For those thinking of moving to a different country, there are many factors that need to be taken into account. Things like language barriers, the availability of work and the ease of obtaining legal status all play a role in what a new immigrant will need to do in order to live in their new country successfully.
One key factor that is often overlooked, however, is the disparity between the currencies of different countries. Here are four things you should be taking into consideration about currency:
Current Exchange Rate
The first thing you need to know about your new country’s currency concerns the exchange rate. How much money do you have and how much will it be worth in another country? You may have to utilize the help of a currency company, such as Continental Currency Exchange, to figure this out.
The easiest way to handle this conversion is to use a currency exchange. This will help you to more easily change your monetary assets over so that you can use them in your new country. It’s important to figure all of this out before you move. You don’t want to end up being blindsided by a low rate when you get there.
Purchasing Power Parity
In addition to the exchange rate, you’ll need to know about the difference between the purchasing power in your home country and the one you’re moving to. In economic terms, this is known as “purchasing power parity”.
In some countries, you’ll get substantially more for your money. This is particularly true for countries that are less economically developed than the one from which you are emigrating. It’s important to be aware of purchasing power parity, especially when looking for a job in your new home country. This way, you’ll more fully understand how much money you’ll need to live on.
If you’re moving out of a well-developed country, you’re likely used to your currency being fairly stable. In under developed countries, however, this isn’t always the case. Nations with less-valued currencies can experience rapid price shifts due to sudden increases or decreases in currency value. Yet, this shouldn’t discourage you from moving to a particular part of the world. It’s just important to be aware of it so that you can take it into account.
A tax rather than a matter of currency interaction, a VAT, or value added tax, can have a substantial impact on your purchasing power. VATs are taxes collected at the point of sale on purchases. Although many nations have such a tax, the United States does not.
This means that US citizens moving to new countries are sometimes surprised by the taxes applied to their purchases. A US native moving to Norway, for example, would likely be somewhat shocked by that country’s 25 percent VAT on standard purchases.
By knowing these four things about the currency and purchasing power in a country you are considering moving to, you’ll be able to make better and more prudent financial decisions. All of this information is particularly important when looking for work in a new country. This is because you’ll need to be sure to negotiate a salary that’ll allow you to live as you want. Without understanding these currency matters, you could be going into salary negotiations without knowing how much you’ll need.