How to Calculate International Cost of Living

Check the exchange rate for the country in which you will be living. If you are moving to the U.K., you'll have a tougher time than if you are moving to most countries in South America. Know before you go: look at the incidentals you'll need in your everyday life since they may not be as freely available as they are in the U.S. Then add another 10 percent to your budget.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Calculator
• Currency converter (online source)

1. Grab your calculator.

2. Log onto a currency conversion site, such as Bloomberg or FT. Key in 1 USD versus whatever currency your destination country uses (GBP, Euro, etc.).

3. Access your established monthly budget from the U.S. Now convert that dollar figure to the new rate. Irish-born author Mick Quinn, who lived in Barcelona for 4 years before heading back to the U.S., says the very first step to calculating living expenses is to accurately list the major costs: mortgage, food, heating and power. For example, while living in Barcelona, he realized the "cost of home heating is outrageous." Therefore, ensure that you've checked how much it actually costs to heat your home, fuel your car (if you'll have one) or otherwise get around. You think gas is expensive here; wait till you see what it costs in Europe.

4. Work a long-term budget with "various forex (foreign exchange) rate fluxuations," advises Quinn, who was once a Wall Street CEO. Realize that the currency rate will likely fluctuate, especially if you've been there a long time.

5. Factor in your pets. If you are bringing Snoopy along, he'll probably need a microchip, unless you are going to Canada. And wherever you're going, you'll need up-to-date veterinary records and a pet passport. These are expensive. You'll also need a firm carrying case before you pay another small fortune to transport your little furry friend.

6. Review your figures with an accountant or numbers-savvy friend. Moving abroad is a big step, so if you aren't known for being good with a buck, find someone who is. Ideally, that will be a friend in the country in which you'll be living. Email them a month's or a year's budget and ask them to go over everything. Someone living abroad--someone who knows what it costs to heat a home, buy food and drive a car there--will be the absolute best fact-checker you can find.

Tips & Warnings

• Know the exchange rate at the time you are leaving--not 3 months before you go. Rates fluctuate, especially in volatile markets.
• Make sure you can afford this, especially if you are hopping over to a country where you'll be paid in American dollars but trying to live within the other country's culture (such as England or parts of Europe).
• Don't assume that everything you can find easily and cheaply in the U.S. will be as available or inexpensive where you are going. You'll have surprises when you are there--everything from the cost of coffee to the cost of gas. Some costs will be in your favor, and some surprises will be pleasant, but not all of them.
• If you are moving to London or another insanely expensive city, make absolutely sure you have a generous savings account.
• Do not throw all your money into the stock market right now, but don't take all of it out either. Ask your financial adviser for help on this.

Resources

• Author Mick Quinn's website
• Information on foreign exchange markets
• Expats in France: Discussion group for French speakers, including Americans abroad
• Italian apartments, home rentals, job listings and other practical information
• Bloomberg currency converter