If you are considering whether or not you will accept a job offer abroad or are just considering moving or retiring to a foreign country, you will want to consider the cost of living attributed to the country, state and city where you will be living. This information can help you to determine if the salary offered by your new employer or your savings will hold up against the economic burden of living in that new location.
You must determine if the salary provided by the prospective employer abroad will allow you the same standard of living you currently enjoy. Increased income and property taxes, transportation and goods and services can be quickly absorbed in a higher salary if the other city is more expensive. Assuming that your consumption patterns remain consistent, you would need to spend less money and bring more money home to maintain a consistent standard of living.
Always conduct an international cost of living comparison by city for a more accurate comparison. States adopt widely varying tax laws, see fluid property value fluctuations and have vastly different health care schemes and structures for residents. For example, if you were to compare the cost of living in Los Angeles to Paris for the 2009 calendar year, you would first consider the exchange rate. Using the exchange rate as a base measurement, you would then consider other factors such as health care, for example. In France, patients are responsible for and allowed to claim up to 85 percent for the total cost of health care services (2009). In the United States, health care coverage is determined by each individual plan. When drawing a comparison, consider your individual plan costs and coverage services. Measure these against your expected costs while in France. It is important to use the exchange rate as a backdrop for all comparisons as it will determine the variances between the two cities.
As a general rule of thumb: Use a cost of living comparison calculator to determine if the city abroad evenly matches your current city. If not, determine the minimum salary range you require to meet your current needs while maintaining the same, if not similar, standard of living.
When calculating international cost of living, consider if an increase in income will cover any increases in expense. To do this, use a salary calculator to determine what you should be earning in comparison to other professionals in your industry, city and business type or company; all variables should remain constant with similarities in education and training. Balance the information provided by the salary calculator with information from a cost of living calculator to then determine how much your salary will buy you regarding goods and services, health care, property and transportation. For example, compare two company's salary to the larger world market, and then determine which is more competitive or offers greater pay equity for your current position.
An international cost of living index is simply a barometer of the expenses you may incur while living abroad. This information is used to help you estimate how your salary will stack up against the average income level, as well as expected expenses like housing, health care, education, transportation, personal care and food. An international cost of living calculator cannot predict with 100 percent accuracy the expenses you will incur while abroad.
International economic data changes daily and requires perpetual research. Online sources like Economic Research Institute's Relocation Assessor, the U.S. Department of State and the Economic Intelligence Unit's Worldwide Cost of Living bi-annual survey are all useful resources when compiling international cost of living comparisons.
According to the CNN website, the five cheapest countries in the world are: Paraguay, Zimbabwe, Argentina, the Phillipines and Pakistan. Low housing costs, low fuel costs, weak currency and low food and accommodation costs all helped these five countries to make the list.