What does the 2.5 rule of thumb mean?
Dec 8th 2012, 12:52 pm
#1
Just Joined
Thread Starter
Joined: Dec 2012
Posts: 1
What does the 2.5 rule of thumb mean?
Hi , I would like to know what the 2.5 rule of thumb means when you are discussing wages in Australia verses uk.
Dec 8th 2012, 5:24 pm
#2
BE Forum Addict
Joined: Oct 2006
Location: Nowhere - I'm a travelling (wo)man!
Posts: 2,362
Re: What does the 2.5 rule of thumb mean?
It means that the cost of living in Australia is such that most people find you need to use an exchange rate of A$2.5 = £1 when comparing salaries to have an equivalent lifestyle in Australia to that in the UK.
For example, say you earned £50,000 per annum in the UK. At the current exchange rate of ~A$1.6, that is equivalent to A$80,000. However for equivalent buying power you would need a salary of A$125,000 (or at least somewhere between A$115,000 and $125,000 in most people's experience).
For example, say you earned £50,000 per annum in the UK. At the current exchange rate of ~A$1.6, that is equivalent to A$80,000. However for equivalent buying power you would need a salary of A$125,000 (or at least somewhere between A$115,000 and $125,000 in most people's experience).
Dec 8th 2012, 5:57 pm
#3
Worongary
Joined: Sep 2005
Location: GC hinterland
Posts: 10,288
Re: What does the 2.5 rule of thumb mean?
It means that the cost of living in Australia is such that most people find you need to use an exchange rate of A$2.5 = £1 when comparing salaries to have an equivalent lifestyle in Australia to that in the UK.
For example, say you earned £50,000 per annum in the UK. At the current exchange rate of ~A$1.6, that is equivalent to A$80,000. However for equivalent buying power you would need a salary of A$125,000 (or at least somewhere between A$115,000 and $125,000 in most people's experience).
For example, say you earned £50,000 per annum in the UK. At the current exchange rate of ~A$1.6, that is equivalent to A$80,000. However for equivalent buying power you would need a salary of A$125,000 (or at least somewhere between A$115,000 and $125,000 in most people's experience).
ie
where will you live - look at rentals / houses in that area, try http://www.realestate.com.au/rent
job / income will vary from city to city
etc etc etc
Dec 8th 2012, 7:23 pm
#4
Daffyd Duck
Joined: Jul 2008
Location: Paradise
Posts: 5,636
Re: What does the 2.5 rule of thumb mean?
this rule of thumb is bullshit imo
Dec 8th 2012, 7:27 pm
#5
Lost in BE Cyberspace
Joined: Feb 2009
Location: UK
Posts: 14,284
Re: What does the 2.5 rule of thumb mean?
With rents being so high here in Sydney, sometimes I think that it is best to isolate the accommodation costs and then compare the remaining living costs using a 2.5 rule of thumb.
Dec 9th 2012, 12:10 am
#6
Proudly Deplorable
Joined: May 2003
Location: Alloha snack bar
Posts: 24,246
Dec 9th 2012, 1:13 am
#8
221b Baker Street
Joined: Jun 2010
Location: Miles from anywhere, Victoria, Australia.
Posts: 14,125
Re: What does the 2.5 rule of thumb mean?
You will get mixed anwers to this question, as you can see! There is no strict or fixed answer but what it does indicate is that you need to be way over the current exchange rate in order to do some rough calculations.
Enjoy B.E.
Dec 9th 2012, 11:33 am
#10
Daffyd Duck
Joined: Jul 2008
Location: Paradise
Posts: 5,636
Re: What does the 2.5 rule of thumb mean?
if money and "history/culture" are your object and don't want risks or the non-quantifiable positives (eg weather, open spaces) - stay where you are.
Dec 9th 2012, 11:39 pm
#11
(It's not my real name)
Joined: Sep 2002
Location: Ilukapool. WA
Posts: 12,467
Re: What does the 2.5 rule of thumb mean?
Here's my rule of thumb - you need to earn as much as possible because Australia has become crazy expensive in the 10 years I've been here. Specially Perth.
Dec 10th 2012, 12:06 am
#13
BE Forum Addict
Joined: Nov 2007
Location: Scotland
Posts: 3,337
Re: What does the 2.5 rule of thumb mean?
Personally, I think I has some merit as a very rough guide. Certainly better than someone using the exchange rate. Obviously it varies a lot on circumstances, for example, for us, it is closer to x3.5.
Dec 10th 2012, 12:57 am
#14
Frequent Flyer Member
Joined: Jun 2007
Location: Melbourne
Posts: 10,994
Re: What does the 2.5 rule of thumb mean?
There will never be agreement about the cost of living. But I think a rule of thumb certainly has a place for those trying to agree a salary package from afar. Someone taking a proposed AUD salary and dividing it by the exchange rate and saying, 'but that's £xx,xxx' may be doing themselves a disservice and may be getting duped by a potential employer.
80,000 / 1.55 might equal over (£)51,000 and that might look favourable compared to a current salary...but it doesn't mean that $80,000 is even close to the going rate for the job. I think this is an area where direct ex rate calculations should be avoided.
80,000 / 1.55 might equal over (£)51,000 and that might look favourable compared to a current salary...but it doesn't mean that $80,000 is even close to the going rate for the job. I think this is an area where direct ex rate calculations should be avoided.
Dec 10th 2012, 1:13 am
#15
Proudly Deplorable
Joined: May 2003
Location: Alloha snack bar
Posts: 24,246
Re: What does the 2.5 rule of thumb mean?
I reckon x9 is about right