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Essential Financial Tips for Pakistani Expats: What You Need to Know

02 Aug 2023


It is always the financial constraints that force the people of Pakistan to find jobs in developed countries and earn a living. Pakistani migrants work abroad and send money to Pakistan to extend financial support to their families back home.

Pakistan has always suffered from political turmoil, which led to economic challenges for the country, affecting large swathes of its people. In most cases, people find it hard to put food on the table.


They, therefore, need to find jobs that continue for a long time and largely remain unaffected by the changing economic and political scenarios.

And such jobs are available in politically stable and developed countries.

A report by Pilot Guides, therefore, said that about 9 million Pakistani migrants are living abroad to earn a living.


But is it enough to earn a living and meet contemporary expenses by sending money from abroad? Will your job abroad, do you think, last forever? How is it that you can derive maximum benefits from your earning abroad?

Well, these are all important questions whose answers this blog aims to provide.

 

A Brief Background About Maintaining Sound Financial Health

On reaching foreign shores and beginning to earn a living, you normally are pretty excited. In this excitement, you tend to believe that your job will last forever; therefore, the last thing you should worry about is your financial future.

Well, this could, at best, be a fallacy.

Because nothing lasts forever, not at least the jobs that you do abroad.

You also are less careful about managing your finances, which your financial future depends upon, and your purpose of expatriation also largely revolves around it.


So, at the end of it all, when you return after spending a substantial part of your life abroad in a bid to earn a living and support your family back home through a money transfer to Pakistan regularly, you stand where you had started financially.


Which is the last thing an expatriate should be suffering.

To avoid such a scenario, it is essential to learn the management of your finances, with which comes the understanding of budgeting.


But before knowing budgeting and learning tips about financial management, let’s take a look at the Pakistani economy.

 

The Economy Of Pakistan

  • A World Bank report said that Pakistan’s nominal Gross Domestic Product (GDP) in 2021 was $348.26 billion.
  • In another report, the World Bank said that Pakistan’s GDP per capita income was $1,505 in 2021.
  • A former deputy governor of the State Bank of Pakistan (SBP) said that the level of the misery index, which is the total of inflation and unemployment rates, has gone up from 15.2 to 36.8.

These figures paint a pretty bleak economic picture for the country, and when a country economically suffers, the only victims are poor households.

Therefore., it is essential for Pakistani migrants to take stock of their and their family’s financial issues and ensure they maintain sound financial health.

However, the first step to that effect is the understanding of budgeting because your financial management is based on it.


What Is Budgeting?

Budgeting is a plan for your income and expenses over a period. Creating A Budget is essential for sound financial management as it gives you a clear idea about what you spend, when and on what and helps you keep track of your expenses.

 

A Hypothetical Scenario For Better Understanding

Imagine you do not have a budget plan, and you earn and keep spending till the end of the month without remembering what you spent, when and on what.


Against this, if you live by a budget and keep track of your spending throughout the month, knowing full well what you spent, when, for what, and so on.


Which of these two scenarios will help you with better management of your finances?


Well, the answer is fairly obvious.


Tips For Financial Management

It is important to learn the tips to manage finances as a Pakistani migrant, in the light of the preceding data and arguments, instead of simply continuing to send money to Pakistan online to support your family financially without paying due attention to financial management.

 

Create A Budget And Live By It

As mentioned earlier, create a budget and draw lines for your expenses and live by the budget and try to stay well behind the spending lines you have drawn.

 

Open A Separate Savings Account

Never rely on one account that is largely a checking account which you normally use for your transactions. Always make sure to have a separate savings account and contribute to it regularly.

 

Compare Prices

It is easy just to enter one market and do the shopping, but it can be hard on your budget. Therefore, always check and compare the prices of everything you want to buy from different stores.

 

Track Your Expenses

You can have several tools to keep recording your expenses. You can do so manually or use several apps that can help you with it. But remember, merely recording is not enough; going through the data regularly is.

 

Know Taxes

Taxes are a tricky area, and you need to have ample information about your taxes. Try, also, to keep updated about the tax policies in countries where you work.

 

Get Insurance

Not having insurance can disturb your finance, but the best part is that plenty of insurance in different areas are available, particularly health. Getting these can help you financially.

 

Lead A Simple Life

Never try to get things you do not have only because someone else has them. It may become a burden on you financially. Try to lead a simple life well within your financial means.

 

Do Simple Things Yourself

Calling for help to fix a leaking tap or replace a fused bulb burdens you financially. But you can do these things yourself to save money.

 

The Way Forward

Your online money transfer to Pakistan is an area in which you can create a positive financial impact only if you send remittances through companies like ACE Money Transfer which delivers funds to Pakistan in just 7 seconds, offers you a competitive exchange rate, and much more in exchange for a low fee.


FAQs

Why is it essential for Pakistani expats to understand their host country's tax laws?

Understanding the tax laws of your host country can help Pakistani expats make the most of their finances. They may be subject to dual taxation, which can significantly impact their earnings. Tax laws vary by country, and understanding them can help avoid penalties, overpayment, or underpayment. Plus, some countries have tax treaties with Pakistan that may affect your tax liabilities.


What is the importance of setting up an emergency fund?

An emergency fund is vital for everyone, including Pakistani expats. Life abroad can often come with unexpected costs such as healthcare, sudden travel, or job loss. Having an emergency fund allows you to handle these unexpected expenses without impacting your regular finances or having to rely on credit.


Can Pakistani expats invest in Pakistani rupees while living abroad?

Yes, Pakistani expats can indeed invest in Pakistani rupees while living abroad through various channels like property, stocks, and bonds. The State Bank of Pakistan has also introduced Roshan Digital Accounts that allow overseas Pakistanis to open an account and make investments in Pakistan digitally without visiting a bank or embassy.


How can Pakistani expats save on money transfers back to Pakistan?

Expats can save on money transfers by comparing exchange rates and transaction fees offered by different money transfer services. Some services offer lower rates for higher amounts, while others may have better rates for smaller amounts. Using online remittance services can also help save on costs as they usually offer better rates than traditional banks.


What is the benefit of creating a budget for Pakistani expats?

Creating a budget helps Pakistani expats understand their income and expenditures better. Living abroad often involves expenses not typically encountered in Pakistan (e.g., higher cost of living, different taxation). By tracking and categorising their expenses, expats can identify areas where they can save money and allocate funds more effectively towards their financial goals.


Resources

  • Pakistani diaspora

(The Pakistani Diaspora – PILOT GUIDES)

  • Pakistani GDP

(GDP (current US$) - Pakistan | Data (worldbank.org)

  • Pakistani GDP per capita

(GDP per capita (current US$) - Pakistan | Data (worldbank.org)

  • The misery index

(Poverty and stagflation - Newspaper - DAWN.COM)


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