also called PPP
A way of comparing what money actually buys across countries rather than at raw exchange rates.
Purchasing power parity is a way of comparing what your money genuinely buys from one country to another, rather than just swapping it at the exchange rate. It answers whether a wage stretches further somewhere, not just how many units of currency you get. A cost of living index does a rougher version of the same job; this is the more careful economic measure behind it.
On paper your salary converts to a smaller number of pesos than dollars, so it looks like a pay cut. Measured by what those pesos actually buy in rent, food and transport where you are moving, your money covers far more of your life than it did back home.
It reveals where a given income truly goes further, sharpening choices about where to base.
The difference is the whole point, so here is each one in a line.
These are the tools and moves for making money go further by location.
A cost of living index compares how expensive places are, purchasing power parity refines that by what money actually buys, and a nomad-friendly country ranking scores places on cost plus internet, safety and visas.
Geoarbitrage is the strategy of earning in a strong currency while living somewhere cheap, and FIRE is saving aggressively to stop needing paid work early.
Cost of living index · Geoarbitrage · Nomad-friendly country ranking
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