Traveling overseas is one of the most exciting things you can do.
Different cultures, delicious food, the mass confusion caused by pitting your United States dollar against the ever-fluctuating global market — it’s all a thrill, isn’t it?
Ok. That last one is less than thrilling.
Currency exchange is just plain confusing, and the more you think about it, the more confused you get.
Especially considering the value of your dollar (and the currency you are trying to convert to) changes day by day, it can get pretty overwhelming dealing with money.
That’s why we’ve created this guide for expats first stepping into the exciting new world of currency exchange and value conversion.
Learning the Basics of Currency Exchange
When you move to a new country, you won’t be able to use your dollars (unless you’re moving to a country that doesn’t have a currency of its own and uses the American dollar, like Ecuador or Zimbabwe).
Chances are you’ll need to convert your money to the local currency, engaging in a practice known as currency exchange.
The exchange rate is the value of your money (the United States dollar) examined by its value in another currency. This is determined by world economic factors like imports and exports, as well as local economic factors.
Basically, the exchange rate determines how much of a local currency you will receive when you go to the bank or exchange office to exchange your dollars for local currency.
Since so many different factors affect the exchange rate, it changes every day. Because of this, it’s usually a good idea to check the internet before you head to the office. If the exchange rate is particularly low, you can try waiting another day to make your transaction.
Using a Money Converter for Currency Exchange
A currency converter can be your very best friend when moving to a new country.
This handy little device will do all the math for you. A money converter basically allows you to input an amount of one currency (like the dollar) and see how much it is worth in a different currency.
A money converting app is almost essential nowadays when traveling or moving overseas. Check out these useful converter apps:
- XE Currency: The XE currency app is free of charge and available for most smartphones. It has an easy-to-use interface and works with all major forms of currency. It updates automatically, ensuring you get the most recent exchange rate to work with. It works offline as well, saving the most recent rate and using it for the math.
- Currency Banknotes: The Currency Banknotes app is great because it shows you pictures of what your cash will look like. This way, you’ll know when you’re getting fake money. It costs less than a dollar and calculates 150 currencies.
Use a currency exchange app to determine whether or not you’re getting a fair deal on an exchange. It can also prove useful in situations where you stand to spend money (out on a date, at the movies, etc.) and you wish to determine just exactly how much money you stand to spend — in your own currency.
Simply convert the price of the bill using your converter, and it will show you in U.S.A. dollars what you must pay.
Keeping Up with the Current Market of Currency Exchange
There are several reasons why it’s important to keep up with the market. Your life is affected every day by how much money you have to spend.
Currency Exchange for Expats Employed Outside Their Country of Residence
Many expats choose to live in other countries while still earning an income online or through a United States company. This is also true for those who live from pensions.
If your money comes in the form of U.S.A. dollars, you need to pay special attention to the exchange rate in order to minimize your personal spending and avoid scams when exchanging currency.
Expats Earning Local Currency
Many expats living abroad earn money in the currency of their country of residence. If this is the case, it may seem like the dollar just isn’t that important anymore.
Say you live in Colombia. You earn Colombian Pesos. You pay all your bills in this currency. Why should you care about the value of the dollar?
It’s still important to pay attention for friends and family who may be visiting. If you decide you want to take a little trip back home, knowing the exchange rate (and exchanging your money on the right days) can help you save big money.
Learning Currency Exchange Helps Your Wallet and Enhances Your Experience
Besides being a money saver, learning the currency exchange rate helps you assimilate into your new society.
Eventually, you’ll be able to start “thinking” in another currency, automatically calculating your expenses in pesos or yen.
This is an important step on the road to being a local! It’s a fun and interesting challenge, and you’re surely up to the task.
Feature image via Business Mind