Where does your money go the furthest?
A data study exploring the affordability of countries based on currency fluctuations
Ever wondered why the prices of goods and services can suddenly spike? Countries experience currency fluctuations for numerous reasons - one of the most common being high inflation. When inflation soars, everything from groceries to electronics becomes more expensive, not only impacting your wallet, but the overall economy.
Imagine you have a favourite candy bar that costs $1. You save up your allowance and buy it every week. One day, you go to the store and find out that the same candy bar now costs $1.10. This means the price has gone up.
Inflation is when the prices of things (like your candy bar) go up over time. This usually happens because there is more money in the economy, but the amount of things to buy stays the same, so each dollar isn't worth as much as it used to be.
So, in short: inflation means you need more money to buy the same stuff you used to get for less money.
Inflation is just one of many reasons that can cause a currency to become weaker or stronger. Others include economic health, political stability, monetary policy and more.
Check out the graph below to see what has caused the UK pound to fluctuate over the past 25 years:
Great British Pound to US Dollar Exchange Rate Over 25 Years
As we can see, in the past 25 years the UK pound has decreased in value against the dollar. This has been a result of many factors, with politics playing a key role.
The first major dip occurred in June 2001 during a UK general election when many speculated that the UK would adopt the Euro, causing people to have less faith in the pound. Another decline occurred in January 2009 during the Great Recession when several UK banks faced failure, prompting the government to intervene with bailouts.The biggest dip, in September 2022, occurred when sitting Prime Minister Liz Truss announced the government's mini-budget proposing massive tax cuts.
US Dollar to Great British Pound Exchange Rate Over 25 Years
Whereas comparing the US Dollar against the UK Pound over the past 25 years, we see that the dollar has fluctuated based on Federal Reserve policies, events like Coronavirus and Presidential elections.
Currency fluctuations can happen from events happening in your own country, and events happening in other countries. For example, The pound could become weak against the dollar due to an unfavourable vote. However, it could become stronger if the U.S. goes into a recession.
When this happens, it can either have a positive or negative impact on you, as it can affect how far your currency stretches compared to others. For example, if you're from the U.S. and the dollar is strong against the pound, you'll likely get more for your money when visiting the UK, and vice versa.
Great British Pound to Argentine Pesos Exchange Rate Over 5 Years
Some countries have hyperinflation such as Argentina, causing a rapid and extreme rise in prices, mainly due to economic mismanagement, excessive government spending, and currency devaluation. This caused the value of money to plummet, making it difficult for people to afford basic goods and services.
Due to hyperinflation, visitors to Argentina will find that their money stretches much further if they hold currencies from other countries. However, for residents of Argentina, travelling abroad becomes prohibitively expensive due to the devaluation of their currency.
This is important to know to find out which destinations are cheaper to visit, live in or buy products from.
See how far the dollar and pound go in different countries around the world
Where your money will go the furthest
Using data from currencyapi.net, the data experts at NetVoucherCodes have created a resource showing the value of the GBP and USD against 152 currencies around the world.
Choose your currency and explore below to find out where your money goes the furthest:
Whether you're planning a holiday, considering a retirement destination, or seeking places where your money can buy more, this map provides invaluable insights. It details how strong the pound is against the currencies of countries worldwide, helping you maximise the value of your money.
Explore the detailed breakdown of how the GBP has fluctuated over the past year and five years against the world's major currencies.
GBP - USD
GBP - EUR
GBP - JPY
GBP - CNY
This table shows the percentage change in the exchange rate of the British Pound Sterling against each country's currency over the past 5 years. Click on the headers to sort the currencies by their strength relative to the pound.
| Country | 5Y% changeβΎ | 3Y% change | 1Y% change |
|---|
This table shows the exchange rates of various foreign currencies against one British Pound Sterling over the past 5 years.
| CurrencyβΎ | Trend |
|---|
Now we know where you're likely to get the best value for your money, here are some tips to help you save money when travelling or living abroad.
How to save money when abroad
Rebecca Bebbington personal finance expert and consumer champion at NetVoucherCodes.
