scorecardRelocating to a metro as WFH has ended? Financial strategies to keep in mind
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Relocating to a metro as WFH has ended? Financial strategies to keep in mind

  • Access new expenses under different heads, say experts.
  • Prioritise essential expenses while reducing discretionary spending.
  • One can use budgeting apps or spreadsheets to track expenses meticulously.
When Tuhin Bora (name changed), 25 initially joined his current company, he enjoyed the luxury of working from home, which translated to minimal financial responsibilities. However, everything changed when he had to relocate from Guwahati to Mumbai as the cost of living in the two cities is chalk and cheese. Unsurprisingly, expenses like rent, groceries, and transportation saw a sharp increase.

Meanwhile, Shankar Rhad, an IT employee, who shifted temporarily with his parents in Hyderabad from Mumbai during the lockdown when he was offered permanent work from home. Being asked to go back to the office has meant that he is looking out for another job as the rent and other expenses are bothering him.

More companies asking people to come back to the office has meant that employees, especially those who started their career during the pandemic, have to move to a bigger city from their hometown. Like Bora, it has meant a sharp increase in living expenses.

For Bora, several areas witnessed substantial increases in expenses. The cost of food, accommodation (which includes a monthly payment of ₹15,000 rupees for his paying guest (PG) accomodation, along with additional electricity and maintenance bills, and travel expenses all surged significantly.

Plus, the upfront payment he had to make was substantial. Bora had to pay approximately ₹45,000, which includes ₹15,000 for the broker + ₹15,000 for rent + 15,000 for the security deposit).

Things to do to minimise the hit

Tax Implications: “Be aware of any tax differences that might affect your income in the new city. HRA rules may be different for metro cities that are not your hometown,” says Bhuvanaa Shreeram, co-founder and head of financial planning, House of Alpha, a financial planning firm.

Prioritise essential spends: Prioritise essential expenses like food on the table, roof over the head and travel to work while reducing discretionary spending on other expenses.

“Reluctant to rely on my parents for financial support, I adopted a more frugal lifestyle, limiting my purchases to necessities and cutting down on certain indulgences, such as cigarettes. With a monthly income of only ₹35,000 rupees, sustaining myself in the expensive city of Mumbai proved to be a big challenge,” says Bora.

Negotiate salary: If you're moving to a high-cost city, consider negotiating a higher salary with your employer to offset the increased living expenses.

If your employer allows it, and time permits, consider taking up short term projects to earn an extra income.

Housing considerations: Explore different housing options, such as roommates, smaller apartments, or living in a nearby, more affordable suburb and commuting into the city.

Bora decided to move into a shared PG even if it meant compromising on privacy.

Transportation choices: Opt for public transportation, carpooling, biking, or walking to reduce transportation costs. Avoid owning a car if possible, as this can increase, parking and other expenses in larger cities.

For Bora it meant using the Mumbai local and giving up the earlier habit of Uber rides.

Budgeting and saving techniques

Once you have settled in, you need to be careful with your finances. Here are some ways to do that.

Track your spending: Use budgeting apps or spreadsheets to track your expenses meticulously. “This will help you identify areas where you can cut costs,” says Shreeram.

Automate savings: Set up automated transfers to your savings account each month. This ensures that you consistently save a portion of your income, even before you have the chance to spend it. The idea is simple, invest first and then spend.

Prioritise repaying high cost debt: If you have high-interest debt, focus on paying them. Reducing debt can free up more of your cash flows for living expenses.

“In no case your monthly emi should be more than 50% of your monthly earnings,” says Ananth Ladha, founder, Invest Aaj for Kal, a financial planning firm.

Don’t skip long term investments for retirement: Ideally, you should keep putting money into your retirement savings.

“If you stop or lower your contributions, it might be tough to achieve your long-term financial goals. Instead, work on making your budget work for both your daily expenses and saving for the future,” says Shreeram.

“However, if you are finding it difficult, for a short term, for a maximum of six to nine months, you can decrease your investments, but eventually in the long term you should increase it,” says Ladha.

Build a foundation for the future

It is important to remember that while going back to office may be a temporary setback financially, it can be a good time to pave the way for a financially secure future.

Networking: Moving to a big city brings with it a set of advantages too and one should make the best of such opportunities, Network extensively , leverage connections for learning and seeking opportunities.

Healthcare and insurance: Review your health insurance. Healthcare in a city like Mumbai or Bangalore will be more expensive than in a small town or city so you need to increase your sum assured.

Continued education: Consider further education or certifications that can boost your income and career prospects.

Long-term planning: Keep an eye on your long-term financial goals and adjust your strategy accordingly.

Remember that living in a larger city may provide more career opportunities, which can impact your financial future positively.

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