That sort of cost is not necessary unless you're hosting a larger community. I run synapse (for myself, but it's idling at quite a low load so it could easily support more people) on a $10 USD/month Linode. For personal use you could get by on a $5 Nanode, but I'm using my VPS for other things, too.
The great thing about federation is that you don't have to host an entire community; just a slice of it.
The great thing about federation is that you don't have to host an entire community; just a slice of it.