Experts suggest accessing new expenses under different categories and prioritizing essential expenses while reducing discretionary spending. To track expenses meticulously, budgeting apps or spreadsheets can be utilized.
The story of Tuhin Bora illustrates the financial challenges faced when relocating from one city to another. Initially enjoying the luxury of working from home in Guwahati, Bora had minimal financial responsibilities. However, when he had to move to Mumbai, a city with a significantly higher cost of living, expenses such as rent, groceries, and transportation increased drastically.
Another individual, Shankar Rhad, temporarily moved from Mumbai to Hyderabad during the lockdown when he was offered permanent work from home. Now, with the office reopening, he is searching for another job due to the financial burden of rent and other expenses in Hyderabad.
Many companies have called their employees back to the office, forcing individuals, especially those who started their careers during the pandemic, to move to larger cities. This transition has led to a sharp increase in living expenses.
For Tuhin Bora, several areas saw substantial increases in expenses. Food costs, accommodation (including a hefty monthly payment for his paying guest accommodation), travel expenses, and upfront payments made a significant dent in his finances.
To minimize the financial impact, there are several strategies individuals can adopt. Firstly, they should be aware of any tax differences that may affect their income in the new city. Understanding the HRA (House Rent Allowance) rules is essential, especially for metro cities that are not their hometowns.
Prioritizing essential expenses such as food, accommodation, and travel while reducing discretionary spending is crucial. Adopting a more frugal lifestyle and limiting unnecessary purchases can help individuals manage their finances effectively.
Negotiating a higher salary with employers to offset increased living expenses is also advisable for those moving to high-cost cities. If permitted the employer, taking on short-term projects can also provide additional income.
Considering alternative housing options, such as roommates or smaller apartments, can help in reducing costs. Living in nearaffordable suburbs and commuting to the city might also be a viable option.
Choosing public transportation, carpooling, biking, or walking can reduce transportation costs. Avoiding car ownership is recommended due to the associated expenses in larger cities.
Once settled, tracking expenses meticulously using budgeting apps or spreadsheets can help identify areas where costs can be cut. Automating savings setting up regular transfers to a savings account ensures consistent savings before the chance to spend arises.
Paying off high-interest debt is a priority, as it frees up more cash flow for living expenses. Monthly EMIs should not exceed 50% of monthly earnings, according to financial planning experts.
Continuing retirement savings contributions is essential for long-term financial goals. Though temporarily decreasing investments might be necessary, increasing contributions in the long run is advisable.
Moving to a big city also presents networking opportunities that individuals should leverage for learning and seeking new opportunities. Reviewing health insurance and increasing the sum assured is vital in cities with higher healthcare costs.
Considering further education or certifications can boost income and career prospects. Finally, individuals should always keep their long-term financial goals in mind and adjust their strategies accordingly.
It is important to remember that while returning to the office might bring temporary financial setbacks, it can pave the way for a financially secure future. Living in a larger city often offers more career opportunities that can positively impact financial prospects.