After the New Year’s Eve fireworks die out and the parties end, it’s time to get serious with personal finances.
The majority of residents in the UAE are spending the bulk of their income on rents, utility bills and debt repayments. It’s only right to kick start the year by reducing expenses to avert any crisis in the future.
According to the National Bonds Corporation survey released last December, nearly eight in 10 (77 per cent) of savers in the UAE are not confident the amount of money they have set aside is adequate for the future.
The study also indicates that over half of the respondents in the UAE have borrowed money from lending institutions, with the majority currently stuck with either one or two loans.
Before everything gets out of control, here are 10 money-saving tips to consider for 2015, as suggested by financial advisors in the UAE.
1. Book your tickets early
Those who plan their trips well in advance know how much money they can save if they buy their tickets several months before traveling. A return ticket that costs a little more than Dh4,000 can be had for about Dh2,000, if purchased in advance. The key, of course, is to decide early on where to spend their holidays in 2015.
Preeti Bhambri, managing director at MoneyCamel.com, a personal finance website, says residents in the UAE should take advantage of promotional offers by airlines. “Quite a few airlines are currently offering big discounts on travel up to July, if tickets are purchased by end of January,” she says.
“This can save you anywhere between 25 to 40 per cent of your travel costs. MoneyCamel.com comes with regular updates on sale offers and promotions,” she adds.
2. Cut down on out-of-home dining
A significant portion of people’s budgets goes towards food. With food prices showing no signs of let-up, consumers are left without choice but lessen their food expenditure. If you really want to ensure your money stretches farther, stay away from restaurants and coffee shops completely. Learn to cook. But if this is too much of a burden, why not take advantage of dining discounts and deals?
“There are discount vouchers/deals available from budget restaurants and takeaway joints to fine-dining restaurants,” notes Bhambri. “Use the best combination to save an easy 25 per cent of your eating out expense.”
There are vouchers that you can purchase so you can avail yourself of great discounts the next time you eat at your favourite restaurant. You can also sign up for privilege cards or explore dining discounts offered by credit card providers.
3. Reduce housing expenses
If there’s only one direction the rents in the UAE go, it is up. Those who have been in Dubai for quite a while know that rent increase is an annual affair. Consider downsizing or moving to a smaller place that costs a lot less than what you’re currently paying. If you can move to a location that lets you cut travel costs without spending more on rent, that’s even better. Perhaps you can share the apartment with some of your friends or take in a lodger? Check first that you’re not running into trouble in the near future. Sharing accommodations in non-freehold areas, for example, may not be allowed. So take note of the municipal housing regulations at the same time.
4. Shop in sales
Try visiting a mall today and you’d notice that the red “sale” signs are in almost every shop. The Dubai Shopping Festival is on and retailers are trying to get rid of last season’s stocks. If you’ve got some serious shopping to do, now is the time to take advantage of the sales promotions. Make sure, however, that you compare prices before parting with your cash and bring home only the items that you really need. Although it’s still early, some money-savvy shoppers do their Christmas gift shopping at this time of year when they can get presents at reduced prices.
5. Use less water and electricity
With temperatures in the UAE dropping, there may not be any need to turn on the air-conditioning this time around, but watch out for excessive water heater usage. Perhaps you don’t have to turn the heater on every time you wash your hands or clean the dishes? If you want to bathe, maybe you can go with just inches of water in the tub instead of a full bath? Limit shower time. Ensure that the electrical appliances are turned off when not in use. Leaving them on standby can be costly in the long run. Make it a habit to turn off the lights when you leave the room or house.
6. Keep an eye on your telecom and data charges
Life is hard without an internet connection or mobile phone. Since telecommunication service is something you can’t live without, just aim to reduce your expenses. Bhambri suggests that you review your telecom charges and data usage and find ways to cut down on “avoidable costs”.
“Replace some international calls with free Skype calls. Use Wi-Fi for data intensive browsing to reduce expenses on 3G,” she suggests. “Even a small saving of Dh100 a month can lead to an annual saving of Dh1,200.”
Also, check for special offers that telecom providers du and Etisalat may have in store for you.
7. Prioritize. Cut down on non-essential spending
Whether you’re grocery or clothes shopping, planning your next holiday or weekend activity, make sure you spend your money on the most important stuff. “The changes you make are not likely to make you feel deprived, but they will help to keep more cash in your pocket,” says James Thomas, managing partner at deVere Acuma.
8. Cut the cost of your debts
If you have one or more credit card debt and personal loans, don’t just sit around and wait until your bank files a legal complaint and threatens you with a jail term. Is there a way to consolidate your loans so that your debt repayments become less of a burden?
The interest you’re paying on credit card debt and other types of loans can empty your savings. Even if you only have a small credit card debt, the high annual percentage rates (APRs) lenders are charging, which can run up to 40 per cent, could be costly in the long term.
“Owing even a modest amount on your plastic could cost a significant sum in the long run,” says Thomas.
“If you are thinking of applying for a loan to consolidate existing debts, you should ensure you have a plan to pay off what you owe. Sometimes people who try to bring all their borrowing together in one place continue using their credit cards, ending up in a far worse situation than before,” advises Thomas.
9. Aim to cut your transportation expense by 30 per cent per month
Since the Dubai Metro has become operational, a lot of people have abandoned their cars to save money. It seems taking the Metro to and from work is more economical than driving a car. If you can do that, you can save thousands of dirhams on traffic fines, Salik fees, car maintenance, registration and insurance each year. If abandoning your car completely is not possible, car sharing may be an option. Or, if you can give up your gas-guzzling four-wheel-drive car, do that.
10. Take advantage of privilege cards when shopping
Grocery operators and fashion retailers in the UAE have their own privilege cards that let customers earn some cash back after a certain amount of shopping. Make sure you have them in your wallet the next time you go out to refill your weekly groceries or hunt for a new pair of shoes.
“Most supermarkets are associated to one or more cards. Use these cards to get up to 10 per cent cash back on your grocery expenses,” says Bhambri.
“Examples include AirMiles card associated with Spinneys or Tamayaz Card associated with Union Co-op. Other credit cards associated with hypermarkets that offer up to 10 per cent cash back on purchases include ADCB LuLu Gold Credit Card, EIB Union Coop Tamayaz Card, RakBank Gean La Carte Credit Card [among others],” adds Bhambri.
