Calculate How Much You Should Spend on a Hotel Abroad With the Big Mac Index

When you travel abroad, everything can be much cheaper than here, including hotels . If you’re not sure how much you should be spending a night in other countries, this equation will help you get an idea.

First, you need to calculate what Sam Dogen, the financial samurai , calls your Natural Hotel Spending Rate (NHER). Add up all your living expenses including rent, mortgage, property tax, and utilities. Now divide this by 30.5 days. This is your NHER. This is the kind of rate you can potentially spend on hotels while traveling abroad without breaking the bank. However, your dollar can change in value as you travel, so you need a way to offset that. Dogen offers an easy way to do this – compare the price of something you can find almost anywhere: McDonald’s Big Macs. Here’s an example of how to calculate this using the $ 180 NHER:

For example, a Big Mac costs $ 2.50 in Kuala Lumpur and $ 3.8 in San Francisco. Divide $ 2.5 by $ 3.8 to get 66%. Now multiply $ 180 by 66% and you get $ 118.80.

This means that if you have a $ 180 NHER, $ 118.80 or less is a good fare for your trip to Kuala Lumpur. If your NHER seems quite low like mine, it probably means that you are renting and that hostels may be the best choice for your international travel in most cases. That said, the Big Mac Index is a fun way to compare, no matter what you might have to pay for. You can find out more about the calculations at the link below.

How Much to Spend on a Hotel When Traveling Overseas – Calculate Adjusted NHER | Financial samurai


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