One of the biggest points of confusion for athletes playing abroad deals with the economy of each country, I know it was for me. You may know the currency used in that country but are things in that country more or less expensive when compare to the United States?
Even before signing your contract, it’s a good idea to see just how expensive that country is. Why? The more expensive the country is, the less of your money you will be taking home at the end of the season. Because obviously you will be spending money here and there while you are abroad. Knowing how expensive a country is will also give you a good idea of how much money you are spending. I know that may sound stupid, but when dealing with a foreign currency and foreign exchange rates we often forget how much money were are spending in terms of US dollars.
A nice and easy way to determine the expensiveness of a country in comparison to the United States is using what is called the Big Mac Index. Initially when I discovered it I thought it was pretty stupid, but the more I learned about it the more it made sense. If you don’t know, McDonalds restaurants are all over there world and McDonalds’ signature meal is the Big Mac. What this index does is it takes the price of the Big Mac in each country and converts it to US dollars and then compares it with the price of a Big Mac in the United States. This gives you a nice indicator of just how expensive that particular country is. For example, the Big Mac in Switzerland costs 6.50 in Swiss Francs (Swiss currency), which translates to $7.14 in US dollars. They compare this to the price of the Big Mac in the United States, which is $4.62, and conclude that Switzerland is 54% more expensive than the US. Now of course this does not translate to every product and service, but it does give you a good idea as to what you are getting yourself into.
You can find the Big Mac index here.
A couple other tips when dealing with foreign currency…
- Know the foreign exchange rate between the US dollar and whatever the currency is of the country you are going to.
- Use a Credit Card with NO FOREIGN TRANSACTION FEES as much as possible.
- When Credit Card use is not possible, try to get cash from the team or from a bank account that the team set up for you. Using an ATM to withdraw foreign currency and exchanging money at an exchange rate place can be expensive.
Following these helpful hints will give you a leg up on accumulating wealth, which is step one in securing your financial future.