Entrepreneurs

» Bonny Albo - Bank's 'Big Mac' survey says Tokyo residents have highest pur

By Alexander Higgins

GENEVA (AP) - Residents of Tokyo have the highest purchasing power in the world, edging out people in Toronto, Montreal, Los Angeles, Sydney, Australia, and London, according to a new survey by the Swiss banking giant UBS that uses the "Big Mac" (NYSE:MCD) as its benchmark.

Tokyo scored at the top of the survey, which aims to eliminate variables such as exchange rates, even though it is one of the most expensive cities in the world, UBS said in the Prices and Earnings report released Wednesday.

"Wages only become meaningful in relation to prices - that is, what can be bought with the money earned," it said.

The bank calculated the "weighted net hourly wage in 14 professions" and divided it into the local price of "a globally available product," for which it chose McDonald's flagship hamburger.

"On a global average, 35 minutes of work buys a Big Mac," it said. "But the disparities are huge: in Nairobi, 1 1/2 hours' work is needed to buy the burger with the net hourly wage there. In the U.S. cities of Los Angeles, New York, Chicago and Miami, a maximum of 13 minutes' labour is needed."

In Tokyo, it takes a mere 10 minutes. Bogota, Colombia, came in last among the 70 cities surveyed at 97 minutes.

The UBS survey, conducted every three years, rated Oslo as the most expensive city on the basis of the cost of a basket of 122 goods and services, excluding rent. It was followed by London; Copenhagen, Denmark; Zurich, Switzerland; Tokyo; Geneva; New York; Dublin, Ireland; Stockholm, Sweden; and Helsinki, Finland.

The least expensive cities were Manila, Philippines; New Delhi; Buenos Aires, Argentina; Mumbai, India, and Kuala Lumpur, Malaysia.

UBS said that if the cost of housing was included, "life is particularly expensive in London and New York."

The bank also compared wages. In that contest Copenhagen was tops, with an index of 118.2. For that comparison, New York - in fifth place - was taken as the base with an index of 100. Second place went to Oslo, followed by Zurich and Geneva. London was in sixth, followed by Chicago, Dublin, Frankfurt and Brussels.

At the other end was New Delhi with an index of 6.1.

"In the cities of western Europe and North America, workers in 14 representative professions earn a gross hourly wage averaging US$18; in the eastern European and Asian cities examined, the figure was only $4-$5."

But taxes and social security payments take a big bit in northern Europe, with Scandinavian and German cities losing ground.

Rankings were similar to the last survey in 2003, with changes resulting largely from shifts in foreign exchange rates, the study said. New York and Chicago dropped in the expensive cities ranking, mostly due to the weaker U.S. dollar.

"Shanghai and Beijing, meanwhile, remain comparatively inexpensive despite an economic boom because the national currency, the renminbi, has so far resisted pressures to appreciate."

Workers in Seoul, South Korea, work the longest. Those in Paris have the shortest work week.

"Based on a 42-hour work week, Asian workers labour about 50 days a year more than their peers in Paris," it said.

The study said a dollar earned in Los Angeles, after deducting taxes and social security contributions, is worth more than in Chicago, New York, Miami, Toronto and Montreal.

"Although the highest wages are paid in New York, it also has the highest cost of living anywhere in the Americas," it said. "Thanks to their much higher wages, after buying the basic basket of goods and services, workers in North American cities have far more left over for vacations, luxury items or savings than their counterparts in Latin America. The average purchasing power in Central and South America is just a third of the level in the North American cities."

Purchasing power ranking of cities based on the number of minutes of work required to buy a Big Mac, according to a study conducted by Swiss banking giant UBS. The rating was based on the local price of the product divided by the weighted net hourly wage in 14 professions.

