Wednesday, May 14
The relative cost of living
The following is a simplified example. It doesn't take into consideration the resale value of the motor vehicle. Neither does it consider costs of other items/bills eg. property/renting property.
A car in Malta costs Lm8000.
The same car in the UK costs Lm6000.
In Malta, the car costs 33.33% more. Or does it?
If, in Malta, a buyer saves up Lm200 a month, it would take him 40 months to buy the car.
If in the UK, another buyer (same job, higher wage) saves up Lm350 a month, it would take him 17 months to buy the car.
The car costs the Maltese person 135% more time saving up.
After 40 months, the Maltese buyer will have finished saving up and will finally have a car.
When the Maltese buyer will finally have the car, the UK buyer will have had the car for 23 months and apart from buying the car Lm2000 cheaper, he will also have saved up a further Lm8050. That opportunity cost adds up to WAY more than 33.33%.
Read also Standard of Living in Malta