PPP : UK/Europe/USA
Discussion
Ever since I saw the comment below:
I know PPP measures the relative purchase power of a country, and you have this data per capita as well, but somehow it doesn’t answer the question I have regarding purchase power on an individual as I would like to know it. For instance, one guideline I’ve used myself that 1 pound = 1 dollar = 1 euro = 100 yen when it comes to what you’re able to purchase in your respective country/area etc.
Now I know this is oversimplified, and was wondering if there’s a yearly calculation which shows what I would need to earn in the UK/USA/etc. in order to have the same lifestyle as the one I have currently in Germany. Forgetting the city/countryside/expensive/cheap areas argument for a bit as this is the same everywhere.
Apologies if this was discussed before but I’ve been unable to locate a similair discussion via the search function.
Matt Harper said:
Please feel free to chip-in where you like Jim.
My point is that a quid goes about as far in the UK as a dollar does in the US.
In general terms US incomes are similar to those in the UK. i.e. I wouldn't be earning proportionally more in the US than I would in the UK, due the the exchange rate - if my job paid 50,000 pounds in the UK, I could expect it to pay $50,000 in the US.
So with this car - it's GBP110k in UK - so should be $110k in the US - it isn't - it's more than 20,000 more expensive - 1 pound, being equal to 1 dollar in real world terms.
This exchange rate calculation in terms of value of products only works if you live and buy in the US and earn in the UK - and few people do that.
In the thread about US vs. UK I’ve been wondering something. My point is that a quid goes about as far in the UK as a dollar does in the US.
In general terms US incomes are similar to those in the UK. i.e. I wouldn't be earning proportionally more in the US than I would in the UK, due the the exchange rate - if my job paid 50,000 pounds in the UK, I could expect it to pay $50,000 in the US.
So with this car - it's GBP110k in UK - so should be $110k in the US - it isn't - it's more than 20,000 more expensive - 1 pound, being equal to 1 dollar in real world terms.
This exchange rate calculation in terms of value of products only works if you live and buy in the US and earn in the UK - and few people do that.
I know PPP measures the relative purchase power of a country, and you have this data per capita as well, but somehow it doesn’t answer the question I have regarding purchase power on an individual as I would like to know it. For instance, one guideline I’ve used myself that 1 pound = 1 dollar = 1 euro = 100 yen when it comes to what you’re able to purchase in your respective country/area etc.
Now I know this is oversimplified, and was wondering if there’s a yearly calculation which shows what I would need to earn in the UK/USA/etc. in order to have the same lifestyle as the one I have currently in Germany. Forgetting the city/countryside/expensive/cheap areas argument for a bit as this is the same everywhere.
Apologies if this was discussed before but I’ve been unable to locate a similair discussion via the search function.
There are tons of salary equivelance calculators - www.easyexpat.com is one.
But it's always so dependent on what you do with your money and what you would do in the new place. For example if you moved from London to New York and wanted to go for weekend breaks in Europe every month then your costs would go way up.
That's extreme, but differences in the price of any number of goods and services and an individuals consumption of them make a generalised comparison more or less meaningless.
I would rather go on a few arbitary prices. The Economist magazine used to have a Big Mac index which I thougth was quite useful.
But it's always so dependent on what you do with your money and what you would do in the new place. For example if you moved from London to New York and wanted to go for weekend breaks in Europe every month then your costs would go way up.
That's extreme, but differences in the price of any number of goods and services and an individuals consumption of them make a generalised comparison more or less meaningless.
I would rather go on a few arbitary prices. The Economist magazine used to have a Big Mac index which I thougth was quite useful.
The problem with the US is that the costs of living here vary a bit more than they do in the UK but that being said, at least in my case, your pay goes a lot further here.
Some things are more expensive, some are much less expensive.
More Expensive:
Health care can be, good jobs have it but you still have to contribute towards your family as a rule.
Property Taxes are frequently more expensive.
Used cars are more expensive, you can't get a decent used car here for £1,000, that £600 10 year old Mondeo is a $3,000 car here.
Car insurance can be. I hear stories of people paying £300-400 a year to insure a decent car, good luck with that here.
Cheaper:
Groceries.
Fuel for your car.
New cars can be very cheap, I leased a $46,000 list price Cadillac for $515/mo for 36 months, 15k miles per year with $1,400 due at signing. Taxes included. My friend is paying $500/mo with similar upfront money to lease his 328i AWD with Sport and Navi.
Now, what I do for a living, which is technically a Used Car Manager at a new car dealership pays about $90k a year on the low side to an average of about $140,000 per year. Some guys at big stores make well over $200,000. I see comparable jobs advertised in the UK paying £35-60k.
Some things are more expensive, some are much less expensive.
More Expensive:
Health care can be, good jobs have it but you still have to contribute towards your family as a rule.
Property Taxes are frequently more expensive.
Used cars are more expensive, you can't get a decent used car here for £1,000, that £600 10 year old Mondeo is a $3,000 car here.
Car insurance can be. I hear stories of people paying £300-400 a year to insure a decent car, good luck with that here.
Cheaper:
Groceries.
Fuel for your car.
New cars can be very cheap, I leased a $46,000 list price Cadillac for $515/mo for 36 months, 15k miles per year with $1,400 due at signing. Taxes included. My friend is paying $500/mo with similar upfront money to lease his 328i AWD with Sport and Navi.
Now, what I do for a living, which is technically a Used Car Manager at a new car dealership pays about $90k a year on the low side to an average of about $140,000 per year. Some guys at big stores make well over $200,000. I see comparable jobs advertised in the UK paying £35-60k.
Thanks for the replies.
I get that depending on your wishes/habits etc. the UK/USA might be more or less attractive on the same level of salary, but I was wondering the following:
If I earned say, 100 euros here in Frankfurt, how much money would I have to earn in pounds to have the same bang per buck in London? The currency exchange situation today means it's 85 pounds if I'd exchange it, but would this 85 pounds go as far as the 100 euros in Frankfurt? Or should it be 90? Or 80?
With the recent exchange rate changes (some big changes happening in the last 2-3 years) and the weak pound/dollar skewed my image of the relative value and so I'm wondering what the 'real' value actually is of a salary in the UK or USA vs. Europe.
I get that depending on your wishes/habits etc. the UK/USA might be more or less attractive on the same level of salary, but I was wondering the following:
If I earned say, 100 euros here in Frankfurt, how much money would I have to earn in pounds to have the same bang per buck in London? The currency exchange situation today means it's 85 pounds if I'd exchange it, but would this 85 pounds go as far as the 100 euros in Frankfurt? Or should it be 90? Or 80?
With the recent exchange rate changes (some big changes happening in the last 2-3 years) and the weak pound/dollar skewed my image of the relative value and so I'm wondering what the 'real' value actually is of a salary in the UK or USA vs. Europe.
To get this to work for your situation you also need to take into account the "gross to net" effect of the relevant tax system on your earnings. This can be complex because although the headline tax rates are easy to see the different effect of allowances and tax breaks can be very significant when comparing one country with another. For instance,
- personal allowance
- marriage allowance
- child/family allowances
- loan interest allowance
- vehicle use allowance
- any compulsory NI/pension contributions
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