Travel Advice - Know the true value of foreign currencies.

Travelers seem to lose track of the fact that foreign currency is real money. Some return home carrying lots of foreign currency. Others do not want to convert the currency before they return and spend it on junk at duty free shops while waiting for the return flight home. Foreign banknotes may not look like the money at home and you may not be able to spend them at home but they can have significant monetary value.

During your trip outside of the US, you will be exchanging dollars for other currency. Sometimes you will deal with denominations that defy counting. In other cases, a dollar will not be enough to buy even the smallest banknote in the country’s currency (e.g. one dollar will not buy a British Pound Sterling or a Euro at current rates).

Regardless of the currency’s exchange value, local currency is money and worthy of your consideration. In the example above, you are not rich in Turkey and poor in the UK. The value of your money remains the same regardless of how it's denominated (i.e. you may have more or less currency than your original number of dollars but the value is equivalent).

The real issue for the traveler is the cost of products and services when converted to dollars. Some countries are extremely expensive for travelers (e.g. the Nordic countries) while others are relatively inexpensive (e.g. countries in Eastern Europe). You need to have some idea of the cost of goods and services in a country to appreciate how much you are really spending. The only practical way to measure cost is to make sure that you know the exchange rate and know the value of the local currency in dollars. Only when you are able to value goods by calculating their conversion value will you be able to determine what things really cost. (See ThereArePlaces article on Currency Conversion).

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