30 Jan 2023
Remittances act as a spur for investment and a lifeline for economic growth by triggering a cycle of consumption, production, exports, income, and additional investment as a sizable portion of GDP to support Pakistan's cash-strapped economy.
Remittances are crucial for Pakistanis since many households completely depend on the money received from abroad. The overseas Pakistanis send money to Pakistan to their families and loved ones, which adds to Pakistan's GDP and further boosts the country's economy.
However, it is undeniable that Pakistanis abroad have been sending billions of dollars home every month, giving the nation's economy much-needed comfort. These remittance inflows have been assisting in balancing the nation's trade deficit. Do you know that you can make savings and investments by utilising the portions of your remittances as a Pakistani expatriate? Let’s guide you on that while providing insight into the value of remittances to the country.
Remittances are essential to Pakistan's economy since they bring much-needed funds to increase the country's foreign exchange reserves.
Most money transfers to Pakistan come from Gulf nations, but Saudi Arabia and the UAE stand out among them. The Pew Research Center reports that Saudi Arabia was Pakistan's top source of remittances, with $5.8 billion sent there in 2016. The UAE ($5.7 billion), the UK ($1.7 billion), the US ($1.33 billion), Kuwait ($1 billion), Canada ($565 million), and Singapore ($531 million) were the other top nations. Oman ($403 million), Bahrain ($305 million), Spain ($251 million), Italy ($248 million), Germany ($193 million), Australia ($122 million), and Afghanistan ($119 million) all have more money than Qatar ($483 million).
Remittances are crucial for the beneficiary families because they utilise the money that Pakistani migrant workers send home for various needs like monthly utility bills, children’s school fees, healthcare, household requirements, etc. It is undeniable that Pakistanis abroad have been sending billions of dollars back home every month, giving the nation's economy much-needed comfort. Where these remittances help run several households, they can also create investment opportunities leading to enhanced employment and future economic stability.
Economists think that every money transfer to Pakistan has been assisting in replenishing the nation's low foreign exchange reserves and reducing ongoing balance of payment issues brought on, in part, by reliance on imported fuel and persistently weak exports. This should not be shocking given Pakistan's impoverished economic situation and its roughly nine million people dispersed over four continents.
You should take small steps toward financial independence so that you can enjoy your freedom. Start by taking stock of your current financial situation, reining your spending and creating more passive income. This is how it goes:
It's crucial to examine your starting point first carefully. You might begin by creating a budget. What financial resources do you now have? What amount can you put down each month? Do you already have any investments or reserves? If so, how well are they doing? Do you still owe money on any loans that you have taken out?
To set aside a small amount each month for saving and investing, you should work to achieve a balance between your overall income and your outgoing costs.
You can learn more about budgeting through ACE Money Transfer’s effective guide: The Best Budgeting Techniques for Expat Workers - Everything to Know.
Think carefully about what achieving financial independence means to you, what you want to do, and when you want to achieve it in the second phase. Is your ultimate objective to retire early, or do you also want to travel the world, own a sizable home, and purchase the car of your dreams?
When establishing these objectives, consider your actual circumstances because unrealistic expectations might easily demotivate you. Few people suddenly become rich. Set up several interim objectives to help you move incrementally toward your ideal.
Building up a reserve is advised before considering investing your money because something unexpected could happen, and you would need money immediately. For instance, your car can break down and require significant repairs or replacement, or you might suddenly become unwell and be unable to work for a while.
It’s recommended that you keep savings in hand for critical needs and emergencies. Besides savings from other necessities, you can avoid consuming large amounts when you send money to Pakistan online via ACE Money Transfer, as it provides the lowest transfer costs at the highest exchange rates.
Generally, you should have three months' worth of expenses available. The majority of issues can be resolved with this amount without it being extravagant. You will be able to cover your living expenses for a while, giving you time to restore your balance.
The ideal place to keep money is typically a location with high liquidity, such as a checking or easy-access savings account. Even so, you might decide to keep the cash. Building reserves is entirely about security, not money. The following action includes that.
You can pick between investments with lower and larger risks. You could split your money between growth equities from developing countries and safe blue-chip firms from Europe or the US. State-backed securities and trash bonds both have this characteristic. This enables you to diversify your portfolio further within a given asset class.
There are other ways to make passive income, though, and so become financially independent. You can continue to increase your wealth if you own real estate with rental units by receiving rental revenue. Or you can make money off of your pastime.
ACE Money Transfer is one of the most respected money transfer services in the remittance transfer industry. Their services are frequently used by expats abroad to send money quickly, securely, and affordably to any location in the world. In addition to providing affordable transfers, ACE offers a variety of incentives to its devoted customers for acknowledging their efforts.
Before exports, remittances are Pakistan's main source of foreign cash. By bridging the balance of payments in the face of decreasing dollar inflows from other sources, they offer crucial support to currency and forex reserves. Until now, the increased remittance flow has contributed to maintaining the current account and fostering feigned stability in the external sector. ACE Money Transfer has always covered you in learning how to transfer money to Pakistan economically and securely.