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Currency Income Buffer Calculator
Enter the salary in the currency you are paid, the current exchange rate and the adverse move you want to test. The calculator shows income before and after the move, plus the loss.
The rate used for salary conversion differs from the rate used for card spending and transfers; include conversion fees and test more than one adverse scenario.
Exchange risk is income risk
When the salary is paid in one currency and the household spends or saves in another, a rate move changes real income without any change to the contract. The loss is not a market fluctuation in a distant portfolio; it reduces the amount available for rent, school fees and remittances in the home currency.
The annual loss is the size of the exposure for a given move. Compare it with the savings buffer. If a ten percent move consumes several months of disposable income, the household is carrying meaningful currency risk and may want to hold a larger buffer or negotiate how conversion is handled.
Who bears the conversion cost
Some contracts pay in the home currency at a defined rate, which shifts the risk to the employer. Others pay local currency and leave the employee to convert. A currency clause may set a reference rate, a review date or a band within which no adjustment is made. Read the wording rather than assuming the salary is protected.
Even a protected salary can carry fees: transfer charges, card spreads and the difference between the official and the retail rate. In practice the household receives less than the mid-market calculation. Add those costs to the budget and revisit the numbers when the rate moves materially.
Frequently asked questions
Should I use the official rate or the rate I actually get?
Use the rate at which you can actually convert and spend, including fees and spread. The official mid-market rate is a reference, not the amount that reaches your account.
How large an adverse move should I test?
Test more than one scenario and choose a move that would matter for your budget rather than a worst case. The point is to see whether the plan survives, not to predict the rate.
Can a currency clause remove the risk?
It can shift or share the risk, depending on the wording. Check the payment currency, the reference rate, the review date and any band before assuming protection.