Wednesday, March 16, 2011

The Cost of Living Overseas

I've been asked again about the cost of living in Amsterdam and I think I should take the time to write a more complete discussion of this. I've touched on many of the issues here in my part 5 of my work permit series, but I since people ask and since I am getting search engine traffic for "cost of living" in foreign countries, I should explain things more carefully: the cost of living figures tend to be a difficult indicator of what you need to live somewhere.

First, we need some perspective. When I moved from a Nottingham, a small town in the UK, to London, I had to have a housemate. Food costs were higher, it was more expense and hassle to travel. No one is surprised by this. Similarly, if you move to a new country, you're going to find costs are different. You're simply going to have a different quality of life if you're living in the première arrondissement de Paris instead of Soweto.

Boudin Noir with Caramelized Apples and Saurkraut
Boudin noir tastes better than it looks
Photo by Naotake Murayama
Part of this is because we don't entirely give up our old lives. For example, when you walk into a grocey store in a new country you have a tendency to buy familiar things because frankly, you may not know what slavinken is and you're not sanguine about your chances with that boudin noir. Trying to change everything all at once is hard. Years ago I read about a gentleman pointing out why the Japanese can afford to live in Tokyo when many Americans were struggling with the prices: the Japanese were living the Japanese lifestyle; the Americans wanted American-sized flats and American-style food. This is the single most important thing to remember when moving to a new country: take yourself, not your expectations. If you insist upon living lifestyle X in country Y, you're going to drive your costs up.

While we're on the subject of lifestyle choices, be aware that cost of living indicators also don't prepare you for the individual surprises each country has. When I lived in the US and the UK, I used to hit bookstores, browse for hours and walk out with several new books at a time. My wife did the same. Note the past tense. Here in the Netherlands, thanks to a minimum fixed book price (which has interesting side-effects), even cheap mass market paperbacks cost €17 to €18 each. This has impacted our lifestyle, but won't necessarily impact yours.

Similarly, if you drive everywhere, you'll find your lifestyle impacted by a country which charges €0.5 a liter versus one which changes €5 a liter. You might also move to a city, like London, with a congestion charge where you have to pay for your daily commute. I don't drive any more (though I've been thinking about getting my license again), so this doesn't impact me.

pimp my car
This could have a dramatic budget impact
Photo by Martin Abegglen
The exchange rate is also relatively unimportant. Not only do they constantly fluctuate, but exchange rates are for exchanging currencies. They're useful when you're on holiday somewhere and you need to know how much you're really spending, but when you're paid rupees and you're spending in rupees, how much those rupees are worth in dollars is pretty useless.

So what you really want to know about the cost of living is what salary to ask for. I can't help you there because I don't know your career, your background, where you're coming from or where you're going to. You're the only person who can really answer that and if you read the work permit series and you followed the advice I laid down, you already know what someone in your position should be earning.

The only caveat I can add is that you should be aware of the legal issues with minimum wages. Specifically, many countries will not allow you to be hired if you're paid less than the national average for your position, though in practice said average is not always well defined. Furthermore, you may be hired as a highly skilled migrant or have certain legal benefits as an immigrant (such as tax rulings) which require you to be paid a minimum salary to take effect.  In short, make sure you know what minimums apply to your situation. Many employers will try to get your for the best price possible and may inadvertently (or not) try to hire you at less than a legal wage and you could find yourself technically being an illegal immigrant as a result. Don't let this happen to you!

In short: if you've researched your opportunities, you know what your job should pay and you should ask for a salary which reflects that and your skills. After that, be prepared to adjust your lifestyle to fit your new country rather than have your new country fit your lifestyle. It's not as satisfying an answer as explaining the cost of living, but it's often a more honest one.


  1. "Here in the Netherlands, thanks to a minimum fixed book price (which has interesting side-effects), even cheap mass market paperbacks cost €17 to €18 each. This has impacted our lifestyle, but won't necessarily impact yours."

    I'm quite surprised by this. Are you reading that many Dutch language books? Because you can buy novels published in England or the USA for around EUR 10, even in normal book stores.

  2. @Abigail: really? Which book stores? I've hit the American Book Store near Singel, but they were still charging €17 for English language books.

  3. One comment I should have made a long time ago, but didn't, is that €10 for a used book is still a much higher price than I'm used to, even ignoring the exchange rate. That's still two to three times what I would pay in the UK or the US. Thus, if you're an avid reader, €10 is still a ridiculous amount of money for a book. Just grabbing a random book from my bookshelf - one I bought in the UK (Children of Men) shows the new list price as £6.99. That's if it's new.