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The cost of living abroad

Prepare for the cost of the smaller things that you may not have analysed as carefully yet but will nonetheless have a big impact on your day-to-day finances.

Lately, our practice is dealing with emigration queries on a daily basis. More and more of our clients are either moving offshore or many have already been abroad for quite some time. Helping them with the formal requirements is the easy part. We often get the dreaded question: “Is there anything else I should be thinking of?” The answer is categorically “YES!”. Unfortunately, we can’t prepare you for everything.

We’ve written about some of the information you need to check before emigrating. Click here if you missed our article. There is no generic step-by-step guide that we can provide that will give you all the answers. You will have to sit with your advisor and an emigration expert and work through the financial matters in detail.

One aspect that we come across time and again though is clients expressing surprise about the cost of living once they are abroad. For someone still living in SA, it often feels like an abstract conversation, but today I saw a visualisation that really hit home for me.

The price of a beer around the world

Source:  www.visualcapitalist.com

Never have I been happier to live in South Africa! As you can see above, we officially have the cheapest beer in the world. This probably explains our severe social issues to some extent, but that is a more complex problem than we are able to deal with in this column. Rather than getting too stuck on beer, I thought we could have a look at some other items that we spend our money on, to try to establish why expats are so often surprised by the cost of living in their new cities.

Deutsche Bank issues an annual report (Mapping the World’s Prices) comparing global prices of various items. They have not analysed the 2020 data yet, but the 2019 report surprised us in many aspects.

Cape Town and Johannesburg were ranked 28 and 32 in the Quality-of-Life Index respectively. This is well above major cities like Paris, Rome, London and Hong Kong. The Quality-of-Life Index is a compilation of various factors, including purchasing power index, house price to income ratio, cost of living index, etc. Keep in mind that stats do not always tell the whole story – these rankings will be greatly affected by the fact that the data is analysed in dollars and have probably worsened a bit since 2019 due to the stronger rand, but these numbers cannot be ignored. Whatever the detail, they indicate that the cost of living in SA is relatively cheap, all things considered.

We are assuming that someone who plans to emigrate will do a lot of homework on the big things like rent, healthcare, taxes, insurance, etc. Today we want to highlight the smaller things that you may feel are not so important, but still make a big dent in your pocket if you don’t keep track of them.

Looking at the Cheap Date Index (taxi, dinner/lunch for two at a pub or diner, soft drinks, two movie tickets and a couple of beers), Johannesburg and Cape Town ranked 38 and 44, respectively. As an avid moviegoer, pub diner and beer drinker, I was quite upset that we are on the list at all, but again, the devil is in the detail. According to Deutsche Bank, a date in Johannesburg will cost just under $70, but important to highlight is that the same date will cost you a cool $203 in Zurich, $143 in New York and $138 in London. So, while Jozi may be ranked the 38th most expensive, your date is still half price relative to the London couple’s evening out.

A litre of Coke cost you $1.25 in Johannesburg in 2019. The rand is a bit stronger now, so the current price is closer to $1.46.  At the time, Norway was the most expensive, coming in at $4.73 per litre. Those South Africans who do not drink large amounts of beer, are almost certain to be drinking large amounts of Coke (or whichever other flavour soft drink you prefer), so this is a cost that will add up very quickly.

A pair of jeans would be roughly half the cost in SA relative to that in Zurich and around 30% cheaper than in Australia or the UK, where many South Africans seem to be moving to.

A mid-size car (Volkswagen Golf or similar), would cost you just under $23 000 in SA in 2019, coming in at 26th most expensive in the world. Buying the same Golf in the UK would have cost you around $26 500, roughly 15% more expensive.

Smokers have never had a better reason to quit the habit! A packet of cigarettes in SA comes in at roughly $3, where the same will cost you $14 in both New York and London. That is almost five times more expensive and will be a true budget breaker for heavy smokers.

If you are used to having your domestic worker or nanny around five days of the week, you will have to set aside a special budget for these items. According to Payscale.com, the average hourly rate for a cleaner in SA is R20.61 compared to R202 per hour in London as at today’s rand/sterling exchange rate. Similarly, the average rate for a nanny in SA is currently R23 per hour, compared to R204 per hour. We cannot agree that R20.61 an hour is a living wage any way you look at it, but R200 an hour seems quite far to the other side of the spectrum.

None of the above items will make you change your mind about where you want to live in the world. That is not the point of this article. For those of you planning to leave, we hope that it will prepare you for the cost of the smaller things that you may not have analysed as carefully yet but will nonetheless have a big impact on your day-to-day finances.

For those of you who are sticking around, we hope your next beer will taste just that little bit better after reading this article.

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Michael Haldane

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Interestingly, one of Paul Theron’s Blunders-video series on youtube said the same but from a different angle. He reckons we have millions of laws and regulations here but very sh_tty enforcement of it, so we are one of the countries with the best freedom for individuals in the world. Given this article and the video, maybe I should change my very cynical view of SA? The ruling regime and their voters, however, will remain a bunch of boxes irrespective of the rosy glasses one put on.

Then there’s the possibility that living in SA, on any random day, has a higher chance of costing you your life than in Zurich, Oslo, Melbourne or London… Just saying.

This is a totally misleading article. Have just returned from Berlin where my daughter has just settled having been offered a job there. First of all salaries are much higher there. Sure taxes are high but u actually get something back. The really expensive part is accommodation but groceries are almost half the cost of even taking the shitty exchange rate into account. A single person can easily live well on 300 euros pm on groceries. Cars are cheap…if u need one…cos public transport is just so efficient. Clothes are dirt cheap..where can u buy a tshirt for 1 euro in SA? Nowhere!! Booze is also cheaper because of the competition in the market place. A bottle of liqueur is a third of the price compared to here. A decent table wine is 3 euros.
U will find that cities like Zurich have higher salary scales than living in a smaller town otherwise they would not attract work force.
The standard of living in SA is falling by the day.
Poor uninformed article.

Did you actually bother to read the article? I was in Switzerland 2 years ago and the cost of living was staggering (even if you were earning Swiss Franks) – Lost many a friend to emigration and 90% of them are not better of outside SA. Having said that the standard of living in SA has dropped.

Pathetic article that does not take into account that relatively speaking you should earn a lot more ( in equivalent Rand value ) when you move overseas .

We immigrated to the UK in November, family of 6. Wife got job in Feb, I found work recently and we are finding living in UK a lot cheaper than living in SA. Rent the same, taxes similar except here we aren’t paying medical aid, security, school fees, all 4 kids in school free which includes meals for the 2 smaller ones. Our biggest saving is groceries, we are finding we are paying about half for groceries here. Eating at home is a big saving. Eating out or takeout, more expensive than SA. Overall kids and Mrs much happier here. We are doing a lot more as a family outdoors and find living here much easier. SA sadly isn’t what it once was and I don’t think will be again unless there is a Boer War and things get put right. PS, we moved on a budget of around R500k including all costs and still have a good bit left and are living well in a 4 bed house with garden etc in a good area. Don’t keep convincing yourself SA is as great at it is, things are not. What people are used to there and deal with daily, is actually unacceptable!

End of comments.

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