Tokyo 10 minutes of work

Los Angeles 11

Chicago 12

Miami 12

New York 13

Auckland, New Zealand 14

Sydney, Australia 14

Toronto 14

Dublin, Ireland 15

Zurich, Switzerland 15

Frankfurt, Germany 16

Geneva 16

London 16

Vienna, Austria 16

Berlin 17

Hong Kong 17

Luxembourg 17

Montreal 17

Munich, Germany 17

Copenhagen, Denmark 18

Oslo, Norway 18

Amsterdam, Netherlands 19

Helsinki, Finland 19

Madrid, Switzerland 19

Nicosia, Cyprus 19

Brussels, Belgium 20

Milan, Italy 20

Taipei, Taiwan 20

Barcelona, Spain 21

Paris 21

Stockholm, Sweden 21

Singapore 22

Lyon, France 24

Manama, Bahrain 24

Dubai, United Arab Emirates 25

Moscow 25

Rome 25

Athens, Greece 26

Riga, Latvia 28

Seoul, South Korea 29

Johannesburg, South Africa 30

Lisbon, Portugal 32

Kuala Lumpur, Malaysia 33

Ljubljana, Slovenia 35

Sao Paulo, Brazil 38

Shanghai, China 38

Prague, Czech Republic 39

Tallinn, Estonia 39

Warsaw, Poland 43

Vilnius, Lithuania 43

Beijing 44

Budapest, Hungary 48

Istanbul, Turkey 48

Rio de Janeiro, Brazil 53

Bratislava, Slovakia 55

Santiago, Chile 56

Kyiv, Ukraine 55

Buenos Aires, Argentina 56

New Delhi 59

Bangkok, Thailand 67

Bucharest, Romania 69

Sofia, Bulgaria 69

Bombay, India 70

Manila, Philippines 81

Mexico City 82

Caracas, Venezuela 85

Jakarta, Indonesia 86

Lima, Peru 86

Nairobi, Kenya 91

Bogota, Colombia 97

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» Bonny Albo - Simple Thoughts on Financial Security

As I sat down to write this article, the stock markets around the world were plunging then rising then plunging again. Analysts in North America were not sure if the market was just reacting to a slowing of the American economy or "doing a natural correction." And it seems like the Autumn season is a prime time for market drops ever since that Black Friday in October 1929. The result of all this activity is a sense of uneasiness, even panic, among many of the population, particularly those who look toward the markets for their retirement incomes, both current and long-term.

As I have often said, "When times are tough, go back to the basics." For me, the basics of financial peace of mind are best summarized in David Chilton's book, The Wealthy Barber and Joe Dominguez and Vicki Robin's book Your Money or Your Life.

Chilton bases much of his message on the magic of compound interest; however I think that his philosophy can be best summed up by the phrase "Think long-term, save now." Chilton believes that sound financial planning is relatively simple, based not on high-priced financial advisors or rigid budgets, but on common sense and regular savings. If you are in a plan for the long term, he advises: "Don't sweat the ups and downs of the market...."

A few of Chilton's maxims on financial planning tell us:
"Pay yourself first."
"Pay off debt as quickly as possible."
Invest 10% of all you make for long-term growth."

The ramifications of following these three can be easily calculated using the math we were taught in high school. For example, saving $200 per month at an interest rate of 8% after thirty years gives a total of nearly $300,000. With the financial calculators and software readily available, even those who have forgotten the math can sit down one evening and play the what-if game. If you would like to spend an interesting evening, run through some scenarios of what your assets could be if you were paying yourself first and investing for the long-term.

Paying off debt quickly and remaining as debt-free as possible frees your money for your own use. If you buy on credit, the true price of an item rises. So, before you borrow, calculate a reasonable total interest cost and then add that to the product price. Is it still worth it?

If you have a small savings at hand (not your long-term investments), I suggest borrowing from it for any purchases you must make on credit. Then pay yourself back and include an interest payment equal to that the credit cards charge. And remember Chilton's Number 1 maxim: "Pay yourself first" each month.

While Chilton gives sound information on what your money can do for you, I would combine his wisdom with that of Dominguez and Robin as expressed in Your Money or Your Life. Although the two books have many areas of overlap, particularly on budgets (like diets, they don't work) and preparing personal, or household, financial statements, each offers a unique view on controlling your financial present and future.

In Your Money or Your Life, Dominguez and Robin ask the reader to take a close look at their personal relationship with money. They take a wide perspective, asking us to consider how we feel about: earning it, spending it, investing it, owing it, protecting it and worrying about it. They ask us to increase our financial intelligence by stepping back from our assumptions and emotions about money and observing them objectively. "Until you think independently, you can't be independent." In addition they advise us to develop our financial integrity, which is achieved by learning the true impact -- on ourselves, on our family, and on our planet-- of our earning and spending.

