NRI Financial Trouble: Being financially secure is one of the top priorities for an NRI. There are certain signals that hint towards the unpreparedness for any financial emergency. NRI Financial Trouble can be one of the most disturbing scenarios. Handling your finances and maintaining a healthy spending habit is necessary to counter that. In this article, we will discuss the alarming 15 signals that suggest an inept management of finances inviting financial trouble for NRI.
Financial Planning for NRI: An Approach
Mrs. Shruti Agarwal (CFA, Co-Founder of CAGRFunds) iterates during her webinar with SBNRI: There are 3 fundamentals of Financial Planning:
- Emergency Fund
- Health Insurance
NRI Investment in India must be targeted individually at all of these approaches. The emergency fund comes in handy while tackling emergencies and should generally be equal to at least three times of your salary. A Health Insurance ensures readiness against the risks of accidents one might encounter and Investments are a medium to multiply funds by generating better returns. An integrated approach towards these fundamentals makes sure that you become financially sound and secure.
In the next segment, let’s explore the 15 signals that hint towards NRI Financial Trouble. The objective here will be to understand how many of these signals have flashed against your eyes and how you can rate yourself on a scale of 1 to 15 on financial security.
15 Signals that hint NRI Financial Trouble
- Spending money makes me feel good: You love spending money, that’s good. But you have no plans of saving it for the future. That’s where you have a problem.
- I let others (or I wish there was another to) handle my finances: Giving someone else the power to control your finances will eventually make you more reliable and less resilient.
- Someone will come along and rescue me: You believe that you will be rescued in times of adversity by your family or friends. In other words, you lack a proper plan if it isn’t your day.
- I rarely balance my checkbook: You don’t maintain a track of your expenditure. Like the famous Indian proverb you believe that money can’t stay in your hands for long. Such lifestyles are ephemeral.
- I now use my credit cards for small items I used to get with cash: You have begun to rely on credit for basic necessities thinking you will balance it all up with the next paycheck. You’re losing more money and you don’t even know it yet.
- 20 percent or more of my take-home pay goes for debt payments: It is highly likely that if you checked some of the above mentioned signals, you’re in a debt trap that’s increasing with time. You just can’t see it yet.
- I’m afraid to calculate my net worth: You are in two minds when it comes to calculating your assets. Perhaps, you’re more busy in settling credits.
- I frequently find myself borrowing small amounts of money: Drop by drop makes an ocean. Your debt is adding up, pennies at a time. And you are not even keeping a track!
- If I lost my job, I’d be out of money in less than two weeks: You’re not prepared for sudden changes. Your lack of emergency funds can make you anxious when there’s a setback.
- It makes me uncomfortable to talk about money: Subconsciously you’re aware that you haven’t planned your finances which makes you avoid the topic cause why not?
- I don’t know the total amount of my debts and obligations: You have been carrying forward an unhealthy lifestyle to a point where you yourself aren’t aware of how much you owe others.
- It is very difficult for me to save any money at all: You plan but fail. Handling finances is difficult and you end up spending more than you anticipated.
- It seems to be a paycheck to paycheck lifestyle: Your salary is the only source of your income and if it stops, there’s no Plan B.
- There have been occasions when I have paid late charges on a loan: The debt trap is crawling up to you. With more liabilities, it has become difficult to pay all your bills.
- I have used (or plan to use) a debt consolidation loan to pay my bills: Borrowing money to settle what you have borrowed earlier is the only option left. Welcome to the abyss.
NRI Financial Trouble: Wake up call
You read the points. Take a pen and a paper and mark yourself out of 15. This is not to frighten you but more of a wake up call. It isn’t too late. You have ample amount of time. Remember the basics. Emergency Fund, Insurance & Investment. The 3 steps that you need to plan and everything will change. Settle in and take the test again after a while. You will see the improvement.
We at SBNRI understand the struggle of our NRI friends all around the globe and that is why we stress so much on having a sorted financial plan. If you are facing any trouble with your finances, just get in touch with our experts for a detailed financial advisory using the button below. Also visit our blog and youtube channel for more details.
As per the Foreign Exchange Management Act (FEMA), an NRI cannot have a savings account in their name in any banks in the country. It is mandatory for NRIs to either have an NRE Account or get their accounts converted to an NRO account as their residential status changes.
Non-resident Indians (NRIs) are liable to pay tax in India on income that is received or is deemed to be received in India during the previous year or income that has accrued or arisen to such NRI in India during the previous year. Income earned abroad by NRI is not taxed in India and the same shall be taxed abroad.
There are multiple investment opportunities depending on the risk appetite of the NRI such as Fixed Deposits, Mutual Fund, Equities etc. Read more
Basic exemption limit is INR 2.5 lakh. It means every person (resident or non-resident), if his income in India is upto INR 2.5 Lakh, he is not liable to pay any income tax in India.
NRIs can get the personal loan amount from the bank in their NRE or NRO accounts. Most lenders provide the loan amount in Indian rupees. However, some banks also provide these loans in foreign currency.