On the same date every month, a transfer leaves millions of Indian bank accounts. A son in Bengaluru sends money to his parents in Madurai. A nurse in Muscat sends money to Kollam. India received $118.7 billion from its people abroad in 2023-24, and Kerala and Tamil Nadu together account for close to a third of it.
Almost none of it is planned.
Ask anyone who sends money home three questions. How was the amount decided? What is it doing at the other end? And when does it stop? Most people cannot answer any of the three.
The second question has an answer, and it is not the one most senders expect. The Kerala Migration Survey of 2023 asked recipient households what they did with the money. Daily expenses, food and clothing, came to under 7%. The largest single use, at nearly 16 per cent, was renovating a house or a shop. The second largest, at 14 per cent, was repaying bank loans, with a further 3 per cent going to informal lenders.
So the money is no longer feeding anybody. It is rebuilding houses and clearing debts.
Two other lines in that table deserve more attention than they get. Households held nearly 10 per cent of the money as cash in hand and put only 4 per cent into a deposit of any kind, so more than twice as much sits in a cupboard as in a bank. And they spent 7.7 per cent on health and medical bills while putting 2.1 per cent into insurance. Nearly four rupees paid out for every rupee that might have covered it.
Underneath all this is a conversation neither side will start. You feel obliged and cannot say so without sounding resentful. They feel watched and cannot ask without sounding demanding. So the money moves and nobody discusses it.
One conversation a year will do it, with your parents in the room, because it is their money and they can refuse any part of it. Three things belong in it.
Clear the debt before anything else
Seventeen paise in every rupee already goes to lenders, and the informal share is the expensive part. Interest you avoid is certain. Returns you might earn are not. Ask which loans are outstanding and what each one costs, then settle the dearest first. Nothing else you do with this money works as reliably.
Get the cash out of the house
Money held as cash earns nothing, cannot be recovered if it goes, and shrinks a little every year. If it is meant as the family's emergency fund, say so, agree how large it ought to be, and move it where it can be reached within a day and still grow.
Insure the bills instead of paying them
The survey's two most revealing numbers sit beside each other: 7.7 per cent going out on medical bills, 2.1 per cent going into cover. A health policy would absorb the first for a fraction of it and release the rest of the money to do something. If your parents are over sixty and uninsured, this is the most urgent line on the page, because waiting periods mean cover bought during a crisis does not pay.
Then put the arrangement on one page and look at it again next year. A figure fixed in 2017 may well need to rise in 2026.
Sending money home is among the more admirable things people do with an income. It deserves better than being the one financial decision in the house that nobody is allowed to examine.
Nehal Mota is co-founder of Finnovate Financial Services, a SEBI Registered Investment Adviser. Views are personal. This article is educational in nature and does not constitute investment advice
