Many major cities around the world – such as London and Los Angeles – have established a reputation for being expensive destinations in which to live.
Whether it’s the price of buying or renting property, owning a vehicle or the costs of entertainment one of the temptations of expat life is moving to somewhere where your money will go further.
After all, if you can maintain your current income level but move to a country where the costs of living are lower then one can live a far more comfortable life.
Of course there are two aspects that need to be considered when it comes to calculating “disposable income” or “purchasing power”. Firstly, one needs to consider the average local salary in any destination being considered, and secondly the cost of buying goods and services in that area.
Fortunately UBS have done the hard work for us, with the 2015 edition of their Price & Earnings survey. Their extensive study combines both these elements in order to deduce which countries enjoy the greatest levels of purchasing power. Quite simply if you’re considering a move abroad for financial reasons then selecting one of the countries with the best purchasing power should enable you to enjoy more material possessions and fewer financial worries.
The study looked at a “basket” of 122 goods and services in 71 cities around the world. It them compares the cost of these items to the average salaries experienced in these cities in order to deduce which residents enjoy the greatest level of disposable income.
As it turns out, the country with the highest levels of purchasing power is Luxembourg, where residents enjoy more than ten times the purchasing power of those residents at the bottom of the chart.
What is interesting to note is that many of the cities topping the charts are actually known around the globe as expensive places to live. The second and third positions go to Zurich and Geneva respectively. Miami and Los Angeles round off the top five destinations.
The data suggests that living in an expensive city doesn’t necessarily need to hamper your financial situation; so long as salaries are fairly aligned with the costs of living.
Of course there are always discrepancies. London ranks a lowly position 21, meaning those that bemoan the costs of living in London are far from imagining things; London really is an expensive city to live in.
Indeed, while London ranks as the sixth most expensive city to live in out of the 70+ destinations studied, it fails to even make it into the top ten in terms of salaries. This means that when calculating spending power London really is a very expensive place to live when compared to other destinations.
On a lighter note, the survey also compared the costs of a number of well-known consumer goods with the average salaries in order to calculate how many working hours it would take to buy a Big Mac or an iPhone 6. The results are shockingly different around the world.
In Zurich, for example, one could “earn” a Big Mac in just 11 minutes and an iPhone in just over 20 hours of work. In Nairobi, however, it would take 173 minutes of work to afford a Big Mac and an astonishing 468 hours to purchase an iPhone. It would seem that McDonalds probably isn’t quite an popular in Kenya as it is in Switzerland.