Rebecca shares list of tips to help you save money when travelling abroad:
Maximise Savings with a Wise Card
A Wise card is a savvy travel companion, providing an excellent way to manage your finances while exploring new destinations. This card offers the ability to hold multiple currencies, allowing you to spend money like a local without incurring hefty conversion fees. When you make purchases or withdraw cash, Wise uses real exchange rates, ensuring you get the best possible deal.
Moreover, the Wise card is widely accepted, ensuring you won't be caught off guard in a foreign country. With its user-friendly app, you can track your spending, set budgets, and receive instant notifications, helping you stay on top of your expenses and avoid overspending. Other cards to consider are Revolut and Monzo which all have different free withdrawal limits abroad.
When it comes to travelling in Europe, Starling is my go-to choice! It's great for using abroad as it always offers the best exchange rates - with no added fees - meaning you always get more for your money, whatever currency it's in.
You can also pay by card or withdraw cash with no added fees, giving you peace of mind when spending abroad. The instant alerts are also a great feature that I love. In real-time, you'll know how much you've paid in sterling, which makes me feel like I'm saving money!
It's super simple to set up and also has fantastic budgeting features in its online app which I'm yet to try. I recently reverted my old-school parents to Starling, and they love not having to deal with cash abroad anymore. I couldn't recommend Starling enough!
Beware of ATM Charges
When withdrawing cash abroad, it's crucial to be mindful of ATM charges to avoid unnecessary expenses. Always opt for local currency withdrawals and decline the offered conversion rate, which often includes hidden fees and unfavourable rates. Instead, let your bank handle the conversion to benefit from a better exchange rate.
Using Google Maps to find ATMs affiliated with your bank or those known for lower fees can also help minimise costs. Other travellers' reviews will also let you know if the ATM is known to be faulty, has compromised cards in the past or simply isn't open.
Additionally, consider withdrawing large sums of money less frequently to reduce the cumulative impact of fixed ATM fees. Some ATMs might charge a fee per transaction, so planning ahead can help you avoid multiple charges.
Skip Airport Currency Exchanges for Better Rates
Converting money at airports is convenient but typically comes with a high price tag due to poor exchange rates and additional fees. Airport kiosks often capitalise on travellers' urgency and lack of alternatives, leading to suboptimal financial decisions. Instead, plan ahead and exchange money at reputable banks or currency exchange services in the city, where rates are usually more favourable.
If you must exchange money at the airport, limit the amount to what you'll need immediately, such as for transportation to your accommodation. Once you're settled, you can find better rates in town. By avoiding airport exchanges, you can ensure more of your money goes toward enjoying your trip rather than unnecessary fees.
Know the Exchange Rate Before You Go
Understanding the exchange rate before you travel is essential for managing your budget and avoiding overcharges. Research the current exchange rate between your home currency and your destination's currency to have a clear idea of what to expect. This knowledge will help you recognize fair rates and spot unfavourable deals when exchanging money or making purchases.
Using currency conversion apps or online tools can also provide real-time updates, ensuring you always have the latest information. Being informed empowers you to make smarter financial decisions and can significantly enhance your travel experience by helping you stretch your budget further.
Travel to Economically Favourable Destinations
Choosing travel destinations where your money goes further can significantly enhance your vacation experience without breaking the bank. Research countries with a favourable purchasing power parity, meaning you can enjoy a higher standard of living for less money. Destinations in Southeast Asia, Eastern Europe, and South America often offer excellent value, with lower costs for accommodation, food, and activities.
By prioritising countries where your currency has greater purchasing power, you can indulge in more experiences, dine at better restaurants, and stay in nicer accommodations for the same budget. This strategic approach to destination selection can lead to richer and more fulfilling travel experiences without the financial strain.
Inquire About Card Fees in Advance
Before making purchases abroad, it's wise to ask if there are any additional fees for using your card. Some merchants might impose surcharges for card payments, which can add up over time. Knowing this information beforehand allows you to make an informed decision on whether to use your card or pay with cash.
Additionally, understanding any potential fees helps you manage your travel budget more effectively. Some stores might offer a discount for cash payments, providing an opportunity to save even more. By staying informed and asking the right questions, you can avoid unnecessary expenses and keep your travel budget on track.