Deconstructed: The Calculus of Change


I have always been a tiny bit perturbed by how difficult it is to get change for bills of any size in foreign countries. You take money out of an ATM and they almost always give you bills that are in denominations that seem almost impossible to get change for, either in Asia (India in particular) or Mexico. As my experience in various countries continues, I do detect a certain pattern and mathematical formula at work. Here are some of the rules, at least for the countries I have been to so far:

1. The poorer the country, the harder to get change. This one is fairly obvious as small venders in the informal economy don’t usually have large sums of cash on hand with which to change large bills. They are very often living on a very thin edge and have no reserves.

2. Sometimes, however, vendors in these places will take advantage of the fact that the difference won’t mean that much to you, counting on you rounding up by some ridiculous amount. I have been in cabs in India that refused to offer me change for not very large bills and as I got up to leave without paying, change miraculously appeared or they would go to a local shop to get some.

3. The best locations to break big bills would be in large established places such as a hotel restaurant or upscale boutique. Of course, you have to spend more in these places to get your change. No one will just give it to you.

4. Using the US currency as a base, there is a kind of proportional math at work when assessing the difficulty of changing a bill in any particular country or situation. For example, the difficulty of changing a $100 bill in a cab in the US is roughly equivalent to trying to change $12 in the same situation in India and about $46 in Mexico. For small street venders, the amounts are even smaller.

5. The best thing to do when taking money out of an ATM in a foreign country is to take out smaller amounts which often times will result in smaller denominations coming out. One should be careful about ATM fees however if your bank charges per transaction set fees instead of a percentage.