Travel 101: Tricks to Understanding (and Enjoying!) the Money Side of Travel
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Quick
Tips for Excelling at Currency Exchange
by
Judy Wolf
This article is the first in a three-part Travel 101 series entitled "Tricks to Understanding (and Enjoying!) the Money Side of Travel."
It can be intimidating to suddenly have to operate within a whole new economy and system of money. But never fear! Here are a few simple tricks to ease the transition.
Let's start with a quick overview of what currency exchange means to you when you're faced with a bank placard listing lots of numbers like 1:7.94 or 1:250,000. First of all -- just to make sure we're all on the same page -- these should be read "one to seven point nine four" and "one to two hundred fifty thousand," respectively, which means "one of this currency is equal to seven point nine four (or whatever) of that currency." One column will be the local currency, the other the foreign currency (yours).
We all know that money is an arbitrary designation of value for goods and services exchanged in the marketplace. Instead of saying "I'll give you four hours' work in your fields in exchange for that pair of shoes" (to which the store owner responds, "But I don't have any fields!?"), we hand over some cash and leave the store with our footwear. This is what normally happens. It's a familiar exchange.
As travelers, however, we don't have reference points for comparison within the local economy (especially at first), so the value of the local currency only has significance for us as it relates directly back to our home checking accounts. Which means we spend a lot of time standing in stores doing awkward calculations, right? Luckily there are a few shortcuts.
On a practical level, currency exchange basically comes down to two questions: how many units of the local currency is your dollar/pound/euro worth? Or, in reverse (and this is the one we really care about once we've exchanged our travelers checks or made our ATM withdrawal), how many dollars/pounds/euros is each unit of local currency asking you to spend?
As previously mentioned, the rates you see advertised by banks and exchange counters will usually have two columns: the local currency, and other countries' currencies (in my case, U.S. dollars). How this information is presented will be determined by which direction you're changing money.
Exchange counters make their money by building in a slight difference between what they pay for dollars versus what you pay to get those dollars back again when you leave. For instance, if the "We Sell" exchange board tells you that each U.S. dollar buys 48 Indian rupees, don't be confused when the "We Buy" board says that each U.S. dollar costs you 51 Indian rupees to reacquire. For now, what you care about is the price you paid to buy the local currency (the other only comes into play if you have anything left over at the end of your trip!), the "We Sell" rate (in the example above, 48 rupees).
While it's definitely useful to pull out your pocket calculator as you adjust to the currency (and a generally smart move when larger amounts of money are being transacted), the following hints will make small exchanges easier, faster, and more enjoyable.
As soon as you arrive in the country and exchange money, figure out some basic equations, or units of comparison. For instance, if US$1 buys 48 Indian rupees, I immediately round up (or down) slightly to an easily multiplied number, in this case 50. In this model, every 50 rupees equals $1. So if something costs 100 rupees, I know that's approximately $2. Twenty-five rupees? Fifty cents. Five hundred rupees? About $10.
Next, create a few "placeholder" amounts (this is especially useful when the exchange rate isn't quite so math-friendly as 50) so you know how much local currency equals $1, $2, $5, $10 and $20 (for example): in the case of Indian rupees, that would be 50, 100, 250, 500, and 1000. Having this in place, you can then instantly recognize a price tag as being "approximately X" in your home currency without having to fiddle with your calculator every time you turn around.
Some people get confused by all the extra zeros in countries that operate in the thousands and millions for items like bread and cheese. Two things to understand: 1) know that many countries use decimal points for commas and vice versa, and 2) even the locals in these places tend to only use the first few digits (in fact, many prices will be listed like this), so you can cut off the last three or six (or whatever) zeroes and operate just like you would if the numbers were smaller to start with (just remember you have to tack those zeroes back on again when you pay).
If you're in one country long enough, you'll start to adjust to the local currency to the point where you think in terms of the local economy ("Okay, the price for that souvenir is equal to two restaurant meals"). Or, if you're traveling from country to country, you may find yourself converting not to U.S. dollars, but to the last currency you were in. For example, I spent long enough in Thailand that I did my currency conversions in Laos and Cambodia based on Thai baht rather than U.S. dollars (this was also useful because the value of items relative to the local economies were more closely analogous to Thailand's than the U.S.'s), and when I got to India and found the rupee had a similar exchange rate to the dollar as I'd known with the Thai baht, I already had basic units of comparison established in my head.
As you spend more time within a culture, you'll begin to develop a sense of the local economy. If you (like so many travelers before you) begin to find yourself frustrated by the separate, higher-priced tourist economy that exists in most countries, be sure to read the next article in this series, "Sure Cures for Walking Wallet Syndrome," for some tips on how to survive the experience with your sense of adventure intact.
Copyright (c) 2002 Judy Wolf
About
the Author:
Judy Wolf (www.judywolf.com)
is a world traveler, freelance writer, speaker, and whitewater kayak instructor.
She's taken numerous, extended solo journeys around the world, traveling
by foot, bus, jeep, camel, truck, boat, train, plane, elephant, and bicycle
to over 30 countries on five continents. She currently lives in upstate
New York with her husband and border collie, where she's working on a
book-length travel narrative about her most recent adventures…that is,
when she's not plunging off waterfalls or entertaining the dog.
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Currency
Conversion Hints
- As soon as you arrive in the country and exchange money, figure out some basic "placeholders" or units of comparison to make quick price conversion easier
- Many countries use decimal points for commas, and vice versa
- When faced with a multitude of zeroes, do what the locals do-take them off while adding or converting, then tack them on again when you pay
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