Sunday, July 6, 2014

budgeting in two currencies: the perfectionist's nightmare

The fact that Julie and I are both detail-oriented people means that tracking our expenses is a relatively conflict-free part of our marriage–we both agree on the need for accuracy in maintaining a budget. The fact that I love Microsoft Excel makes record-keeping fairly uncomplicated*. But the fact that we both tend towards perfectionism makes budgeting in two different currencies really irritating. The constantly shifting exchange rate** between the Nicaraguan córdoba (C$) and the US dollar means that complete accuracy is virtually unattainable. Discerning the absolute value of money starts to feel like a philosophical question.

Since the support we receive is in dollars, there's no avoiding this question: What is the " absolute value" of the córdoba in terms of dollars? Is it based on the exchange rate the day we get it (from an ATM or a person) or the day we spend it?

If it's based on the day we get it, does that mean if I have two C$50 bills in my wallet, they can have different values? How would I ever keep that straight?

If it's based on the day we spend it, we have other problems. For one, local prices don't change as quickly as the exchange rate (thankfully). So C$50–which may be worth $1.931 USD on Monday and $1.923 USD on Friday–will buy the same half-gallon of milk; so if we buy milk on both those days, did we really pay a different amount? Secondly, I lent a friend some dollars, and he's paying me back in córdobas. He paid me about 2/3 of it last week; should the balance he pays next week be based on how many córdobas he owed last week, or what the remaining dollar amount will be in córdobas next week?

Credit cards make things a little bit easier because when the transaction posts (days later), it gives us an absolute dollar amount to put in our budget. The annoying thing is that this amount is based on the rate the day that it posts, not the day the purchase was made, so whatever preliminary amount we put in the budget will always have to be changed a few days later.

The truth of the matter is that the most that all the discrepancies might cost us in a month is a single US dollar (but I'm not entirely sure if we're paying or gaining that dollar and where it comes from or goes to). The real problem is my addiction to a high level of accuracy. It's been nearly five years with this dilemma, and I just can't decide not to care about it.

*It also means that our budget/checkbook spreadsheet is a minor work of art that I'm always tweaking. Fellow Excel nerds/enthusiasts will agree that a spreadsheet's success is measured in how many things change automatically simply by entering data into one cell: empty cells are suddenly populated because of cleverly-crafted =IF() formulas, colors change from conditional formatting criteria being met, sums and averages update on multiple worksheets, and the line/bar on your line/bar graph shifts by a pixel or two. It's a beautiful thing.

**Interesting factoid: the exchange rate when we moved here in November 2009 was 20.5. Today it's 26.0.

1 comment:

  1. Wow, what a headache. I had never thought about this; it would probably make me pull my hair out!


You don't need a Google account to comment! Just select "Name/URL" when you click the "Comment as" drop-down menu, and type your name to let us know who you are before you let us know what thought this post inspired in you. No one likes to receive anonymous comments!