Every New Year, a lot of people resolve to improve their personal finances. Many vow to cut back on spending, settle their debts, pay more attention to their budgets and save more.
These things are easier said than done, especially in the UAE, where personal borrowings are piling up. We've asked the experts to provide some useful advice around the area of investing, financial planning, budgeting, saving or spending to help improve the financial situation of residents in the UAE. We consult with Mark Leigh, chief operating officer at XTrade and other financial experts.
1. Save first
Saving money is a top priority for those who want to build their wealth, especially among residents from Europe or the US.
1. Popular money-saving measures include using vouchers and apps that provide discounts, and taking advantage of loyalty and cash back schemes.
2. Other frugal habits also include shopping around for a better deal on a range of goods and services, from insurance policies to groceries.
3. The best thing to do to avoid the temptation is to put cash aside first in a savings account. This way, access to disposable income is very limited.
2. Pay your credit card dues in full
If you must use your plastic money, make sure you don’t max it out and you are very diligent in paying back your dues in full, to avoid incurring hundreds or thousands of dirham in interest and late payment fees. Interest rates on credit cards in the UAE are said to be higher than in other markets like the UK or most of Europe, Japan and the United States. You can also move the outstanding balances to an interest-free balance transfer card, to help lower borrowing costs and pay it off much quickly.
3. Budget wisely
Work out how much money you require every month to pay utility bills, including your housing rent, water and electricity consumption, mobile phone, internet and other financial responsibilities. Make sure you are financially disciplined to prolong the desire to make additional purchases towards the end of the month, as a reward for staying within budget. If you must spend, take advantage of discounts for dining, shopping and other activities that are offered in multiple mobile applications.
4. Invest in a will, life insurance
As an expatriate working in the UAE, it is important to think about what might happen if the unthinkable does occur. By having a will in place, you’ll have peace of mind knowing that, when faced with death, your assets are distributed according to your wishes and your family has access to money.
Without it, authorities will handle your estate according to Sharia law and your bank accounts will be frozen. Life insurance also ensures that your dependents will continue to receive money to cover living costs and any mortgage or debt is paid for.
5. Invest cautiously
There are many strategies for investing money, but whatever approach you decide to take, it is important to take into account the global economic environment:
For those who prefer to invest in gold, it may not be a bad idea, as well. It is advisable to invest in it as, historically speaking, gold preserves wealth. This precious metal has always served as a hedge against declining currencies, rising inflation rates as well as economic uncertainty. However, for an investor to be a successful trader, a diversified portfolio is always recommended.
Online trading is another area you could venture into. If approached correctly, this has the potential to provide supplemental income and enough financial support when you decide to stop working. But you need to orient yourself first and learn how it works.
6. Start saving for retirement
Individuals must save for retirement at an early age, ideally in University. A study showed that three out of five expats in the UAE have no retirement savings yet.
This is alarming, because people without retirement savings will struggle to find a source of income to support their lifestyle and will have to give up a number of luxuries they have earned throughout their lives. In order to succeed, people must be disciplined and willing to invest in the long-term.