NRI couple in Sweden keeps only India flight money as emergency fund. Here's why

Why one NRI couple maintains an emergency fund of only ₹4 lakh in Sweden.

An NRI couple pays over half their gross income as tax in Sweden, but say they don’t feel the pinch from such high taxation. In a conversation with Mint, Annamalai Ramanathan and his wife Meena Palaniappan said that the social security benefits offered by the Nordic country are so good, they don’t mind the high cost of living or paying nearly 50% of their income as tax. In fact, the couple’s emergency fund is only 50,000 Swedish Krona, which is roughly the amount of money needed for a flight to India.

An NRI couple in Sweden talks about their emergency fund in a country of high taxation. (Representational image)

“Don’t need any fund in Sweden as job-loss and medical are taken care of,” the couple told Mint.

Taxes and social security in Sweden

For Annamalai Ramanathan and Meena Palaniappan, the need to save money is lower due to the host of social security benefits offered by Sweden. While Ramanathan works as an instrumentation engineer, Palaniappan is a finance professional. The couple has a young son.

Their employer’s social security contribution is 31.4% of their gross income, and they also pay 25% income tax on the balance (which comes to 17.15%). The result is that this NRI couple is left with 51% of their income as take-home salary.

Despite the high taxation, they would not have it any other way.

Ramanathan and Palaniappan get free education and healthcare for their son in Sweden. They also get a monthly child allowance of 1,250 KR ( ₹10,000 approximately) from the Swedish government.

The country has provisions for state pension post retirement and subsidized healthcare for adults. Moreover, the unemployment fund ensures that if an employee is laid off, the government pays them 80% of their last drawn salary.

With these safeguards in place, the need to save money for a rainy day is not a priority for the couple. In fact, they have only 50,000 KR set aside for any emergency flights to India.

The pros and cons

Ramanathan and Palaniappan do find some things very expensive in Sweden. The cost of flights to India, for example, has gone up steadily. Eating out and people-driven services are also more expensive as compared to India.

Buying a house is also an expensive proposition in Sweden. “Interest rates are 3-3.5% but housing prices are very high. Co-owning an apartment with a resident’s association is an affordable and common way to own a home,” the couple told Mint.