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Money and Finances Are Different in Mexico

Assortment of Mexican pesos
Credit: Joseph Toone

Money and finances are different in Mexico. Obviously, the look and feel of the country’s currency is different, but also how money works. One’s relationship with Mexican dinero and banks often takes some adjustments for expats.

The currency in Mexico is the peso. Paper currency comes in denominations of 20, 50, 100, 200 and 500 pesos. Rarely do I come across a one thousand pesos note, which is currently worth about US$50. Coins come in denominations of 1, 2, 5 and 10 pesos, each clearly labeled. I’m not going to even bother explaining the teeny, tiny half a peso coins as they so rarely come in handy.

Way more so than up North, Mexico is a cash-based society. Credit cards are normally only handy at the large box stores and more expensive restaurants. Like my father before me, I keep my cash in envelopes marked for the various monthly expenses in a safe (though his “safe” was a rather large shoe box). Yes, most every Mexican home has a safe just for this reason.

Getting change is a problem. Small-denomination bills and coins are hard to come by, so get use to collecting them. Shopkeepers and taxi drivers always seem to be out of change and small bills, particularly first thing in the morning or at the start of a work shift. There is an expectation that the customer should provide appropriate change, rather than the other way around. Even in the large box stores cashiers make a fuss when you don’t have exact change, which is both ridiculous and annoying.

Mexico 200 pesos note
Credit: Joseph Toone

You’ll learn quickly that box stores and booze stores, areas of high cash-paying traffic, are the best place to get change for a 500 peso note. If you go by a tamale vendor expecting to pay 10 pesos with a 200 peso note, you’ll likely walk away hungry. Yes, if it comes to making a sale or making change, most would rather not make change.

Also, don’t forget to have enough pesos to carry you over a weekend or Mexican holiday, when banks are closed. Wise people carry a spare ATM card as the machines are known for swallowing a card. Even at a bank, when it is open, you won’t get your card back. It’s unpleasant but will happen at some point.

Currency exchanges provide a human option for getting pesos, but at slightly lower rates. The caveat here is you must have your passport with you. Before leaving either a bank or currency exchange window, count your change in front of the teller before the next client steps up. Cumbersome, but if there was an error and you’ve walked away, it can’t be fixed.

If you’re only coming to San Miguel de Allende for a visit, have your home bank do a peso exchange for you a few days prior to departure. It may take several days to complete, but it’s normally fee-free.

ATM in Mexico
Credit: Joseph Toone

For ATM safety, use machines in popular areas in San Miguel like the Jardin or a big box store, or the bank itself. Also, be aware that even if the bank shares the same name with an international bank, the branch in Mexico is often owned by a different company. They are operated in Mexico as a separate entity. Confusing but quite common so don’t assume you can move money between accounts.

The U.S. dollar sign ($) is also used to indicate pesos in Mexico. Assume all pricing is in pesos. We aren’t like Guatemala where even the ATMs dole out American dollars. Without a passport, you can’t exchange dollars, so to your typical Mexican the dollar is only good in a game of Monopoly.

Speaking of pesos, don’t bring back pesos to Mexico from a long- ago trip. Chances are the bills are worthless as Mexico frequently changes their paper money to prevent counterfeiters. When pesos change form, like the 500- and 200-peso denominations recently did, get rid of your old bills over the next year before they become valueless. I can’t tell you how many times on tours people show me their old pesos, which are often rather pretty. However, neither I, nor anyone else, will accept them.

Also, on-line banking is different here. I’ve yet to have my bank be able to access my account on-line and neither can I. It just means I stop in for paper copies once a month to make sure all is normal.

Bills are different, too. Whether a credit card, water, electricity, etc., you as the consumer are expected to know when your payment is due and how much. You may get a bill in the mail, and you may not. Mail is flakier here than a Kardashian. Knowing how much and when a bill is due, as a former CFO, was probably the most difficult thing I had to get used to.

Wait, I stand corrected. Accounting terms were the most difficult thing to get used to. Even when properly translated into English they don’t mean the same thing. If you plan on investing, or have more complex finances than a checking account, don’t assume because you know the word in English it means the same thing in accounting terms.

Credit card interest, also, is way higher in Mexico, as are annual fees. That said, it is a joy to have a Mexican credit card in an emergency when your U.S. bank is closed and has declined your hospital entrance payment.

Receipts are a huge deal in Mexico as local folks are more suspicious of vendors than expats and tourists are. Hold on to your receipts for bills paid and anything to do with real estate. Even on an inexpensive bus ride you’ll get a receipt. Just take it. That one you can throw away later, but only after your ride.

I invest in Mexican bonds (both corporate and government) and feel they are the unsung heroes of financial independence world-wide. By Northern standards, the rates are great, and, get this, taxes are taken out automatically upon your interest payment. You fill in nothing to show you have paid your Mexican taxes, though you still have to for your U.S. taxes even if you don’t owe. Consider it a lost Sunday afternoon in exchange for way better interest rates!

Banks run the gamut in terms of services. Most only offer checking and savings accounts, and for many expats that suffices. Others offer a wide array of investment opportunities, insurances and consulting.

For the last decade, I’ve been with salsa dancer extraordinaire Maggie Herrera of Imbursa Bank. I opened my investment account with Maggie and have been with her for nearly a decade at the bank and on the dance floor, in English classes and fiestas with her family. It’s comforting to know your bank’s representative is a decent person even outside the office and that her grandson has an enormous fondness for McDonald’s fries.

Also, be very particular with the name listed as beneficiary on your bank account. It supersedes your will, and the name must be exactly the same as on your passport. Mary Doll on a bank form, for example, is a different person than Mary T. Doll on a passport. Be precise about this and save your heirs countless frustrations.

So, to be financially happy in Mexico adjust your expectations, be prepared to learn a new vocabulary and reap the benefits of safe, high interest earning investments. Oh, and always think about how and when you can exchange a 500 peso note for something smaller.

For today’s trivia, that Inquisition Era nun you see on the older, green 200 peso note has a book behind her. With proper magnification, you can view she has scribbled: “God help the men that underestimate the intelligence of women.”