This squarely befits the Indian migrants who leave their loved ones and families to travel abroad to earn a living. About 18 million Indians are living in foreign countries for a host of purposes, including jobs and education. They send money to India from overseas to extend financial aid to their families back home or those who depend on them financially. A World Bank report said that the quantum of inward remittances to India in 2022 was a staggering $111.22 billion. But how can these expats achieve financial stability through effective budgeting techniques?
Effective Strategies to Live on a Budget and Make Monthly Savings
Living Within One’s Means – The First Step
The Indian expatriates living overseas have to realise that they have to attain financial stability. For this, the first step is to live within one’s means.
Living within one’s means is to have enough money to cover all the expenses. But it has nothing to do with the volume of one’s earnings. Many people with limited means can achieve financial independence faster than those with higher incomes.
The reason?
They learn to make little savings and live within their means. Little savings in one’s daily routine can be considered the cornerstone of living within one’s means. Because through these, one has a fair idea of what they have at hand based on which they can create a financial plan.
Living within one’s means, therefore, comes through adopting a personal financial plan stemming from savings and adhering to it.
Understanding Budgeting – The Basics
Budgeting is about creating a financial plan to spend one’s money in effective ways. The fundamentals of budgeting are to know what one’s earning and what one’s spending. While creating a budget, one has to ensure that they are realistic about their financial standing. Many people fall victim to the assumption fallacy in the process.
Typically, while creating a budget, they ignore what they have at hand, in terms of their income and expenses and rather make assumptions about what they might have in the time ahead. This approach must be avoided and replaced with a realistic and fair analysis of one’s financials, particularly at the time of budgeting.
Importance of Budgeting
Creating a budget is extremely important because it allows one to have enough financial strength to meet the basic needs of life and also to be prepared for the financial shocks that are now a norm in this financially struggling world rather than an exception.
Living by a budget also allows Indian migrants to shed the debt they might have acquired for going abroad and also to lead a financial life free of debts.
Why Budgeting Matters?
Budgeting matters because it allows one the room to achieve the following essential objectives.
- Budgeting helps one march toward achieving long-term financial goals
- It restricts one from going into spending overdrive
- It makes savings for retirement easy
- Budgeting helps one prepare for financial emergencies
- It can reveal and fine-tune one’s spending habits
Needs-Specific Budgeting
One point the Indian migrants earning abroad need to focus on is that the budget they make must be needs-specific. For example, their budgeting must include which service provider they will send money back to India through, be it ACE Money Transfer or any other for that matter, because the incurring costs in the process have a financial impact.
Otherwise, budgeting can be an exercise in futility.
Creating an Effective Monthly Budget – An Insight
There are a few simple and easy steps following which a budget can be created, but before that, a look at the following few critically important areas is pertinent.
Monthly Income and Expenses – A Brief Overview
Here’s the list of average monthly expenses. As for the monthly income, it is relative to every single individual separately.
- Housing
- Food and dining out
- Transportation
- Child care
- Cellphone
- Health insurance
- Debt clearance
- Savings
- Entertainment
- Utilities
- Retirement savings
- Travelling
- Emergency fund
Telling Needs Apart from Wants
One of the gravest challenges an expat faces in creating a budget is not being able to differentiate between wants and needs. Where wants are always infinite, a huge list of needs can be taken care of, and it has a definite and decisive end, unlike the list of wants.
Savings First; Spending Later
The world’s biggest investor, Warren Buffet, while describing the six principles of financial success, said that one must separate savings from one’s earnings first and then spend from the remainder. For example, on getting a salary, one must remove the necessary amount for savings and then go about their routine expenses.
Essential Budgeting Tools
- Budgeting Spreadsheet: Google Sheets
- Budgeting Smartphone app(s): Mint; Spending
- Budgeting Smartphone app for beginners: Goodbudget
- Budgeting Smartphone app for investors: Personal Capital
- Budgeting Desktop Software for Small Business Owners: GnuCash
Do you know how Indian migrant workers can transfer funds back home from overseas?
They can find many service providers for sending money home from abroad, but finding the one corresponding to their remittance transfer needs is what they need the most. Among other providers, ACE Money Transfer is one of the most trusted remittance companies that offers ZERO-Fee, competitive exchange rates, and the fastest and most secure transactions to India from overseas.
Steps to Creating a Monthly Budget
Here’s how an effective budget can be created.
- Add up all the income
- Track spending
- Set financial goals, both long-term and short-term
- Calculate essential expenses
- Highlight debt payments
- Create a spending plan
- Keep adjusting and tweaking the budget every month
Tips for Savings
As mentioned earlier, savings lie at the heart of budgeting and attaining financial independence.
A few tips to save money are explained below.
Eliminate Debt
Indian migrants living abroad must get rid of the debts they might have acquired. And the best way to pay off the bigger debts first is to avoid paying interest rates.
Emergency Fund
Creating an emergency fund is not as important as regularly contributing to it is. An emergency fund is the best remedy for one’s rainy days, that are inseparable from life as a whole.
Setting Financial Goals
Setting up financial goals keeps one extremely focused, and those doing this can easily avoid financial waywardness in their financial attitudes.
Spend to Save
Utilities hardly go down once they go up. Therefore, the best option is to spend in areas that help one save. The best example is to spend on solar panels once to get free electricity for a long time.
Self-Dependence and Savings Hacks
Indian migrants living abroad must rely on themselves when it comes to savings. They should cook in bulk themselves, use public transport, shop in bulk, wait for sales, avoid eating out, share rent, and so on.
Wrapping Up
Nowadays, attaining financial independence is a little tricky if one does not consider what the preceding write-up offers. Avoiding unnecessary expenses, planning and implementing effective budgeting, and opting for various techniques to make savings can help migrant workers and expats achieve financial stability. Besides, money transfers to India can play a significant part in helping remitters save money, but only if done through companies that design their services in a manner that corresponds to their money transfer needs, like ACE Money Transfer and many others in the industry. Choosing a service provider wisely is the first baby step in the right direction.
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