices? It is a no-brainer.

Tip #3: Get a Credit Card with Rewards

This one only works if you pay the credit card completely off every month. Paying interest is like throwing money away and that is something a thrifty person never does.

The key here is also to get a credit card that has no foreign transaction fees and that offers cash back or points for purchases. Once you have the card, use it for everything you buy. I remember one year we redeemed our credit card points for $800 in Macy’s gift cards. That is a lot of bonus money just for spending money we would have spent anyway.

Tip #4: Play Exchange Rates Like Stocks

You can use exchange rates to your advantage to make and save money in Mexico. In order to do this, you should know which way the exchange rate is likely to go. The following is a useful site to track the dollar to peso exchange rate and the site predicts upcoming changes:

Now that you have an idea which way the dollar is headed, here are few ways to take advantage of that:

Transition between dollars and pesos

Many businesses will offer a terrible exchange rate to take advantage of foreigners. For example, if the current exchange rate is 17:1 they will offer only 14:1. That means the meal or merchandise turns out to be more expensive than the price advertised. In this case, you should always pay in Mexican pesos.

However, if the prices are given only in U.S. dollars (which is not uncommon in tourist areas), you should ask what the exchange rate would be if you paid in pesos. Nine out of ten times, the clerk will give you an exchange rate that works to your advantage.

For example, I want to buy a hat that costs $10 USD. I tell the clerk that I only have pesos (whether or not that is true) and ask what the conversion rate will be. If the clerk quotes me 15:1, and the current rate is 17.4, then I the hat ends up costing me only $8.62 USD.

Use a credit card when the dollar is high

Credit cards often give you the best exchange rate. If the dollar goes up slightly, that is a good time to do your grocery shopping because you will have more buying power.

Wire money when you have the best rate

I will be doing a separate blog solely on the topic of wiring money to Mexico, but for now I just want to touch briefly on the topic. I have found that it is very beneficial to wait until I believe the dollar is peaking before sending any money to Mexico.

For example, I notice that the dollar went up slightly from 17.3 to 17.8 pesos. I choose that time to lock in the price and send $2000 to myself in Mexico as pesos. The next day, the dollar drops back to 17.3 which means that my $2000 in pesos is now actually worth $2057.

This is a lot easier to do if you have opened a bank account in Mexico. You can learn more about that by reading 5 Reasons to Open a Mexican Bank Account.

Tip #5: Travel During the Low Season

One of the things my wife and I enjoy most is traveling around and staying in beautiful hotels. We limit these excursions to the low season and avoid the peak weeks, like Holy Week. This allows us to save over 50-70% on the trip.

Tip #6: Don’t Be Afraid to Haggle

Contrary to popular belief, not everything is negotiable in Mexico; however, a lot of things are, so why not try? This is especially true when dealing with services. My wife recently negotiated a $60 one hour massage down to $14.

It is difficult to teach the art of negotiation. Perhaps I will dedicate a future blog to the topic.

Tip #7: Ask About Discounts for Locals

If you live near a tourist area, restaurants and businesses often offer discounts for residents. We have found that this runs between 10-20%. You may have to prove you live locally by showing them your resident visa or an electric bill.

All of these techniques are useful to help you live very well in Mexico on a small budget. The key is to be consistent and make your budget a priority everyday.

Tip #8: Save Money on your Cell Phone Plan

I covered this one in How I Cut my Cell Phone Bill to $10 for Unlimited Calls to the United States, Canada and Mexico.

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8 Comments on "Tips to Making Your Money Go Further in Mexico"

  1. Michael Bruno | May 4, 2016 at 5:27 pm | Reply

    Well written.

  2. love your blog:)

  3. Darlene C Revere | August 8, 2016 at 9:41 pm | Reply

    Awsome information. Can you do a piece on the weather

  4. I have been a menber of Prestige. My contract clearly states that I have up to 30 days before full payment is required. A few weeks ago they introduced a 100 USD deposit to hold a room. I cancelled because of poor service the last time we were there. I gave the hotel 4 months notice canceling my room. They refuse to pay back the 100USD! Even though I paid my yearly 50 USD yearly cancelation fee. This is clearly wrong and stealing. I booked every three months for a year plus. Pretty much almost two years.

    This is not in our contract. You cannot predict the future, or how the Hotel has started to become a constant scam.

    Can I contact them to get my money back?!?

    Sadky I come especially at Christmas with brand new items that the under privilaged need.

    Do now they are also loosing out on our help.

    Both me and my daughter is sick about it.

  5. Any chance you could explain this formula or process? I would love to know how to do this on the fly, and these number games dont come easily to me!

    For example, I want to buy a hat that costs $10 USD. I tell the clerk that I only have pesos (whether or not that is true) and ask what the conversion rate will be. If the clerk quotes me 15:1, and the current rate is 17.4, then I the hat ends up costing me only $8.62 USD.


    • Hi Albert,

      Thanks for reading the blog. The way we do this on the fly is to always carry pesos and to know what exchange rate you got them at. Right now, I am getting around 19 pesos for every dollar. If a business only has prices in U.S. dollars — which is actually illegal in Mexico but common in tourist areas — then you can flip that by asking them what their exchange rate is for pesos. If they quote anything less than the amount that you obtained your pesos at (19), you are getting the item or service for less.

      Example: Clerk charges $10 USD for a t-shirt with no peso price listed. I ask for an exchange rate for pesos and he quotes me 16 pesos to the dollar. Without doing the math, I know that I am saving money because the clerk is charging me less than 19 pesos: $160 pesos for the hat. Those $160 pesos in reality only cost me $8.42, not $10.

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