Friday, July 3, 2020

3 Questions To Ask About Remittances and Your Finances

Have you ever sent money to someone via a wire service or electronic payment? If so, you have made a remittance. In many cases, migrant workers make remittances when they send money to their families in their home countries. Workers transfer billions of dollars internationally each year to their loved ones. 

Global remittances in 2019 reached a high of US $554 billion, but they fell in 2020 due to the COVID-19 pandemic, which reduced work hours or eliminated job opportunities altogether. Nonetheless, with large disaspora populations living in the United States, remittance levels still contribute significantly to a number of foreign economies. Governments make remittances to one another to import goods.

Remittances are also frequently made within the country, such as money transfers between parents and children or friends as well as online or electronic payments to merchants and contractors. 

A number of specialized companies meet the needs of this financial niche, which has developed into a significant economic factor. Moving from the larger picture to focus on your personal finances, remittances could play a role in your future. Here are three important questions to ask.

How can you use remittance services when managing your own finances?

When setting up a personal budget, you need to know how much money you have coming in each month, each quarter, and each year, and compare that to expected expenses. You also need to put aside funds for emergencies. 

These are the basics of budgeting, but every family’s situation is unique. Perhaps you are supporting a child or other relative in the United States or abroad. By using remittance services, you can quickly and easily transfer money at very low costs.

You can also easily make and even schedule electronic payments for many expenses, including household utility and telephone bills, internet services, and delivery services. Electronic transfers let you pay all your bills without leaving home. Service providers keep electronic records, so it is easy for you to keep a close eye on your transfer.

Are remittance services good investments?

The industry of money transfers or remittances is sizeable, and providers compete with one another. Transfer methods have advanced in the last few years so that remittances are faster and less expensive than ever before. 

Remittance services have good investment potential. To determine the best options for investment, consider specific factors, including: 

  • Global reach
  • Technological capabilities
  • Innovative services
  • Nature and speed of growth

This is an evolving, mercurial industry. You must stay informed about trends. Digital remittances companies offer specialized services at lower rates than traditional banks, especially for international transfers, and they are driving development in this sector. 

Patterns seem to show this industry will be growing and changing for some time, making it a potentially worthwhile choice for informed investors.

What role will remittances play in the future of the global economy?

Remittances are an important factor in the economies of developing countries. On an individual basis, remittances directly help individuals and families. They fund life’s basic necessities such as food, but they also pay for improved quality of life by opening up access to education and health care.

Globally, international remittances boost national economies. They help smaller and developing economies grow and deepen by supporting the needs of one family at a time. Altogether, small remittances sent to individual families add up to significant amounts. This influx of capital helps stabilize developing countries, thereby strengthening the overall economic outlook for the planet.

While remittances may not initially seem to affect you personally, they in fact play a large role in the overall global economy. Remittances often refer to international money transfers, but domestic transfers are also a large part of this financial niche. Remittances affect your life daily, whether you choose to pay bills electronically or understand the value of a stable global economic system.

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