Price/Lifestyle Arbitrage
Today we ate at McDonalds in London. Was it my preferred place to eat? Not at all. However, my wife and I are staying in a hotel near the Gatwick Airport, we don't have a vehicle, we don't know the bus system, so we get what is close.
My options:
- KFC
- McDonalds
- A Gas station
What did I decide on?
Kentucky Fried chicken.
Except I walked in to check the price of a 2 piece chicken meal with fries and a drink. I converted to Canadian dollars and went... Nope.
$18 CAD (roughly) ...
... In Canada $7.99
... In Philippines $4.99
... in Indonesia $3.99
When I'm in SouthEast Asia and I see less expensive prices it is a nice surprise. When I go to London and prices are effectively doubled? Ouch
Which is why I took the picture of the gas price. 157.9 Pounds. Converted to Canadian? $3.16 CAD. In Canada we are grumbling over fuel prices but it is only $1.96 when I left. Not quite double in London but close enough.
Did you notice the price on the McDonalds saver meal? 5.59 UK Pounds... roughly $11 CAD. In Canada? $5.99. Again, almost double.
...and that is what I found on everything.
The bus trip from the airport to the hotel? 20 Pounds per person. Double what I would expect to pay in Canada.
A Coca Cola? 2.50 pounds in Canada $2.50. Again double.
The one I really had to look in astonishment was the price to have laundry done by the hotel.
Pants 11.50 pounds. $23 Canadian.
I remember posting about the price of laundry in the Surabaya Fairfield and thought their prices were bad. Here it is arguably much much worse. I remember getting all my entire load of laundry done at a local shop in Surabaya $7.00 CAD which is only a 1/3rd of the price for my pants here.
Make in dollars, pay in dollars
It is one of those things that seems obvious when stated but is easily misunderstood.
When I am in the Philippines and people ask how much I make I hesitate to tell them. The reason? They will hear the number in Philippine peso's and think that I am rich. Why? My Canadian paycheque looks very good in the Philippines because its dollars to pesos. I'm certain the same thing would happen in the UK. If I hear how much they make it will seem large to me but when you are here? Making pounds and paying pounds? I'm certain things don't seem so rich.
Which brings up "arbitrage". Which is mostly just the idea of buying where cheap and selling where expensive. However, with lifestyle I think more in terms of "earning where rich" and "living where inexpensive".
If I was to work my life in Canada and retire in London? I'd be pretty broke. That would be earning low and living expensive.
If I was to work my life in Canada and retire in Surabaya? I'd be pretty rich. I would have been earning high and living inexpensive.
In theory it sounds great. But there are a few issues.
- Gentrification.
Big word which means that when a bunch of rich tourists or expats go into an area they drive up prices. Low prices don't stay low when rich people move in.
- Expectations
London is a nice orderly city (at least what little I saw). Much of what I saw could easily be Canada if it wasn't people driving on the other side of the road. Surabaya? Would never be thought of as Canadian. Things just don't flow as smoothly there.
There are tradeoff's when going to a less expensive lifestyle.
Sometimes good and sometimes bad
I'm lucky I can see this first hand
I'm lucky I can travel. It allows me to see how others live. It lets me see how things change in price from place to place. How different things have different value in different places.
Plus all the other cultural differences, lifestyle differences, viewpoint differences and even just structural differences in how things are done.
Sure it is expensive here in London but I'm glad I get the opportunity to see a new place and new way of doing things :)
However, for anyone considering moving to a different country to "make more money" or for "a better life"... It can work but always remember "Make in pounds but also you must spend in pounds"... that evens things out quickly.