In the wake of Black Friday (yes, it’s in Denmark too – unfortunately) I thought I would “lighten the mood” a little, with some “FUN FACTS” (they’re actually more opinions than facts – but since more than 50% of the worlds population still believe in some form of religion, I guess the facts vs. fiction is a mute issue these days!).
Anyway, having spent countless hours vacationing in foreign countries, paying with foreign currencies, I thought I would throw out an interesting (maybe?) observation, and see if anyone had noticed the same thing.
You see, when you live in a small country (the population of Denmark is less than 6 million people) with its own currency, the currency exchange quickly becomes a big thing. You guys, who are used to paying with either dollars or pounds (or Euros) probably never noticed this (Some of you Euro-using people might still remember your old currency – in that case, I apologize), but from a danes perspective, the currency really matters!
While vacationing in the US this summer, it occured to me that most americans have never had to deal with currency exchanges. In fact, most of them believed that we paid with the Euro in Denmark (we don’t – we have our own currency called the Danish Krone).
I tried explaining to them that the exchange rate on the dollar vs. the krone was currently NOT in our favor. They didn’t really understand the concept – which is understandble, if you’ve never had to exchange your currency (which most americans haven’t, as more than 50% have never been outside of the US) understanding how the exchange rate works, can be tricky.
I tried explaining to them that a Big Mac in Denmark was like 35 DKK. In the US, it’s around $3.5. When you compare those two numbers, without factoring in the exchange rate, the price of the Big Mac in Denmark seems crazy expensive! (it is! – But that’s actually due to the value added tax that we “love” to put on everything).
If you factor in the exchange rate, the prices are comparable (if you deduct the danish VAT). But, what I learned (from the years of traveling) is that even though you’re able to do the calculations in your head to make a quick comparison, paying even $5 for a Big Mac would seem resonable! – But paying 35 something somehow seems expensive. WHY?! Because 35 is a higher number, compared to the number 5.
Somehow, even though we are able to do the math in our heads (and figure out that the prices in fact are comparable) paying 5 something for something that we’re used to paying 35 something for seems extremely cheap!
They’re only $5?! I’ll have 5 then!
This is something that only danes (and other small-currency countries) will actually ever understand! The opposite will also be the case, when the americans come to Denmark (they do occasionally, some of those roughly 50% who do travel outside of the US) they feel that everything in Denmark is extremely expensive (which is also true – but not really if you factor in the high VAT – then it’s only a little expensive!).
So when I make investments in either €, $ or £ I have to think twice about the amount that I put in. Because to me, €1000 or $1000 doesn’t really seem like that crazy an amount of money! 7.500 DKK however, seems like a lot of money (€1000 =~ 7.500 DKK).
This is simply my mind, favoring the smaller number! Even when I get dividend payouts in euro, €10 doesn’t really seem that great. But 75 DKK seems OK! This is one of the reasons, why I’m struggling NOT to throw more money into crowdlending. I currently have < €10.000 in crowdlending. That doesn’t seem so bad, does it!? Well, how about 75.000 (DKK)? It suddenly becomes a little more “real” to me…
This is probably called something fancy! (Ping me, if you know what it is!?) I just thought I would make you guys aware, of the struggles that you go through, as a world resident of a small-currency country! 😛
Have you noticed something similar? (or something completely different – but related!? Hit me up in the comments below!).
On another note; I once made the mistake of booking a holiday in £, while believing it was in €…That became an expensive mistake. So: BEWARE OF THE CURRENCY! 😛