31 Oct 2024
Managing finances in a new country can be daunting, especially for Ghanaians settling in Austria. Investing as a foreigner is not easy, and budgeting as a foreigner is not a walk in the park, from preferences for a particular currency to increased living costs.
Living standards in Austria are fairly good, and these costs can quickly accumulate, especially those for rent and utilities, transportation, and food. This is quite frustrating, though using a well-explained budgeting approach such as the 75/10/15 rule will help you get back on track. Additionally, with services that allow you to send money online to Ghana from Austria, you can efficiently manage local expenses and financial support for your family back home.
The average cost of living in Austria is 72% higher than in Ghana, particularly in cities like Vienna. It’s essential to create a financial plan that accounts for these differences. The key aspect of budgeting is efficiently understanding how to send money online from Austria to Ghana. According to the Ghana Netherlands Business and Culture Council, remittances to Ghana reached $4.6 billion in 2023, showing how essential it is for expatriates to find reliable and low-cost money transfer services.
The first principle of the 75/10/15 rule is to allocate 75% of your income for living expenses. These include shelter, food, means of transport, and entertainment. Sticking to this guideline enables you to seek cost-effective alternatives in your daily spending.
For instance, consider shopping for groceries at regional markets rather than at up-scale supermarkets. Some ways to help cut down monthly expenses are considering other forms of shelter, such as shared accommodation. By remaining conscious of spending, Ghanaians in Austria can create a balanced budget that maximizes their 75% allocation.
Regarding purchases, focus on their value rather than just their cost. An expensive cup of coffee that costs $5 may not be reasonable. But if it helps increase efficiency and facilitate interaction between people, it is worth the money. On the other hand, large amounts of items or products bought, such as cars, electronic gadgets, etc., only give temporary pleasure. They can put immense financial pressure if not appropriately planned.
For Ghanaians adapting to Austrian life, this approach encourages mindfulness in spending and helps avoid financial pitfalls that stem from impulse buys. If you want to send money to Ghana from Austria, try to find companies with low fees so you don’t spend too much on each transfer.
The next move is to formally allocate 10% of your earnings to develop a buffer stock. It is helpful in emergencies because funds for such incidental expenses must be available. A 2022 study revealed that over half of Americans couldn’t afford a surprise $1,000 expense, underscoring the importance of having a financial buffer.
While estimating the most suitable amount for a cushion fund, you need to work out your monthly expenditures, for instance, rent, utilities, and food bills, and then scale up this result by five. For example, if your monthly expenses total €1,500, aim for a cushion fund of €7,500. Once this fund is established, focus on storing it in a high-yield savings account (HYSA) to maximize interest earnings.
Read more: Financial Planning for Working Abroad as a Ghanaian
Finally, allocate 15% of your income to investments. Building wealth is not solely about saving; it requires making your money work for you. Two primary investment accounts are the Roth IRA and the 401(k).
A Roth IRA enables earnings to grow tax-free, which is beneficial when saving for a long-term financial goal. Contributions are made with after-tax dollars, meaning no taxes will be owed upon withdrawal in retirement. Another option is a 401(k), which allows for tax-advantaged growth and is often accompanied by an employer’s match, meaning you get free retirement money.
Investing in index or exchange-traded funds (ETFs) is a practical approach for those who want to diversify without extensive financial knowledge. Investing in a broad market index reduces risk and simplifies the investment process.
The 75/10/15 rule can benefit Ghanaians by changing how they budget their earnings when they are in Austria. By spending wisely, saving for emergencies, and investing in the future, anyone can build wealth, regardless of their current financial situation. To enhance the money transfer intensity, consider using a trusted service for making an online money transfer from Austria to Ghana smoothly.
This model states that you should spend 75% of your income to meet various expenses, 10% on an emergency fund, and 15% on investment.
Tracking expenses can be done through budgeting apps, spreadsheets, or traditional pen-and-paper methods.
It is more advisable to make some purchases at cheaper grocery stores, avoid taxis, use local transport, and purchase foods from local markets.
If you plan to build your cushion fund, the first step is determining your general monthly expenses. Additionally, if you need to support loved ones, making a money transfer from Austria to Ghana is easy and efficient, with reliable services that help you manage savings and financial responsibilities.
The interest rate on high-yield savings accounts is higher than that on traditional ones.
