Guide
Paid in one country, living in another
Half a percentage point of inflation difference between where you earn and where you spend quietly removes a seventh of a career's pay. Here is the arithmetic.
Roughly half the people who work in Luxembourg do not live there. They drive or take the train in from France, Belgium and Germany. The same pattern repeats around Basel and Geneva, across the Øresund bridge between Denmark and Sweden, between Austria and Slovakia, and along the Irish border.
If that is you, your salary and your shopping obey two different countries. Pay is negotiated, taxed and often index-linked where you work. Rent, groceries, childcare and fuel are priced where you sleep. Nothing forces those two to rise at the same speed, and inside the euro area there is no exchange rate to warn you that they have drifted apart.
The arithmetic, on the figures Valnivo ships with
Valnivo carries a reference rate of consumer price inflation for each country. For this example it holds 2.1% for Luxembourg and 2.6% for Belgium. Suppose you earn 60,000 a year in Luxembourg, your pay keeps pace with Luxembourg prices exactly, and you spend it all in Belgium.
| After | Pay, in cash | Belgian prices | What the pay buys, in today's money |
|---|---|---|---|
| 10 years | 73,900 | ×1.29 | 57,100 |
| 20 years | 90,900 | ×1.67 | 54,400 |
| 30 years | 111,900 | ×2.16 | 51,800 |
The cash figure nearly doubles and the payslip looks healthier every year. Measured in what it actually buys at home, the same salary is worth about 5% less after ten years, 9% less after twenty and 14% less after thirty. Half a percentage point of difference, compounded, quietly removes a seventh of a career's pay. The table holds both rates constant for thirty years; the app instead glides each country from today's inflation to its long-run rate over the first few years, so its own figures will differ.
It can just as easily go the other way
Swap Belgium for France, where the reference rate is 1.9%, and the sign flips. Pay indexed to Luxembourg now grows faster than French prices, and the same salary buys about 2% more after ten years and 6% more after thirty. Living across a different border changes the answer completely.
This is why a single national inflation number is the wrong tool for a cross-border household. What matters is the gap between the country that sets your pay and the country that sets your prices, and that gap is different for every commuter.
What this simple version leaves out
- Indexation is not automatic everywhere. Luxembourg applies a statutory sliding scale to all wages (the échelle mobile des salaires, Labour Code art. L.223-1, administered by STATEC); Belgium indexes wages under sector agreements using the health index. In France only the statutory minimum wage (SMIC) is indexed automatically, and in Germany no wage is, so pay there generally tracks inflation only as far as negotiation carries it. Rules like these change; check the current position for your own contract.
- Tax and social security are split across two states by bilateral treaty, and the rules on working days spent at home have moved repeatedly in recent years. The app and its projection model no tax; the Luxembourg and French income-tax calculators are separate estimates, and neither applies a treaty.
- Your own basket is not the national basket. The published rate is an average across a whole economy. If most of your money goes on rent near a booming border, your personal rate is higher than the headline.
- Reference rates drift. The numbers above are a snapshot bundled with the app so it works offline. In the app you can fetch current figures from the World Bank or type your own, and a fetch never overwrites a figure you entered yourself.
How to set this up in the app
On the Countries & rates tab of the Money screen, add both countries and check the inflation rate held against each. Set the country you live in as your home country, because that is the one your spending is measured against. Record your pay and your regular payments as normal. The projection starts your pay and your spending rising at the same rate, your home country's inflation; to see the gap, open a future and set Pay rise each year to the rate of the country that pays you, leaving Spending rises each year at your home country's.
Run it on your own figures
Valnivo is a free financial planning tool that projects your income, spending and savings over 10, 20 and 30 years. It handles money held in several countries and currencies, and it is private by default. It holds a rate of inflation for every country you use and a rate for every currency, so the arithmetic on this page runs on your numbers instead of an example, and it shows what changes if you save more, stop earlier or prices rise faster. Nothing leaves your device without a press of a button.