Thursday, January 09, 2014

Fixed and Variable Costs

So it has been a week of detailed financial analysis at Marcus and Agata's house.

I say house, but compact apartment would be a more accurate statement.

In summary we have analysed our income in, and spending out, at the current time and made some future projections.   We have found that Switzerland is a very expensive place to live should you at any time not be working!

Once could say this is an intuitively obvious conclusion but we would like to back it up with a few facts  (I can see retired Swiss Nationals reading this and filling in their emigration papers now!)

The following analysis represents a typical family of 2, if you have children, or a larger detached house, it could work out more expensively:

Fixed Costs
  • Mandatory health insurance >=3K CHF (Swiss Francs) per year per person (A 3K lowest rate is in exchange for agreeing to pay the first 2K of any claim yearly)
  • Property Tax: The rental value of your home, even if you are living in it is taken as income.  Example: Your apartment costs 30K CHF to rent out per year.  So tax payable is (say at 20% ) 6K CHF
  • Apartment Service Charge: 4K / year is a typical cost in Switzerland.
  • Subsistence Food: With nothing fancy 6K CHF / year per person.  Food is very expensive in CH!
  • Wealth / Asset Tax:  Each year your total assets  (e.g. house + car + bank balance) are totaled and you pay a further  0.01% tax on them.  Example: for 1M CHF assets that is  1K CHF / year

Variable Costs
  • Internet, Internet TV and Mobile phone are expensive, about 3K CHF /year  (though we have insanely fast Internet)
  • A car will cost you 17K / year, this cost being dominated by depreciation
  • Electricity: 3K for 2 people per year
So let's see, for Mr and Mrs average, the rough total excluding a lot of things like any clothes, holidays, life insurance is  as shown above per year for 2 people.

Yes, in Switzerland you better have a job to sustain yourselves!

(30CHF / 35 USD / 20GBP for a small box of chocolate, that sounds reasonable)