Don't Be Fooled by Bigger Numbers
Getting a job offer with a higher nominal salary doesn't always mean you'll be better off. Moving from Berlin to San Francisco for a 40% salary increase sounds great — until you factor in US healthcare costs, San Francisco rents (often 3x higher than Berlin), and the higher tax rates on high incomes.
Step 1: Convert to a Common Currency
Start by converting both salaries to USD using current exchange rates. This gives you a baseline comparison, but it's only the beginning.
Step 2: Apply PPP Adjustments
Now apply the PPP factor for each city. Divide the USD salary by the PPP factor to get the "real" purchasing power equivalent. A salary that looks 40% higher might only be 10% higher in real terms after PPP adjustment.
Step 3: Model Your Actual Budget
Research specific costs in your target city:
- Rent for a comparable apartment to what you have now
- Health insurance (especially critical for US moves)
- Transportation (car vs. transit)
- Food and entertainment
- Childcare if applicable
Step 4: Calculate Your Net Savings Rate
The ultimate measure of a salary is how much you can save, not how much you earn. Calculate your expected monthly savings in both locations. This is the true comparison metric.
Step 5: Factor in Career Trajectory
Sometimes the right move is to take a short-term PPP hit for long-term career gains. Moving to San Francisco or London may expose you to higher-quality networks, more ambitious projects, and faster promotion tracks that pay off over a 5–10 year horizon.
Real Example: London to Toronto
A software engineer moving from London (£75,000) to Toronto (CAD 115,000) might see:
- London USD equivalent: ~$95,250
- Toronto USD equivalent: ~$85,100
- London PPP-adjusted: ~$132,300
- Toronto PPP-adjusted: ~$103,780
The Toronto offer is actually lower in both raw USD and PPP-adjusted terms. You'd need to negotiate or factor in other benefits (permanent residence pathway, healthcare system, lifestyle preferences) to justify the move financially.