Foreign Currency: It’s Not Monopoly Money

Adventure is a State of Mind

How to Handle Money

I used to not be able to manage money. No, I’m not talking about budgeting. I’m talking about dealing with unfamiliar currency in another country.

During my first trip to Europe, I planned to meet my friend, Heather, in London and assumed at that point she would teach me everything I needed to know about the local currency (among other things I wasn’t worrying about figuring out ahead of time), so I didn’t bother to learn a thing about British Sterling. I obviously did not predict the blizzard in the U.S. that would result in me arriving in a different airport (Gatwick instead of Heathrow) on a different airline (American instead of PanAm) and necessitate me exchanging money in the airport to pay for a bus ride to meet my friend. (These were pre-cell phone days, and I didn’t have any other way of finding her.) I clearly remember holding out a handful of money to the kind and honest (thank goodness!) bus driver and asking him to take however much I owed for the ticket.

In that moment, I experienced the stress of being completely ignorant and vulnerable because I didn’t understand how their money worked.

Now, I experience the embarrassment of knowing if I had taken even ten minutes before my trip to do some research (such as talking to someone who had traveled to Great Britain before me), I would have realized that the money in the U.K. may have different names than I was used to using, but it basically works exactly the same as the money system I’ve lived with my entire life.

Money is Money

Luckily, almost every country’s currency is based on the decimal system, meaning that units are divided by a number with the power of ten. For example, in the U.S., 100 cents make a dollar. Different countries call their money by different names, and there can be coins that are not a power of ten — for example, a quarter is made up of 25 cents and four quarters make a dollar in the U.S.

Sometimes coins have nicknames that are widely used — in Canada, a store clerk might tell you that you owe them a “loonie” for the candy you’re trying to buy, meaning you owe them one dollar. (Look up a photo of the one dollar coin in Canada and you’ll get the reference.) Also, the symbols for currency are widely used in stores and on menus, so to help you understand how much things cost, before your trip, do at least a few minutes research so that you understand, for example, what a £ symbol versus a € means.

Look at All the Pretty Bills!

A word of warning — foreign currency is not Monopoly play money. I know you know that. I know that. Everyone knows that. And yet, many people I know, myself included, have had the experience of treating foreign currency as though it is play money. Suddenly we don’t care how much anything costs and just hand over the cash. Maybe this is because it looks so different from the money we are used to using? Maybe because it’s difficult to translate a foreign amount into a more familiar system we understand? I’m not sure the cause, but I do suspect that knowing the exchange rate can help with this.

Exchange Rates

The exchange rate is the rate at which you buy foreign currency with your home currency. It will vary slightly day to day, unless some dramatic international event happens, in which case it can vary significantly. It can also differ from location to location. (Avoid changing money in airports if possible as the exchange centers there have some of the worst rates you will come across.)

It is helpful before (and during) your trip to check out the exchange rate and to mentally convert the local currency to your home currency to help you have an understanding of how much you are spending.

Sometimes we luck out and the exchange rate is close to being some multiple of 10, so we just have to mentally move the decimal point. Other times the rate may be a strange number, such as one Euro being worth $1.16. In that case, the calculator our phones comes in handy!

There are online websites and phone apps that will also convert any amount from one currency to another. One of my favorites is Xe Currency Converter, which I use as an app on my phone when traveling.

Money Customs

Another bit of money-related research to do ahead of your trip is to explore what the preferred manner of paying is in the country you are visiting. For example, in Iceland, it is common to pay for purchases, even if buying a single hotdog (they’re delicious there, by the way), with your credit/debit card. In Japan, on the other hand, cash is preferred and some businesses do not even offer the option of using a credit card.

Learning a little bit about the cultural aspects around money can also help you be respectful and make a good impression during your travels. As an example, in Japan, money is usually kept crisp and pristine (woe to the money that ends up crumpled in the bottom of a purse!), and to be polite and respectful, is presented to the shopkeeper by laying it on a tray using both hands.

This wasn’t a strange place; it was a new one.

Paulo Coelho

Where and When to Get Money

Before leaving on your trip, consider ordering some foreign currency from your bank or AAA so that you have it just in case of an emergency. Compare the fees and exchange rates before making your decision about from where you would like to order it.

Once I am traveling, I prefer to get money from an ATM. As I discussed in an earlier post, I use a debit card that does does not charge a foreign transaction fee and also refunds me any ATM fees that might be charged. I usually also carry some American dollars (USD) as a backup. If I can’t find an ATM, it is usually possible to change USD to the local currency at a bank. Airports and large cities have currency exchange offices, and occasionally hotels will offer to exchange money, but it is almost guaranteed that your best exchange rate will be from a bank.

Currency and the End of Your Trip

A benefit to using ATM’s while traveling is that you don’t need to change too much money at one time. Hopefully, you can withdraw an amount adjusted to what you actually need if things cost more or less than you had anticipated. That way you aren’t left with a huge amount of local currency at the end of your trip.

Different people handle “left over” foreign currency in different ways. I know some travelers will go on a buying spree their last day to try to get rid of all of their local currency, especially if it is feeling like play money to them. This can be fun but could leave you short of cash for a taxi on the way to the airport.

A small amount of money, especially unusual coins, can be a fun souvenir. If you plan to return to the same country within a few years, you may want to keep your remaining currency as your future “just in case” money for the beginning of your next trip.

Most travelers understandably would prefer to not be holding onto a large amount of currency that they can’t spend in their own country. If this happens, most banks can buy back your foreign currency. Keep in mind that they will usually only exchange paper money, though, so you won’t be able to change any coins you might have left from your foreign adventures. This may seem like a minor point, especially to Americans who rarely use coins with a value of more than 25 cents, but many countries have commonly used coins that are worth much more than a quarter. A pocket full of change in those countries can quickly add up to a significant amount!

Have you looked into the currency of the next country you are planning to visit? What information can you learn ahead of time that will help you to feel confident when exchanging money or making purchases in that country?