I used to think that having travelled to conferences etc. and having to deal with small budgets during those trips that I had a good feeling for how much money one can spend in another country. Well, one of the biggest problems adjusting to arriving here this time has been exactly that: I know how many dollars I will be earning, but how much buying power is that? This is especially important when you go to a supermarket to get groceries, because the relative prices of things here are very different. So how far does your money actually go? If you are planning to have some savings, you’d better have an answer to that question.
My first instinct was to multiply all the prices by 8 (to get the $ to Rand rate), and do the same with my salary to get a feeling for it. Bad idea. If you do that, you end up buying nothing at all – everything seems massively overpriced, even if you seem to be earning that much more. Even if you were a millionaire, wouldn’t you feel ripped off paying R12 for a sprig of parsley? Today, while riding the bus home from Seattle (which costs $2.50, which is R20, and sounds crazy), I hit a nice formula. I will be earning basically half as many dollars as I did rand at home. So if I simply multiply the prices of things here by 2, I get a nice relative idea of how much money I can spend in a month using the rules I was used to in SA. Effectively it gives you a sort of ‘big mac index’ type idea – the relative buck.
If you do that, you quickly realize that things here are affordable. Bus fare is only 5 relative bucks (at least, it ‘hurts to spend’ as much as R5 would have hurt in SA). A paperback book costs 30 relative bucks. A Starbucks coffee costs 6 relative bucks (a latte in Cape Town costs at least twice that much). Most things, by this calculation, actually work out quite a bit cheaper. So I can now rest knowing that I should be able to live at a similar level as I did in SA, but with more savings.
So what item is unexpectedly expensive? Hay for the rabbits – a bag that lasts a week goes for 22 relative bucks (the hay in Cape Town cost as much, but lasted almost two weeks sometimes). But then again the hay here is much more green and finer – the bunnies enjoy it more, and it prevents horrible odors from escaping too. The cheapest item is coke and soda water – 3 relative bucks for a 2l bottle.
Note: this calculation only works in my case, because of the relative sizes of my salaries in SA and the USA – so I wouldn’t recommend you use it in your case without thinking it through!