As you are determining your emotional relationship with money, Dominguez and Robin show you how to determine your true financial status. I refer you to the book for details, but in summary, the program goes something like this. (I hope Vicki and Joe's spirit forgive my simplified treatment of their marvelous program. If my words grab your attention, get the book and read the words of the true masters. They have much more wisdom to convey than I have extracted here.)

1) Determine what you have earned to date in you lifetime.

2) Next determine what you have to show for it. This includes all your tangible assets -- house, cars, furniture, clothes, bank accounts, retirement and mutual funds, etc.

3) List your current liabilities, all debts from loans to outstanding bills.

4) Now determine your present net worth by subtracting your liabilities from your assets. These calculations give you an idea on where you currently stand financially. If you are seriously in debt, you may have a negative net financial worth.

5) The next step is to determine your real hourly wage. This is done by adding all those costs over a year associated with holding your job: commuting, cost of work "uniform", outside meals and snacks, day-care, expenses incurred by activities or products used to de-stress yourself after work, job-related illness expenses, etc. Subtract this total from your annual income, after taxes, from all work-related sources (full-time or part-time jobs including moonlighting, but not money earned from investments.) Now divide the remainder by the number of hours worked per year (e.g., number of hours per week times number of weeks worked). This gives your real hourly wage. Not so impressive now is it?

With this figure in mind, you may want to rethink your current work situation. Could you work closer to home and eliminate commuting costs (and time)? Is the second family income really worth someone else raising your children in daycare? Is your job satisfaction level reasonable for your pay?

This calculation also gives you a means of determining how much money you are trading your life energy for. Dominguez and Robin see this as an important tool in determining your relationship with your earnings and spending because your life energy is your life. For a quick example, if my calculated real wage is $10 per hour, and I buy a new widget that cost $40, by dividing the cost by my real wage indicates I gave 4 hours of my life in exchange for it. Was the purchase worth four hours of my life? Maybe, maybe not, this is a personal judgement, but I now have a personal yardstick by which to judge the the cost of my expenditures. (Others to use would relate to the social and environmental costs of spending.)

6) The next step asks you to keep detailed records of all expenditures -- every cent. The purpose is two-fold. First, it gives you a factual handle on where your earnings went. Many find previously unknown information about their spending habits. For example, spending $4 per workday on coffee and donuts becomes $1000 per year! Second, the record gives you the ability to see how much life energy you give to each expenditure or expenditure category (e.g., the sum of all our clothing purchases).

7) Dominguez and Robin recommend that you plot on a graph your monthly income total and monthly expense total. This not only gives you a dramatic record of your current financial state - hopefully income is greater than expenses, if not you have work to do - but also show the trend of your financial status. If initially expenses exceed income and you work at reducing expenses, the gap should decrease and eventually the two curves should cross - a time for celebration!

Financial stability can be achieved by having a stash of interest-earning money saved for that proverbial rainy day. And with proper attention, that stash can be accumulating interest monthly to a level that exceeds your regular expenses. At that point, you are financially independent of your job's income (which leaves you the opportunity to re-consider your life situation). By reducing expenses, increasing real income, or a combination of both, you can increase the amount of money you save for the long-term. And if you concentrate on reducing expenses, you will move much more quickly toward the state of financial independence.

The bottom line, and we are talking finances here, is that regaining control over our financial picture does not require high-price assistance and fancy-named, costly programs. We live in, and will always live in, difficult economic times; it is only the degree of difficulty that changes. But with a little thought and forward planning, we can achieve financial stability.

Simple Thoughts on Financial Security by Keith C. Heidorn, PhD . ©1998, All Rights Reserved.

Living Gently Quarterly is published by Keith C. Heidorn ©2006, All Rights Reserved.. Correspondence may be sent to: email: see@islandnet.com.

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» Bonny Albo - By The Hour - A 'Working' Mom's Wage

by Myrna Giesbrecht

You go to work, you put in your time, you do your job, and you get paid. You take the money, you buy stuff with it, you go back to work and the cycle starts all over again. That's the way it goes.

So what do you really make? Have you ever stopped and thought about it? Sure, you say, $10.00 per hour (or whatever it is you get). But, is that what you really make? Whether you get paid by the hour, on commission or salary, you work X number of hours for X number of dollars. If you work 40 hours a week at $10.00 an hour, you bring home a gross wage of $400.00.

