Weighing options: comparing job offers in different cities
It can be a difficult decision, whether or not to move overseas. One thing seems straightforward: comparing salary offers. Surely if Job A in one part of the world pays 20% more than Job B in another part of the world, Job A is automatically more rewarding.
Not so fast! You have three factors to weigh up before you judge which offer is better: cost of living, full salary package, and non-financial factors. Let’s explore these in turn.
Cost of living
Cost of things like food, housing, transport, fuel, clothes, eating out, entertainment, and so on, varies depending on which country, and which city of that country, you are based in. If Job A pays 20% more than Job B, but it costs 40% more to live in City A than City B, you’re not making headway financially.
Resources such as the Wiki Cost of Living site, the Mercer Cost of Living Survey, or the Big Mac Index (subscription only but see visual here) can give you an indication of purchasing power in each place of interest, and you can also talk to expats actually living there. You need to work out how far your dollar will go in each potential living space.
Salary package
A salary is not just made up of a dollar figure. It includes factors such as:
- The currency you will be paid in and exchange rates
- Superannuation
- Allowances, including car, housing, utilities, health insurance, travel/holidays
- Bonuses and incentives
- Contribution to relocation expenses
- Tax implications.
Normalise each salary offer into one currency at current exchange rates. Put a dollar value on every part of the salary package and add it in. Now you’re closer to a true reckoning of the financial value of the offer. If you want to get tricky, you need to add in extra value for money you receive immediately at today’s buying power, verses money you receive at the end of a contract (eaten away by inflation). However, even a rough calculation will give you a better idea of where you stand.
A problem can arise when exchange rates are fluctuating: an offer might look great when the US dollar is strong, but lose favour to another offer if the US dollar weakens. You may wish to check predictions, or choose to calculate with a level of pessimism; if the decision point is so closely linked to exchange rate that it makes the decision difficult, you may wish to use non-financial considerations to weight the decision one way or the other.
Non-financial aspects
Money can’t buy happiness. Remember to consider lifestyle benefits and sacrifices in each place under consideration. Is that 20% extra from Job A worth the hassle and stress of living in one of the less pleasant places of the world? Is the 20% paycut at Job B worth it because of the opportunities for travel and experiences? This is a personal weighing-up process.
Continental Shift goes into more detail about how to factor in non-financial aspects.
If you don’t want to wait, or you want the content in a nice, easy-to-read format, you can buy it in paperback from Amazon, or in paperback or electronically from Lulu.
