The global markets are opening up faster than ever before and more multinationals are planning and expanding their reach across these emerging regions, resulting in the number of expats steadily growing around the world. Relocation and cost of living have become familiar everyday terms and include a range of factors to consider before taking the final step to move.
Cost of living will differ from place to place, the first point that most people will look at is the salary being offered and how much the change in costs will affect them on a monthly basis. Based on these figures they can budget their monthly expenditure, savings and the amount left over for them to enjoy their new salary and position.
– Typical expenses include:
– Household Expenditure
– Transport Costs
– Miscellaneous (newspapers, hair dresser, etc)
– Communication costs
– Education costs
Figures for each of these will vary for everyone. Whether you can stay within your budget and save, or if you exceed these costs depends on the salary offered and the standard of living you select to pursue which are made through personal purchase choices. Talking to an expert / consultant in the HR Department will give you a clear idea of the location, living standards and kind of expenses you will incur.
Contrary to common belief, the cheapest places do not always promise the cheapest living costs. Places such as Luanda in Angola, which is one of the largest oil producers in Africa, is the most expensive expat destination in the world for January 2014. Does this mean the best facilities? The answer is a resounding no. With one of the highest poverty levels on the African continent, Luanda is far from being an expat haven. Expat type accommodation is hard to come by and, available housing comes attached with high rental costs and demands almost 30% of an expatriate's expenditure. Imported goods, which expats purchase more readily than local goods are costly, due to the high inflation rate and currency fluctuations.
On the face of it, it may look like a low cost city due to the poverty it experiences, with great opportunities including a well paid salary, while in reality it could come with expensive accommodation, a harsher environment than what one is used to and an overall higher monthly budget requirement. It could also be completely inappropriate or uncomfortable for a family move especially when you have young children, which could mean your relocation plan could result in a return to your home country at a cost to yourself or the company. A similar picture is painted of Caracas where the Bolivar has fallen but the short of imported goods and increase in inflation has pushed up the expat cost of living.
Most companies make sure that the salary is adjusted for cost of living and match global expatriate requirements.
The top most expensive expat destinations in 2014 are:
1. Luanda, Angola
2. Zurich, Switzerland
3. Geneva, Switzerland
4. Caracas, Venezuela
5. Hong Kong, China
6. Oslo, Norway
7. Monaco, Principality of Monaco
8. Tokyo, Japan
9. Singapore, Republic of Singapore
10. Moscow, Russia
As we can see from the list, the world's most expensive expat destinations are not necessarily names from the most developed nations. In fact, quite a few range from the lower ranks of the developing nations in terms of their poverty, currency and inflation levels. If you compare your salary with the basic cost of living then you could fall into the trap of believing that you will be compensated appropriately to cover your budget and still have enough to save. But what is cheap and affordable for the locals may not be for the expat and here lies the main relocation dilemma. It is for this reason that you need to ensure proper steps are taken so that you can reach the right decision.
Some of these steps are:
# 1 – Research – Thanks to the Internet, it is much easier to get information on any country than ever before. Start with your own research and read up as much as you can on the place / s you want to relocate to.
# 2 – Consultation – Armed with the basic information you can now consult an expert / HR department to get a clearer idea of what your relocation and new job will entail. You will get more insights to add to your existing research.
# 3 – Education facilities – If you have young children then you will need to find out what kind of international schools are available, how good these are and what they will cost.
# 4 – Entertainment – It can not be all work and no play so you also need to find out what the quality of the expat social life will be like.
# 5 – Situational facts – The economic and political stability of the location is also important to your decision. You may be offered a great salary for a place with a high crime rate or political instability. It could also be a place with very harsh climatic conditions so you need to decide what you are comfortable with.
# 6 – Salary – Based on the various criteria, your salary could go up or down. As mentioned, a place which is officially known as 'an extreme hardship location' could offer a six figure salary you would not dream of in your existing job. But if you want to trade a comfortable western lifestyle for a high salary is a subjective decision.
# 7 – Cost of living – Armed with the information you have, you can start calculating how much expenditure you will be incurring on a regular basis and how much savings you can enjoy with your new salary. For this you require a quality international salary calculator.
It does not matter whether you are moving to Manhattan or Mongolia, all relocation decisions can be tough. But some background work, guidance and quiet planning can go a long way to help and arrive at the right choice.
To find the calculator you need to work out the correct expat salary, index or permit visit Calculators