But gross wage is not what you really make. Oh yeah, you say, there's those deductions - income tax, benefits, pension plan, whatever. That's true. But gross wage minus deductions only equals net wage and that's still not what you really make.

To spend money wisely, you need to know what your real wage is. Look at it this way. If a shirt costs $40.00 and you make $10.00 per hour, it takes 4 hours to pay for it. Right? Wrong! Actual take home pay is not $10.00 per hour. To calculate real hourly wage, the total amount of money needed to get to work must be divided by the total amount of time spent getting or being there. The true cost of working includes all expenses directly related to working the job including travel time, unpaid breaks, transportation, clothing, lunches, and daycare. Any time and expenses that would not exist if you stopped working.

Figuring your real wage is both interesting and frightening. It's easy to see why home based businesses and working from home are becoming so popular. A lot of time and money goes into maintaining a job that can not be recovered.

Look at the following example. Working seven paid hours per day with one unpaid hour for commuting and one unpaid hour for lunch equals nine job-related hours per day. Expenses include taxes, parking, and vehicle maintenance, clothing, lunches and daycare. Here's how it goes over a two-week period.

Hours and Income
Paid hours - 70
Unpaid hours 20
Total hours 90
Total Income $700.00

Expenses
Taxes at 22% - $154.00
Parking at $1.25 per day - $12.50
Vehicle maintenance at $50 per week - $100.00
Lunches at $5.00 per day - $50.00
Daycare at $25.00 per day - $250.00
Clothing at $25.00 per week - $50.00
Total Expenses - $616.50

Real Wage
Total Income - $700.00
Less Total Expenses - ($616.50)
Sub Total - $83.50
Divided by work hours - 90
Real Wage $0.93

Now you and I both know that these expenses are pretty minimal for most people's situation, especially in the bigger cities. Yet, in this scenario, real wage is $0.93 per hour, quite a big difference from $10.00. Using the real wage, the same $40.00 shirt would take 43.01 hours to pay for. It sure changes your thinking process.

Calculating your real wage can be depressing, but don't let it get you down. It's a fact of life. What it shows you is how much you actually make and that in turn allows you to make more reasonable and responsible spending decisions. It's easy to see why huge debt loads accumulate when purchases take weeks and even months to pay for. In one day, it's possible to rack up debt that will take several months' worth of work to pay for.

Grab a scrap piece of paper and figure out what you really make. Use this figure as a guide to making spending decisions. Develop a spending plan and put money away ahead of time so you don't get into debt. Real wage applies not only to luxury purchases like extra clothing but also to monthly expenses like the grocery bill. At a dollar an hour, how many hours would it take you to pay for this week's groceries? Knowing that answer might make you consider purchasing sale and brand name items more often. The phrase "its only 50 cents" takes on new meaning when 50 cents is half an hours work.

The first time I calculated my real wage was after the birth of my third child when I was about to return to work. I had a decent job, not bad pay and great hours but after deducting my expenses from income and dividing by the number of work related hours I realized that going to work was going to put me in the hole. I'd be working for negative dollars. It was actually going to cost my family financially for me to go to work. I quit!

I'm not recommending you quit your day job but I am saying if you know how much you really make per hour and you think of purchases in terms of how many hours of work it will take you to pay for them, it will change many of your decisions and you'll spend less money. You'll start turning the lights off in empty rooms to conserve electricity, finding a way to use up leftovers, shopping at wholesale outlets and other cost saving measures. It might even be the springboard to finding a different job, house or town.

For me it was a great motivator to getting my business up and running from home. It's a lot less expensive to go downstairs and turn on the computer than it is to get on the heels, nylons, "dress for success" suit, power hairdo and co-ordinated accessories. And I like the boss!

Myrna Giesbrecht is the author of You Can Be Debt Free. This article is adapted from text in the book. To get more information about the book or You Can Be Debt Free workshops contact her office at 1-250-828-6734.

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» Bonny Albo - How much are you really making?

Some free online real wage calculators:

http://www.webwinder.com/wwhtmbin/java_r...
http://www.debtadvicebureau.org.uk/tools...
http://www.pinoybizpark.com/real_hr_wage...
http://money.netscape.com/story/2006/09/...
http://www.debtadvicebureau.org.uk/tools...

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